Gwangju City Detects 157 Suspicious Real Estate Transactions

119 Cases Including Suspected Illegal Resale and Tax Evasion Referred to Police Agency and Reported to National Tax Service

[Asia Economy Honam Reporting Headquarters Reporter Park Seon-gang] Gwangju Metropolitan City announced on the 21st that, in cooperation with its five autonomous districts, it conducted a detailed investigation of 720 real estate transactions from January to March and uncovered 157 suspicious cases of illegal transactions.

This investigation was driven by the city's strong determination to establish transparent real estate transaction order, following frequent complaints about the widespread false reporting in real estate, such as illegal resale of new apartment pre-sale rights and false reporting of actual transactions.

The investigation targeted 720 real estate transaction contracts from 2018 to 2020. Detailed investigations were conducted by collecting explanatory materials such as transaction contracts and proof of transaction funds from the parties involved, and further scrutinized with advice from the Korea Real Estate Board.

The types of violations detected and planned actions are as follows: ▲ Illegal resale of pre-sale rights and suspected name-trust cases totaled 19, including 3 cases of illegal resale of pre-sale rights, 5 cases of name-trust, 1 case of supply order disruption, 9 cases of excessive brokerage fees, and 1 other case. These are subject to up to 3 years imprisonment or fines up to 30 million KRW, and will be referred to the National Police Agency for investigation.

▲ Suspected tax evasion related to capital gains tax or gift tax totaled 100 cases, including 4 cases of low-price transactions, 51 cases of disguised gifts involving special relations, 44 cases of income omission by certified real estate agents, and 1 case of suspected tax evasion through debt repayment in kind. These will be reported to the National Tax Service.

▲ Violations of real estate transaction reporting totaled 13 cases, including 3 cases of delayed reporting, 3 cases of low-price reporting, 2 cases of false reporting of contract dates, and 5 cases of false reporting by brokers. These are subject to fines up to 30 million KRW or fines equivalent to 5% of the real estate acquisition price.

▲ For 25 cases of gift reporting during the detailed investigation period, administrative guidance was provided.

Representative suspicious cases include: ▲ (Illegal resale of pre-sale rights) A transaction between seller A and buyer B, who are family members, where buyer B paid approximately 60 million KRW at the initial pre-sale contract of seller A, and after the resale restriction was lifted, the pre-sale right was traded, indicating suspicious circumstances.

▲ (Name-trust) In a transaction between brothers, all sales proceeds were funded by their uncle C, suggesting that C is the actual owner.

▲ (Disguised gift) In a real estate sale worth approximately 700 million KRW, part of the buyer’s payment amounting to 300 million KRW was borrowed from family members, revealing multiple cases of unreported gifts.

▲ (False registration cause) A family transaction between seller A and buyer B where only the name was changed without actual monetary exchange was confirmed.

▲ (Others) Cases where certified real estate agents received brokerage fees exceeding the consulting fee or did not issue cash receipts to avoid income reporting.

Meanwhile, among five individuals who voluntarily reported during the detailed investigation period (2 false contract date reports, 2 low-price reports, 1 name-trust), four subjects liable for fines will receive full or half reductions of their fines.

Lee Sang-bae, Director of the City Urban Regeneration Bureau, stated, “Since last year, we have been fully committed to blocking illegal activities that fuel real estate price increases and stabilizing the real estate market,” adding, “We will continue to conduct thorough detailed investigations and guidance inspections to raise awareness that illegal real estate transactions will inevitably be detected.”

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