National Tax Service Targets 'Cash-Rich Individuals and Parental Support' Disrupting Real Estate Market... "127 Suspected Tax Evaders Under Intensive Investigation"

Acquisition of High-Priced Apartments with Unexplained Large Sums of Cash
Disguised Loans and Gifting from Parents Detected
National Tax Service: "All Attempts at Disguised Gifting and Indirect Transactions to Evade Taxes Will Be Completely Bloc

An individual in their 30s, referred to as 'A', who works for a major conglomerate, and their spouse, 'B', acquired a high-priced apartment located in a school district known for excellent educational conditions for approximately 3 billion won, without taking out a loan. According to the National Tax Service's investigation, 'A' and others were found to hold a significant amount of liquid assets compared to their reported income. In addition, 'A's father, a wealthy individual, sold overseas stocks worth about 3 billion won just before 'A' purchased the apartment; however, the use of the proceeds from the sale was unclear. Based on these findings, the National Tax Service believes that 'A' and others received covert financial support from the father to purchase the high-priced apartment entirely in cash, without a loan, and plans to thoroughly examine whether this constitutes an illegal gift.

On the 19th, the National Tax Service announced that it will conduct tax investigations on a total of 127 individuals suspected of tax evasion, who require verification due to recent changes in the real estate market.

Sanghoon Oh, Director of the Asset Taxation Bureau at the National Tax Service, is giving a briefing on the commencement of tax investigations on 127 real estate tax evasion suspects at the Government Complex Sejong on the 19th. National Tax Service

Sanghoon Oh, Director of the Asset Taxation Bureau at the National Tax Service, stated, "If, during the process of verifying the source of funds, there are suspicions that business income has been omitted or corporate funds have been misappropriated for use as housing acquisition funds, we will expand the scope of the investigation to include the relevant businesses." He emphasized, "If it is found in the course of the investigation that taxes have been evaded through fraud or other illicit means, we will take firm action to ensure prosecution and punishment in accordance with the Act on the Aggravated Punishment of Tax Offenses."

The subjects of this investigation include: individuals with large amounts of cash who are not subject to loan regulations and those with excessive private debts; multi-homeowners who have acquired high-priced apartments in anticipation of capital gains; those who have purchased homes in areas showing signs of price overheating; and individuals who have acquired ultra-high-priced homes valued at 3 billion won or more. According to the National Tax Service, the total value of home acquisitions by these subjects is estimated to be about 360 billion won, with the suspected amount of tax evasion reaching 170 billion won.

First, the National Tax Service will investigate cases in which high-priced apartments were acquired with large sums of cash but with no clear reported income, making the source of funds unclear. The agency has also identified cases where, as a result of tighter loan regulations, individuals have borrowed large sums from parents or other relatives, or from affiliated corporations, to acquire homes. In cases where individuals have borrowed large amounts far exceeding their repayment capacity and only a formal loan contract exists, the agency will closely examine whether these transactions were in fact disguised gifts. If the transactions are confirmed as loans, the National Tax Service will manage post-loan monitoring to verify whether the borrower repaid the principal themselves and properly reported any interest, continuing this oversight until the loan is fully repaid.

A case of acquiring a high-priced apartment without a loan but illegally evading gift tax by receiving covert support for the sale proceeds of overseas stocks from the father. National Tax Service

The National Tax Service has also selected as targets for investigation those suspected of tax evasion who have acquired and are holding multiple homes, not for actual residence but for capital gains, by mobilizing funds far exceeding their income or assets. For speculative multi-home acquisitions suspected of using illicit funds, the agency plans to examine not only the source of funds at the time of acquisition, but also tax filings, asset increases, intra-family financial transfers, and the overall process of wealth accumulation and fund flows. In particular, the agency will thoroughly investigate whether assets were accumulated through illegal means.

Individuals who have acquired ultra-high-priced homes valued at 3 billion won or more are also subject to investigation. Because such transactions involve complex funding structures and large sums of money, there is a high risk of income omission, illegal gifts, and other irregular financial arrangements. As a result, the National Tax Service determined that a more thorough review of the source of funds and the process of wealth accumulation is necessary. Accordingly, the agency has been conducting comprehensive verification of ultra-high-priced homes valued at 3 billion won or more since October of last year.

Director Oh stated, "Attempts to evade taxes using expedient methods such as disguised gifts and indirect transactions, which are raising concerns with the end of the multi-homeowner heavy taxation grace period, will be detected without exception. We will impose additional punitive taxes (40%) to eliminate any incentive to evade taxes at the source." He added, "Those who have misappropriated business loans to purchase high-priced apartments will be given an opportunity to voluntarily rectify the situation in the first half of the year, followed by a comprehensive review in the second half. We will thoroughly verify not only tax evasion resulting from the wrongful use of loans, but also possible evasion throughout the entire business entity."

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