Suwon-si Investigates Appropriateness of Acquisition Tax Reporting for Housing Built Under Residential Construction Projects

Suwon City Hall

The city of Suwon in Gyeonggi Province will investigate the appropriateness of acquisition tax reporting for houses acquired for the purpose of housing construction projects by the 28th of this month.

The investigation targets housing construction business operators and housing construction sales operators who acquired houses for housing construction projects between 2020 and 2022.

On the 6th, Suwon City announced plans to investigate whether the real estate acquisition tax reporting for houses acquired by housing construction business operators who received exceptions from heavy taxation under the current 'Local Tax Act Enforcement Decree' is appropriate.

The government introduced heavy taxation regulations (8% or 12%) to strengthen acquisition tax on houses acquired by corporations and multi-homeowners, imposing additional acquisition tax when such entities acquire houses.

However, houses that are not considered speculative or are recognized for their public nature are exempt from heavy taxation and are subject to a tax rate of 1-3% depending on the acquisition price.

There have been cases where some operators, after acquiring houses, demolish them and mistakenly interpret the relevant laws to qualify for the heavy tax exemption, then dispose of the houses or construct commercial buildings or officetels instead of houses.

Accordingly, the city will verify in this investigation whether the houses acquired by housing construction business operators have been demolished, whether new houses have been constructed and supplied, and whether the tax base and tax rates reported for real estate acquisition tax on the Wetax system are appropriate.

A city official stated, "Although houses that are not considered speculative or have public nature are designated as exceptions to acquisition tax heavy taxation, some operators misunderstand the related regulations and dispose of the houses or build commercial buildings or officetels instead of houses," adding, "We urge them to ensure that houses are newly constructed and supplied within the deadline to avoid heavy taxation on acquisition tax."

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