The Estimation of Property Tax Capitalisation in the Korean Taxation Context


The difference between public services and property tax rates is capitalised into home values. The aim of this research is to estimate the property tax capitalisation rate under a different taxation context of Korea, using a repeat sales method with short-term data on housing prices and estimated tax payments. In the operation of the property taxation, there is complexity that needs to be considered in the estimation of the property tax capitalisation rate. In this research, 32,101 apartment samples in Seoul are used for the analysis. Given these unique institutional circumstances, as a result of the analysis, the property tax capitalisation rate in Seoul was between 73.7% and 82.8% in the analysis periods.

Share and Cite:

Kim, H. , Jang, K. and Hur, Y. (2013) The Estimation of Property Tax Capitalisation in the Korean Taxation Context. Current Urban Studies, 1, 110-116. doi: 10.4236/cus.2013.14012.

Conflicts of Interest

The authors declare no conflicts of interest.


[1] Bailey, M. J., Muth, R. F., & Nourse, H. O. (1963). A regression method for real estate price index construction. American Statistical Association Journal, 58, 933-942.
[2] Bruekner, J. K. (1979). Property values, local public expenditure and economic efficiency. Journal of Public Economics, 11, 223-245.
[3] Case, K. E., & Shiller, R. J. (1987). Prices of single family homes since 1970: New indexes for four cities. USA: Yale University.
[4] Choi, S.-H., Ryu, K.-M., Lee, G.-W., & Lee, C.-M. (2010). A repeat sales price indices for office market using transaction data. Journal of Korea Planners Association, 45, 119-131 (In Korean).
[5] Dipasquale, D., & Wheaton, W. C. (1996). Urban economics and real estate markets. Englewood Cliffs, NJ: Prentice Hall.
[6] Ha, S.-K. (2010). Housing, social capital and community development in Seoul. Cities, 27, s35-s42.
[7] Jang, J.-W. (2010). A panorama of a housing market for 30 years. Seoul: Chaeknamu (In Korean).
[8] Kim, J.-Y., & Lee, C.-M. (2004). Dynamic Change of Spatial Structure in Seoul: 1993-2004. Journal of Korea Planners Association, 39, 191-205 (In Korean).
[9] Kim, J.-Y., & Lee, C.-M. (2005). Dynamics of amenity effects on housing price. Journal of Korea Planners Association, 40, 59-74 (In Korean).
[10] Mcmillen, D. P. (2003). The return of centralization to Chicago: Using repeat sales to identify changes in house price distance gradients. Regional Science and Urban economics, 33, 287-304.
[11] Mcmillen, D. P. (2008). Changes in the distribution of house prices over time: Structural characteristics, neighborhood, or coefficients? Journal of Urban Economics, 64, 573-589.
[12] Palmon, O., & Smith, B. A. (1998). evidence on property tax capitalization. Journal of Political economy, 106, 1099-1111.
[13] Rosen, H. S., & Gayer, T. (2007). Public finance. New York: McGrow Hill.
[14] Yinger, J., Bloom, H. S., B?rsch-Supan, A., & Ladd, H. F. (1988). Property Taxes and House Values: The Theory and Estimation of Intrajurisdictional Property Tax Capitalization. Boston: Academic Press.

Copyright © 2024 by authors and Scientific Research Publishing Inc.

Creative Commons License

This work and the related PDF file are licensed under a Creative Commons Attribution 4.0 International License.