Comprehensive Real Estate Holding Tax | Imposition of the Comprehensive Real Estate Holding Tax Held ‘Lawful’ Where the Taxpayer Became an Owner of Two Houses Through Inheritance

🔗the comprehensive real estate holding tax refers to a system under which the National Tax Service separately imposes a national tax by applying a progressive tax rate to owners of land and houses exceeding certain thresholds, apart from the aggregate land tax levied by local governments.

Under Article 1 of the Comprehensive Real Estate Holding Tax Act, the Act explains that its purpose is to impose the comprehensive real estate holding tax on holders of high-value real estate in order to enhance equity in the tax burden on real estate holdings, and, by promoting price stability of real estate, to achieve the balanced development of local finances and the sound development of the national economy.

As of 2022, a person who has temporarily become an owner of two houses through relocation or inheritance may defer payment of the comprehensive real estate holding tax. In addition, a person who has unavoidably become an owner of two houses through relocation or inheritance is recognized as an owner of one house, and accordingly a temporary owner of two houses may also apply for deferral of payment of the tax upon meeting certain qualifications.

A temporary owner of two houses corresponds to a case in which a person purchased a house in order to relocate but has not yet disposed of the existing house. This also includes cases in which a person has inherited a house or holds a low-priced provincial house without speculative intent.

The court found that the imposition of the comprehensive real estate holding tax on A fell within the scope of the limitation on property rights permitted under the Constitution.

The court determined that “under the principle of no taxation without law, the tax statute clearly prescribes the requirements for taxation, and a tax imposed on this basis does not infringe on property rights.” It added that “the comprehensive real estate holding tax in this case was imposed for the public-interest purpose of stabilizing real estate prices and ensuring tax equity, and it does not infringe on the essence of property rights.”

The court explained that “a tax statute reflects the taxpaying capacity of the people and policy objectives, so the legislature holds broad discretion in shaping it,” and that “taxing a person who has temporarily become an owner of two houses through inheritance in the same manner as a general owner of two houses is the result of the legislature's policy judgment.”

The court also determined that “because the Enforcement Decree of the Comprehensive Real Estate Holding Tax Act provides that, even where a person has become an owner of two houses through inheritance, the house is excluded from the count of houses upon meeting certain requirements, this does not constitute an infringement of the right to equality guaranteed by the Constitution.”