Gov’t targets real estate tax cheatsThe government has discovered over 24,000 real estate sales in which prices were allegedly falsified to avoid higher capital gains taxes or inheritance was unreported to avoid estate taxes.
The transactions were concentrated in areas of Seoul and Sejong where real estate speculation is high, and involved over 72,000 individuals.
The Ministry of Land, Infrastructure and Transport conducted an investigation between September and last month during a period when some popular neighborhoods, especially in affluent districts of southern Seoul, continued to see apartment prices rising despite regulations to curb what it views as an overheated market.
The ministry on Tuesday issued a combined fine of 619 million won ($575,670) to 293 people for falsifying sales documents and lying about how they financed their apartment purchase.
Under a new regulation enacted in September, people buying real estate in areas that the government has deemed “hot” have to provide information on how they are financing the purchase, including cash, loans and profit from another real estate sale.
Another 269 people evaded taxes by covering up their inheritance or reporting a lower price to the National Tax Service. In one case, the apartment transaction was between a mother and daughter, but they pretended that they weren’t related in order to avoid inheritance tax. More than 1,100 others were reported to police on suspicions of illegal practices.
Through a monitoring system, the government has referred the 22,852 other cases involving 70,614 people to respective local governments for further investigation.
The ministry said it mainly targeted real estate transactions in areas that have seen a sharp increase in value.
Apartments that sold for more than 900 million won and deals involving people 30 and younger were of particular focus, because younger people typically don’t have the financial means to buy such expensive homes, the ministry said.
A ministry official said it gave 4,058 individuals in 1,191 cases the chance to turn in documents that would explain their defense of illegal practices like falsifying the value of an apartment or covering up inheritance.
In one case, a buyer confessed to underreporting a 900 million won purchase and was exempt from a 30 million won fine thanks to a leniency program that does not penalize voluntary reports of illegal practices.
However, the seller was slapped with a 30 million won fine and faces an audit from the tax authority for dodging capital gains taxes.
BY LEE HO-JEONG [firstname.lastname@example.org]