Falsely Transferred Property to Avoid 'Multi-Homeowner Tax Surcharge'... Capital Gains Tax Levied, Increased Tenfold from 60 Million to 600 Million Won

National Tax Service Investigates 104 Suspects Since October, Recovers 31.8 Billion Won

Real Estate Tax Evasion Totals 73.1 Billion Won

Six Referred for Prosecution, Four Fined for Tax Evasion

Individual "Gap," who owns Apartment A in a metropolitan city valued at approximately 300 million won and Single-Family House B valued at around 1.5 billion won, falsely transferred ownership of Apartment A to her husband's friend "Eul" before selling Single-Family House B, which had high capital gains. The transaction was a fabricated sale designed to apply the one-household, one-home exemption when transferring Single-Family House B for 1.5 billion won, thereby reducing capital gains tax. At the time, Gap paid 60 million won in capital gains tax.

The National Tax Service (NTS), after reviewing the financial flows related to the transaction, found that Gap manipulated financial documents by clandestinely delivering the necessary transaction funds to her husband's friend through other friends and company colleagues. This was intended to make it appear as though the buyer, Eul, had genuinely acquired Apartment A. The NTS confirmed that the multi-homeowner Gap had engaged in a sham transaction to present herself as a one-homeowner at the point of selling Single-Family House B and illegitimately received the capital gains tax exemption. The NTS subsequently collected an additional 600 million won in capital gains tax, increasing the tax tenfold. Furthermore, the NTS filed criminal tax evasion charges with the prosecution against Gap and her husband’s friend for their fraudulent actions and collaboration in tax evasion. The false registry of Apartment A was also reported to the relevant local government as a violation of the Real Name Real Estate Act.

On July 7, the NTS announced that, since launching a concurrent investigation last October targeting 104 individuals suspected of high-end residential real estate tax evasion, a total of 31.8 billion won in taxes had been collected. The total scale of evaded or undeclared funds by these individuals amounts to 73.1 billion won.

The investigation uncovered cases where individuals acquired expensive apartments using funds secretly received from their parents, thereby evading gift tax. In addition, numerous cases were detected in which multi-homeowners fraudulently transferred ownership of low-priced homes to relatives or acquaintances, and then sold high-capital-gain properties, unlawfully obtaining the one-household, one-home capital gains tax exemption or avoiding higher capital gains tax rates by means of sham transactions.

In one case, individual "C" in his 40s, who was unemployed, resided in a luxury riverside apartment in Gangnam with a monthly rent exceeding 7 million won. He received approximately 2 billion won in funds from his parents over time—including rent, stock investment money, and living expenses—without reporting the gift, and was subsequently assessed 1.3 billion won in additional gift tax.

Cases where spouses purchased luxury apartments using corporate funds were also detected. Individual "D" in his 50s acquired several real estate assets, including a luxury reconstruction-ready apartment in the Gangnam area valued at approximately 4 billion won. The NTS discovered that "D" had received a 2 billion won gift from his spouse, who is the head of a livestock products company. The spouse secretly gifted 2 billion won to "D" from approximately 3 billion won in slush funds generated through unreported sales to business partners. As a result, the NTS imposed a total of 3.1 billion won in additional taxes, which included corporate tax for unreported sales at the livestock wholesale company and gift tax related to real estate acquisition funds of "D."

A case where corporate funds, which were omitted from sales, were embezzled and used as funds to purchase a high-priced apartment for the spouse. National Tax Service

Oh Sanghoon, Director of Asset Taxation at the NTS, stated, "The NTS is not only cracking down on capital gains and gift tax evasion discovered during real estate transactions, but we have also expanded our investigations to cover businesses when the source of funds comes from underreported business income or the embezzlement of corporate funds, ensuring complete collection of omitted corporate and income taxes. For cases where tax evasion was committed through fraud or other illegitimate means, we imposed a penalty tax for substantial underreporting, which amounts to about 40%."

Additionally, in accordance with the Punishment of Tax Offenses Act, the NTS not only collected back taxes but also took appropriate enforcement measures, referring 6 individuals to the prosecution and issuing penalty notifications amounting to 700 million won for 4 others. Not only the main targets but also accomplices proven to have engaged in wrongdoing were subject to these measures. Individuals who evade taxes through fraudulent acts may face up to two years in prison or fines of up to twice the evaded tax amount. For 20 individuals found to have violated the Real Name Real Estate Act, such as by using proxy ownership, the NTS notified the relevant local governments to pursue surcharges and criminal penalties.

Director Oh stated, "As there are concerns about an increase in gift transactions by multi-homeowners after the resumption of higher capital gains tax rates for such individuals, we will focus our audits on gifts involving multi-homeowners, examining whether gifted assets are undervalued or if gift taxes are being paid on behalf of others. In addition, we will closely monitor family transactions intended to evade taxes—such as parents transferring apartments to their children at prices significantly below market value or disguising gifts as sales."

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