ATJ Asian Tax Journal

Asian Tax Journal

Print ISSN 1738-3323 Online ISSN 2733-9270

A Study on the Improvement of the Housing Holding Tax System

  • Chung Jin Shim Department of Business Administration, College of Business, Konkuk University
  • Jin Tae Kim Accounting Area, College of General Education, Chung-Ang University

Asian Tax Journal Vol. 27 No. 2 (2026), pp. 269-326

Abstract

This study aims to analyze the structural limitations of the housing property tax system in South Korea and propose improvements to enhance tax stability, equity, and efficiency. The current housing property tax system consists of a dual structure comprising property tax and comprehensive real estate holding tax, with the tax base calculated based on the officially assessed price and the fair market value ratio. While this structure appears rational, it hinders taxpayer predictability due to significant fluctuations in tax burdens caused by market price volatility. Furthermore, as property tax is imposed only on homeowners, it fails to fully reflect the benefit principle, as residents who actually utilize public services are excluded from taxation. Through institutional analysis and comparisons with major countries, this study identifies key issues such as the volatility of the tax base, the imbalance between the benefit principle and the ability-to-pay principle, and functional overlap between property tax and comprehensive real estate holding tax. To address these issues, the study proposes the following policy alternatives: First, transitioning from an assessed-price-based tax system to an acquisition-cost-based system, adjusted for inflation, to mitigate tax burden volatility and improve predictability. Second, strengthening the benefit principle by introducing partial taxation for residents who are the actual beneficiaries of public services. Third, redefining property tax as a fee for public services and designing the tax system to reflect service levels and costs. Fourth, integrating property tax and comprehensive real estate holding tax into a single, local-tax-centered property tax system, while shifting toward a residence-based exemption system. Finally, ensuring both tax stability and equity by introducing a tax burden cap that accounts for changes in income and assets, housing price fluctuations, and inflation rates.

Keywords

  • Property Tax
  • Real Estate Tax
  • Comprehensive Real Estate Holding Tax

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