[Edaily Kong Chi-Yu Reporters Kim Sang-yun, Kim Mi-young, Kim Eun-kyung] The government has made a sharp U-turn on its real estate tax policy, which was centered on increasing the comprehensive real estate tax burden on non-resident single-homeowners. Just 29 days after announcing the tax reform plan on August 3, the government backed down significantly amid concerns that the tax burden—particularly for non-residents—would surge and affect the monthly rent and lease markets.

According to the government’s tax reform plan finalized at the Cabinet meeting on the 1st, the government has revised its initial proposal—which would have lowered the basic deduction for the Comprehensive Real Estate Tax for non-resident single-homeowners from the current 1.2 billion won to 900 million won—and decided to maintain the 1.2 billion won threshold. For single-homeowners who actually reside in their property, the basic deduction will be raised from 1.2 billion won to 1.4 billion won. The upper limit on the Comprehensive Real Estate Tax burden will remain at the current 150 percent.

The deduction criteria for couples jointly owning a single home have also been partially adjusted. While the original government proposal called for lowering the basic deduction—which had been 900 million won per spouse—to 400 million won for non-resident couples jointly owning a single home, the revised proposal raised it to 600 million won.

Based on the government’s revised tax reform plan, E-Daily conducted a simulation with Woo Byung-tak, a Premier Pathfinder expert at Shinhan Bank (applying a fair market value ratio of 70%). if a couple jointly owns a 84-square-meter (㎡) unit at Banpo Xi in Seocho-gu, Seoul, with each holding a 50% share and neither residing there, next year’s property tax is estimated at 16,838,722 won. If the basic deduction were lowered and the tax burden increased as originally proposed, the property tax would be 5,001,102 won (22.9%) lower than the estimated 21,839,824 won.

It appears that the government’s decision to backtrack on its tax reform proposal—which was originally presented under the “principle of actual residence”—was influenced by persistently deteriorating public opinion and President Lee Jae-myung’s approval rating falling into the 30% range. On the same day, the Blue House announced that Kim Yong-beom, Chief of Staff for Policy, had tendered his resignation, which President Lee Jae-myung accepted. Amid ongoing controversy surrounding the introduction of single-stock leveraged exchange-traded funds (ETFs) and real estate tax reforms, his resignation is interpreted as him taking responsibility for economic and real estate issues.