It is necessary to adopt fair property assessment method
The Ministry of Land, Infrastructure and Transport has presented a long-term plan to raise the government-assessed value for real estate, including apartments, through a more realistic appraisal method. Of the three options proposed at a public hearing Tuesday, the second option is mostly likely to be adopted, the ministry said. The second option envisions raising the ratio of assessed value to market value to 90 percent by 2030.
But the year in which the ratio reaches 90 percent differs depending on the price range of apartments, in consideration of the tax burden on people owning lower-priced houses. The year for houses worth less than 900 million won ($800,000) is 2030 and that for houses worth 900 million won to 1.5 billion won is 2027, and over 1.5 billion won 2025.
The move seems to be a step in the right direction, given the principle that assessed values need to be close to market prices. The change is also necessary to stabilize the property market and boost equitable taxation. The government-assessed value of real estate affects the country's welfare system broadly because it is used as a yardstick for health insurance premiums as well as in the calculation of property taxes imposed by local administrations and the central government's comprehensive real estate tax.
Yet it's not easy to ensure fairness in assessing property values. What matters is single-family houses. Unlike multi-family residential dwellings, they are not traded frequently and have quite different shapes, resulting in wide discrepancies in prices. This is why the government should be more elaborate in pushing for this change.
The biggest problem is that the new plan might impose a greater burden on ordinary people who own one house and have nothing to do with real estate speculation. If the government-assessed value rises, they could grumble over their rising tax burden. The government should be careful not to hurt those who own just one modest home.