The government has settled on a direction to shift the tax base for the comprehensive real estate tax from the number of homes owned to the combined value of properties. Under the most likely plan, the current heavy tax rate system applied to owners of three or more homes would be abolished or merged into the basic rate, while deductions would be reduced or surcharges added for multi-home ownership and non-residential or speculative holdings. The overhaul, the first full revision of the comprehensive real estate tax system in four years since 2022, is expected to significantly increase the tax burden even for single-home owners who hold ultra-high-priced homes.
According to relevant authorities on the 26th, Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol delivered a final report to President Lee Jae-myung on the 24th of this month on major issues in the 2026 tax reform, including these measures.
The current comprehensive real estate tax applies rates of 0.5 to 2.7 percent for owners of two or fewer homes and a separate rate of up to 5.0 percent for owners of three or more homes. However, because the tax system is based on the number of homes, someone who owns three homes worth 1 billion won each could face a higher rate than someone who owns a single home with an official price of 3 billion won, even though the total value held is the same. Critics have argued that this system has driven the "one prime property" phenomenon, in which demand concentrates on a single high-priced home.
In response, the government is reviewing a plan to apply the same basic progressive tax rate to the combined value per person regardless of the number of homes. Under this approach, the comprehensive real estate tax system would be divided into three tiers—a tax-exempt range below the basic deduction, a moderate-burden range, and an ultra-high-priced range—with the ultra-high-priced range subject to a subdivided tax base or higher rates. The basic deduction for single-home owners would be raised slightly from 1.2 billion won, while the threshold for ultra-high-priced homes is being discussed at an official price of 3 billion to 4 billion won.
However, the number of homes is not expected to be completely excluded from calculating the comprehensive real estate tax burden. While the method of applying a separate higher rate simply because someone owns three or more homes would be eliminated, factors such as actual residence, the location of the homes, and the purpose of ownership would be reflected in the final tax calculation process. This aligns with the "differentiated taxation" concept for property holding taxes outlined by President Lee.
In addition, the long-term holding and senior citizen tax deductions, which allow up to 80 percent of the comprehensive real estate tax to be deducted regardless of residence, are likely to be revised to center on residence.
The government plans to hold another public debate on real estate policy on the 27th, chaired by Prime Minister Han Sung-sook, to gather additional opinions before finalizing the plan in the tax law amendment expected to be announced early next month.
