President Lee Issues Renewed Warning on Using Business Loans for Home Purchases: "Voluntary Preemptive Repayment Is Necessary"

"If you want to avoid criminal prosecution for fraud, tax investigations, and forced loan recalls"
"It is clear which choice is more rational"

On March 21, President Lee Jaemyung targeted so-called "loophole loans," in which individuals purchase houses using business loans, stating, "It is clear which choice is more rational: facing criminal fraud charges, a tax investigation by the National Tax Service, and forced loan recall, or proactively and voluntarily repaying the loan." This statement serves as another warning against real estate speculation using illicit loans, following the National Tax Service's announcement that it would thoroughly review cases where business loans were used as a source of funds in home purchases.

Yonhap News Agency

President Lee posted this comment on X (formerly Twitter) while sharing a related article. The article linked by President Lee reported that in the second half of last year, cases of using business loans as a source of funds for home purchases increased by 35 percent compared to the same period in the previous year, prompting the National Tax Service to launch a comprehensive review.

President Lee had also issued a strong warning on the same issue on March 17. At that time, he stated, "If you deceive financial institutions by claiming the loan is for business purposes, but actually use it to purchase real estate for speculative purposes, you will face criminal charges for fraud." He added, "The Financial Supervisory Service and the National Tax Service will conduct a joint investigation, and may file criminal charges for fraud and recall the loan."

The National Tax Service has made its intention to carry out a comprehensive review official. On March 19, Lim Gwanghyun, Commissioner of the National Tax Service, stated, "Business loans are intended to finance business operations," and added, "Diverting these funds for the acquisition of personal housing and treating the corresponding loan interest as a business expense is clearly tax evasion." He went on to say, "We will thoroughly review cases where business loans are listed in the funding plans, and will take strict action if tax evasion is confirmed." He further emphasized, "We will closely examine the actual flow of funds and the appropriateness of expense processing, and if suspicions of tax evasion are confirmed, we will immediately convert the case into a tax investigation."

The government believes that purchasing real estate using business loans as an indirect route undermines financial order and can lead to tax evasion. Accordingly, it plans to strengthen its crackdown through cooperation between tax and financial authorities.

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