Unusual Transactions Again Across Seoul... 'Enduring' Through Gift-Like Sales

Transactions Below Market Price in Mapo, Guro, Nowon, etc.
Guro Samsung Raemian 680M KRW (5th floor) → 540M KRW (12th floor)
Urgent Sales by Multi-Homeowners or Family Transactions for Tax Savings

The government is introducing a public reconstruction system as part of expanding supply to stabilize the real estate market, and will significantly relax floor area ratio and height restrictions for reconstruction apartments in Seoul. Alongside this, land development will be pursued, including the site of Taereung Golf Course in Nowon-gu, Seoul, aiming to supply a total of 132,000 new housing units. The photo shows the city center view from Lotte World Tower in Songpa-gu, Seoul, on the 4th. Photo by Mun Honam munonam@

[Asia Economy Reporter Moon Jiwon] Since the government announced the July 10 real estate measures to strengthen the tax burden on multi-homeowners, numerous 'abnormal transactions' with prices up to 100 million KRW lower than market value have been occurring again across Seoul. Industry insiders believe these are likely transactions between related parties aimed at reducing capital gains tax.

According to the Ministry of Land, Infrastructure and Transport's actual transaction price disclosure system and frontline real estate agencies on the 7th, recent transactions in districts such as Mapo, Guro, Gwanak, and Nowon in Seoul have been recorded at prices several tens of millions to hundreds of millions of KRW lower than previous actual transaction prices.

For example, a 122.86㎡ unit (exclusive area) in Mapo-gu Seogyo-dong's Mecenapolis was sold for 1.84 billion KRW on the 18th of last month but was reported as sold for 1.555 billion KRW (23rd floor) on the 29th, a drop of 285 million KRW within ten days.

In Guro-gu Guro-dong, a 58.13㎡ unit in Samsung Raemian was recently traded between 680 million and 690 million KRW, but on the 24th of last month, it was sold for 540 million KRW, more than 100 million KRW lower. A representative from nearby A real estate agency said, "There are currently no listings even at the 700 million KRW level for this size, so it is impossible to sell. It is highly likely that this is a gift-like transaction between related parties rather than a general sale."

Similarly, in Gwanak-gu Sillim-dong, a 84.98㎡ unit in Gwanaksan Humansia 2 Complex was traded for 570 million KRW on the 23rd of last month, 130 million KRW lower than the previous actual transaction price of 700 million KRW. Currently, the asking price for units of the same size in this complex ranges from 710 million to 750 million KRW. A representative from nearby B real estate agency said, "Even 24-pyeong units exceed 600 million KRW, so this price makes no sense."

Additionally, a 114.47㎡ unit in Guro-dong's Guil Woosung was sold for 755 million KRW on the 30th of last month, and an 84.98㎡ unit in Dobong-gu Banghak-dong Woosung Apartment 2 Complex was sold for 360 million KRW on the 27th of last month, both about 90 million and 98 million KRW lower than previous actual transaction prices, respectively.

While some suggest these could be urgent sales by multi-homeowners due to the government's successive measures, frontline agencies predominantly analyze that these are likely gift-like transactions between family members or related parties. This is because the increased comprehensive real estate tax imposition date is still a year away on June 1 next year, and the capital gains tax surcharge implementation has been postponed until the end of May next year. Moreover, Seoul housing prices have narrowed their range but still maintain an upward trend.

Given the increased holding tax burden on multi-homeowners due to the July 10 measures, it is interpreted that they intend to first clear out peripheral properties and transfer them at low prices to relatives or others to simultaneously reduce taxes and enjoy future capital gains.

In fact, if the difference between the market price and the transfer price is less than 300 million KRW or 30% of the market price, it is not considered a gift. Considering the 285 million KRW difference between the market price and transfer price in Mapo Mecenapolis, the industry views it as highly likely to be a gift-like transaction. Similar abnormal transactions with prices several hundred million KRW lower than market value occurred repeatedly in April and May this year ahead of the holding tax imposition date, causing market confusion.

However, experts point out that since the government plans to more thoroughly investigate the legality of special transactions such as under-the-table contracts or sales among relatives in the future, caution is required. Woo Byungtak, team leader of Shinhan Bank's Real Estate Investment Advisory Center, said, "While one may think it is tax saving, if not carefully examined, it could unknowingly become tax evasion, leading to heavy penalties later."

This content was produced with the assistance of AI translation services.