"I Live in Gangnam," They Sigh... Seoul Has Plenty of 'One Good Home' Options for Retirees [Real Estate Walk]

[Financial News] 'Real Estate Walk' will feature carefully selected real estate issues and investment information from experts for readers.
The government recently said it plans to sharply raise holding taxes on owners of ultra-expensive homes, often called a "one good home." The idea is to set a reasonable baseline tax burden for a typical single-home owner, then apply additional relief depending on whether the home is owner-occupied or intended for working- and middle-class households. By contrast, the main thrust is to increase the tax burden on ultra-expensive homes in Gangnam.

The Comprehensive Real Estate Holding Tax is levied on the portion of a home’s officially assessed value that exceeds 1.2 billion won for a one-household, one-home owner. If the basic deduction threshold is raised to 1.3 billion won or 1.5 billion won, the number of homes eligible for the deduction would increase accordingly.
Holding tax burdens on ultra-expensive homes are expected to rise through adjustments to the fair market value ratio. The current level is around 60%, but if it rises to about 80% in the future, owners would have to pay roughly 1.5 times more in holding taxes.
At present, the Comprehensive Real Estate Holding Tax applies rates of 0.5% to 2.7% for owners of up to two homes, and 0.5% to 5.0% for those with three or more homes. Multi-home owners are said to be far more disadvantaged than owners of a single "one good home." For that reason, the government may extend the suspension of the heavier capital gains tax on multi-home owners until the end of next year, in an effort to push them to put their properties on the market sooner.
In any case, even single-home owners will face enormous holding taxes if their property is classified as ultra-expensive, and most branded large apartment complexes in Gangnam appear likely to fall into that category. If you are retired or an employee at a regular company and own one such ultra-expensive home, now is the time to think carefully. Can you really afford to live your retirement life or work life while paying such heavy holding taxes in the three Gangnam districts?

Retirees live on income from the National Pension Service (NPS), retirement pensions and the Korean Home Pension. For that reason, it is better to live in an apartment complex with an officially assessed value below 1.2 billion won. Ideally, it should also be in an area with subway access. There is no need to live while paying enormous holding taxes.
Around major transit hubs in Seoul, including Sindorim Station, Cheongnyangni Station, Yeongdeungpo Station and Seoul Station, there are many large apartment complexes with national-standard unit prices of 2 billion won, and in particular, many complexes have officially assessed values below 1.2 billion won.
In other words, rather than simply saying that I live in Gangnam, an apartment complex in a place where one can enjoy a comfortable retirement while paying a reasonable amount of tax could be the real "one good home."
Of course, some people have enough spare cash to pay higher taxes. But for most people, the important thing is to find a final place of rest where they can live comfortably for the rest of their lives after retirement.
Young people are choosing Dongtan Station for its convenience. For retirees, it may be helpful to live in areas with subway access, lower property taxes, and plenty of parks and mountains nearby./Choi Won-cheol, senior professor, Yonsei University Future Real Estate Development Advanced Program※This article reflects the author's personal views and may differ from the editorial direction of this newspaper.
[email protected] Lee Jong-bae Reporter