Crackdown on Foreign Multi-Homeowners' Capital Gains Tax Evasion... Transition Team "Strengthening Verification"

"Thorough Analysis of Multi-Home Ownership Status per Household for Foreigners Transferring Residential Properties"
Verification of Acquisition Fund Sources at the Same Level as for Nationals

President-elect Yoon Suk-yeol is making an additional appointment announcement on the afternoon of the 14th at the briefing room of the Presidential Transition Committee in Tongui-dong, Jongno-gu, Seoul.

[Asia Economy Reporter Kim Jeong-wan] The Presidential Transition Committee, after discussions with the National Tax Service, has stepped up verification of speculative housing transactions by foreign multi-homeowners.

On the 14th, the Economic Subcommittee 1 of the Transition Committee announced, "Through discussions with the National Tax Service on the 'need to regulate speculative housing transactions by foreigners,' the Economic Subcommittee 1 has decided to strengthen verification of speculative housing transactions by foreign multi-homeowners to protect citizens' housing rights and enhance fairness."

Under current law, foreigners are subject to the same tax obligations as domestic residents when acquiring, holding, or transferring domestic housing.

However, some foreigners have been found to hold multiple houses domestically through speculative purchases funded by capital mobilized from their home countries, disguising themselves as single-homeowners to evade capital gains tax. Verification will be strengthened to address this.

The Transition Committee also stated that despite some foreign households mobilizing funds from their home countries to purchase multiple speculative houses domestically, they exploit difficulties in identifying family members within the same household to disguise themselves as single-homeowners and evade capital gains tax.

According to the Transition Committee, from 2017 to 2021, foreigners acquired 66,069 domestic condominium units, averaging 13,213 units annually.

This announcement by the Transition Committee follows discussions with the National Tax Service, which stated, "We will closely analyze whether foreigners who have transferred houses hold multiple homes per household to focus on verifying tax evasion such as capital gains tax avoidance. When foreigners transfer houses, we will require submission of household-level housing ownership data and pursue institutional improvements to enhance fairness."

In particular, regarding foreigners' acquisition of high-priced and multiple homes, the plan is to prevent tax evasion by verifying the source of acquisition funds at the same level as domestic residents, along with rental income evasion.

The National Tax Service said, "To respond swiftly to speculative real estate acquisitions by foreigners, we will strengthen monitoring by building data on ownership status by region, purpose, and type. We will also intensify investigations into speculative transactions with strong suspicion of evasion and respond more strictly to unfair tax evasion."