The impact of the comprehensive real estate holding tax on house prices and rental pass-through

초록

This paper investigates whether a progressive property tax can significantly and immediately influence housing prices, focusing on the case of South Korea’s Comprehensive Real Estate Holding Tax (CREHT). The CREHT became more progressive through reforms in 2019 and 2021, and was subsequently relaxed in 2023. Based on the sequential Difference-in-Differences (DiD) framework, we find consistent evidence that housing price disparities narrowed following the tax hikes and widened after the tax cuts. These results remain robust across different group specifications and alternative time windows. On the other hand, comparing regions with high and low shares of non-local ownership, we find evidence that regions more strongly affected by the CREHT experienced a larger shift in housing demand from higher-priced to lower-priced units. Additionally, the rental housing market exhibits evidence of tax pass-through to tenants for CREHT-targeted high-end housing units. Our findings imply that while progressive property taxation may reduce wealth inequality among property owners, it may exacerbate inequality between landlords and tenants. © 2026 Elsevier Inc.

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