Gyeonggi Province Uncovers 567 Cases of Multi-Property Owners Underreporting Acquisition Tax...Recovers Over 4.5 Billion Won

[Suwon Ilbo=Reporter Park No-hoon] Gyeonggi Province announced on the 14th that it conducted a propriety investigation on acquisition tax reports for 16,463 properties acquired by multi-property owners from October through December 4, uncovering 567 cases related to exemption violations and underreporting, and recovered approximately 4.5 billion won.

According to the local tax law newly implemented this year, those who acquire four or more properties as a single household are subject to the general tax rate (4%) rather than the existing acquisition tax rate (1-3%) in property transactions.

The province explained that it conducted a comprehensive investigation into whether multi-property owners underreported acquisition taxes by applying the existing tax rate, whether they violated the rental obligation period for rental housing previously granted acquisition tax exemptions, and whether they failed to report acquisition taxes on inherited properties.

The detected violations include ▲232 cases of underreported acquisition tax by multi-property owners with four or more properties as a single household (recovery amount of 2.3 billion won) ▲72 cases of violation of rental purposes, including self-use after receiving acquisition tax exemptions for rental housing (recovery amount of 500 million won) ▲74 cases of underreported acquisition tax on properties acquired through co-ownership shares (recovery amount of 500 million won) ▲153 cases of unreported acquisition tax when inheritance occurs after a purchase contract is signed (recovery amount of 1 billion won) ▲36 cases of unreported acquisition tax from inherited property re-agreed division (recovery amount of 200 million won), among others.

In a major case, Mr. A, a multi-property owner with approximately 70 residential units, reported as a three-property owner on the Weit-X (local tax internet payment system) after purchasing an apartment in Suwon, improperly paying less acquisition tax. Upon detection, an additional 19 million won in acquisition tax is scheduled to be imposed.

Mr. B, a residential lease business operator, initially received allocation of an officetel of 60 square meters or less in Bucheon City and was granted acquisition tax exemption for rental purposes. However, it was revealed that he resided there directly during the rental obligation period, and acquisition tax of approximately 11 million won including surcharges is scheduled to be recovered.

Mr. C purchased a 1/2 share of a property valued at 1 billion won in Siheung City but failed to report the acquisition tax rate based on the entire property value, resulting in an additional 16 million won in acquisition tax.

When acquiring property through a share, the acquisition tax rate is applied based on the entire property value, so it must be reported and paid accordingly. If the acquisition tax rate is reported lower based on the share price, it becomes subject to recovery.

Mr. D, the heir, received the balance from the property buyer and registered the transfer of ownership after the deceased, Mr. E, passed away following the conclusion of a purchase contract for a property in Namyangju.

Despite having a tax obligation to report and pay acquisition tax due to inheritance before the transfer of ownership occurred, he failed to do so, resulting in an additional 13 million won in acquisition tax to be paid.

Choi Won-sam, Head of Tax Justice Division at Gyeonggi Province, stated, "This planned investigation into acquisition tax on properties had a secondary effect of contributing to housing market stabilization beyond uncovering omitted tax sources, including preventing exemption violations and underreporting by multi-property owners and residential lease business operators. As the tax rate for multi-property owners is being strengthened, we will continue to supervise to ensure that unfair practices do not occur in related tax payments."