Land Transaction Permits Must Be Filed by April 20 to Avoid Heavy Capital Gains Tax... Local Governments Race to Speed Up Processing

In Land Transaction Permission Zones, Local Government Approval Is Required Before Contracts
Processing Typically Takes About 15 Business Days
Seongbuk District Shortens Permit Processing to 11 Days
May Increase the Likelihood of Last-Minute Deals Being Concluded

As the end date for the temporary suspension of the heavy capital gains tax on owners of multiple homes has been set for May 9, market attention is focusing on the final window for possible transactions.

Yonhap News Agency

On the 11th, the real estate industry calculated that, in areas designated as land transaction permission zones, procedures must begin no later than April 20 in order to sign a sales contract by May 9. In land transaction permission zones, a land transaction permit must be obtained before entering into a sales contract, and this process typically takes about 15 business days.

Unlike general real estate transactions, which proceed in the order of "contract → final payment → registration," transactions in land transaction permission zones follow the sequence of "preliminary contract → permit → main contract → final payment → registration." In practice, parties are signing conditional preliminary contracts before the permit is issued, and then proceeding with the main sales contract and subsequent steps after the permit is granted. The main contract must be concluded by May 9, after the permit certificate has been issued, in order to receive the benefit of the temporary suspension of the heavy tax.

The permit procedure begins when a real estate agent submits the required documents to the district office. Under the National Land Planning and Utilization Act, the head of the relevant local government who receives a land transaction permit application must decide whether to approve or reject it within 15 days. However, if supplementary documents are requested, the process of requesting additions and re-examining the application can be repeated, which may lengthen the actual processing period.

Against this backdrop, some local governments are attempting to shorten the processing time for permits. On January 26, the Seongbuk District Office notified nearby licensed real estate agents that it would reduce the processing period for transaction permits to 11 business days. In Seongbuk District, where a high proportion of apartments are priced at 1.5 billion won or less and transactions are concentrated, the district has accelerated permit reviews in response to requests from the brokerage industry and residents, as transaction uncertainty increased due to the review process.

An official at the Seongbuk District Office said, "Seongbuk District is one of the areas with a high number of land transaction permit applications among autonomous districts in Seoul, and all departments are focusing on improving work efficiency." According to the Seoul Real Estate Information Plaza, since President Lee Jaemyung first mentioned on January 23 his plan to end the temporary suspension of the heavy capital gains tax on owners of multiple homes, the number of land transaction permit applications in Seongbuk District has reached 361.

On the ground, there are expectations that the faster the permit is processed, the higher the likelihood that last-minute deals will be concluded. A representative of a licensed real estate agency said, "The permit must be issued by May 8 for the contract to be possible, but this process takes a long time," adding, "Because of this period, we are advising clients that they should sign a preliminary contract around the third week of April."