Transition Team "Strengthening Verification of Speculative Housing Transactions by Foreigners"

Presidential Transition Committee Economic Subcommittee 1 [Image source=Yonhap News]

[Asia Economy Reporter Bu Aeri] The Presidential Transition Committee announced on the 14th that it will strengthen verification of speculative housing transactions by foreign multi-homeowners.

The Economic Subcommittee 1 of the Transition Committee decided this through discussions with the National Tax Service on the need to regulate speculative housing transactions by foreigners.

Foreigners bear the same tax obligations as domestic residents when acquiring, holding, or transferring domestic housing.

However, some foreign households have mobilized funds from their home countries to purchase multiple houses speculatively. Among them, cases were found where they exploited difficulties in identifying family members within the same household to disguise themselves as single-homeowners and evade capital gains tax.

From 2017 to 2021, foreigners acquired 66,069 domestic condominium units, averaging 13,213 units annually.

The National Tax Service plans to closely analyze whether foreigners hold multiple homes per household and focus on verifying tax evasion such as capital gains tax avoidance.

When foreigners transfer housing, the system will be improved to require submission of household-specific housing ownership status data.

Regarding foreigners' acquisition of high-priced and multiple homes, the source of acquisition funds will be verified at the same level as domestic residents to prevent tax evasion, including rental income evasion.

Additionally, monitoring will be strengthened through building data on ownership status by region, purpose, and type.

The National Tax Service reported to the Transition Committee that it will strive to normalize the real estate market by investigating speculative transactions suspected of evasion indiscriminately, just as with domestic residents.