Gyeonggi-do Launches 'Adequacy Investigation' on Apartment Acquisition Corporations... 5,843 Locations

Investigation on the Appropriateness of Heavy Taxation and Omission of Tax Base for Apartments Acquired Under Corporate Names Since 2017

[Asia Economy (Suwon) = Reporter Lee Young-gyu] Gyeonggi Province will conduct an appropriateness investigation on acquisition reports for corporations that have acquired apartments within the province over the past four years, to be completed by November.

The investigation targets 5,843 corporations that acquired apartments in the province from 2017 through July of this year.

According to Gyeonggi Province's analysis of acquisition tax report data over the past four years, the number of apartment acquisitions by corporations (excluding housing cooperatives, housing corporations, etc.) has surged annually: 924 cases in 2018, 1,885 cases last year, and 7,261 cases up to July this year.

The province attributes this to the low tax burden on corporations acquiring apartments before the government's revision of acquisition tax rates for corporate housing and the announcement of tax surcharges on corporate-owned housing in July this year, and plans to conduct a thorough investigation accordingly.

The investigation will be conducted in two parts: the appropriateness of metropolitan area surcharge exemptions, directly carried out by Gyeonggi Province, and the omission of tax base, jointly conducted by the province and city/county governments.

The appropriateness of metropolitan area surcharge exemptions will examine whether corporations properly reported exemptions such as employee dormitories and housing rental businesses when acquiring apartments.

The metropolitan area criteria refer to areas under the Capital Region Readjustment Planning Act's overconcentration control zones, excluding industrial complexes. In Gyeonggi Province, this includes 14 cities: Uijeongbu-si, Guri-si, Namyangju-si (excluding some areas), Hanam-si, Goyang-si, Suwon-si, Seongnam-si, Anyang-si, Bucheon-si, Gwangmyeong-si, Gwacheon-si, Uiwang-si, Gunpo-si, and Siheung-si (excluding some areas).

The omission of tax base part will investigate whether indirect costs incurred at acquisition, such as loan interest and brokerage fees, were properly reported for apartments acquired by multi-homeowner corporations.

The province plans to establish the investigation plan by the end of this month, begin the investigation next month, and announce the results in November.

Choi Won-sam, Director of the Tax Justice Division of the province, stated, "Due to the recent surge in cases where individuals establish real estate corporations to acquire apartments to evade multi-homeowner regulations and gain tax benefits, we have decided to proceed with this investigation. We will apply principled taxation on non-business real estate acquisitions by corporations to encourage early apartment sales and contribute to stabilizing the housing market within the province."

Earlier, the province announced plans to designate major areas within the province as foreigner and corporate land transaction permission zones next month.

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