"Pay 2.8 Billion Instead of 100 Million?"...Top Real Estate Tax Tips for Maximum Benefit

Gangnam-gu Holds Tax Saving Lecture with Over 400 Residents Attending
Not Knowing Essential Tax Laws Can Lead to Big Losses
Gift and Inheritance Seminar Scheduled for October This Year

About 400 residents attended the 'Real Estate Tax Seminar' organized by Gangnam-gu, Seoul, where they learned tax-saving tips for acquisition tax and capital gains tax. Photo by Minjin Kim enter@

"What happens if you change the use of a detached house in Gangnam, held for a long time, into a commercial property at the buyer's request after the contract but before receiving the final payment? The seller is essentially selling a commercial property, not a house. Since the property was held as a house for a much longer period, in the past, the interpretation was that it was a house sale, but now they no longer interpret it that way.

If this person was a single homeowner with one house, even if the house price was tens of billions of won, they would pay very little capital gains tax due to tax exemption benefits and long-term holding special deductions. However, if the use is changed incorrectly like this, they lose all benefits and have to pay taxes dozens of times higher.

In the past, even if a long-held house was demolished and sold as land, tax exemption benefits were given, but now it is considered a land sale and no benefits are provided. This change came after the introduction of acquisition tax surcharges based on the number of houses, and the Ministry of Economy and Finance changed the interpretation. People who are unaware of this and comply with the seller’s request to sell the house under better conditions end up suffering losses."

When a case was introduced where a single homeowner who had held a detached house in Gangnam for over 30 years almost paid 2.8 billion won in capital gains tax instead of 10 million won due to the changed interpretation, sighs echoed throughout the audience.

On the afternoon of the 24th, about 400 residents filled the main auditorium of the Gangnam-gu Community Center in Seoul for a 'Real Estate Tax Seminar.' Residents of various ages, from their 20s and 30s to their 70s, stayed for 3 hours and 30 minutes, listening attentively.

Although the real estate market transaction slowdown has continued for several years, interest in taxes remains high. Especially during the recent real estate boom, frequent regulations and tax policy changes caused much confusion. Gangnam-gu recognized that residents have great interest in real estate taxes but also find it the most challenging area, so they organized this event to provide practical help through an integrated real estate tax lecture.

The lecturer, Kim Hoyong, CEO of Mirjin Tax, is an expert in real estate taxes who operates under the nickname 'Minerva Owl.' He is now a celebrity with 100,000 subscribers on his Naver blog, but until a few years ago, he worked as a government official in the National Tax Service’s Investigation Bureau and the Ministry of Economy and Finance’s Tax Policy Office.

CEO Kim advised, "Without tax knowledge, people sometimes pay taxes unfairly that they don’t have to pay," and emphasized, "It is necessary to know legal ways to reduce taxes."

The seminar covered acquisition tax surcharges, basic capital gains tax calculations, utilization of long-term holding special deductions, tax exemptions, special exemptions for capital gains tax on redevelopment and reconstruction, and income tax calculations on housing rental income. It also addressed confusing or lesser-known topics such as criteria for determining residential use of officetels, acquisition tax rates and surcharges on houses acquired through pre-sale rights, capital gains tax issues on mixed-use houses, capital gains tax on high-priced houses, and special exemptions for replacement houses, helping attendees avoid tax bombs or difficulties in tax saving.

Before the seminar, Gangnam-gu Mayor Jo Seongmyeong met with residents and said, "Gangnam-gu, with many regulations and active reconstruction, is greatly affected by real estate policies. We held this seminar to prevent residents from unfairly paying taxes due to lack of awareness of changes, and we plan to continue such efforts." Gangnam-gu plans to hold a seminar on gift and inheritance taxes, which attract high interest from asset owners, in October this year.

Kim Hoyong, CEO of Mirjin Tax, is explaining real estate tax-saving methods to the residents of Gangnam-gu. (Photo by Gangnam-gu Office)