To prevent real estate speculation by foreigners, the government will expand the obligation for foreigners to report residency status and other details, and require submission of a funding plan that includes overseas financing details.
The Ministry of Land, Infrastructure and Transport said on the 9th that it revised the Enforcement Decree and Enforcement Rule of the Real Estate Transaction Reporting Act to strengthen real estate transaction reporting and will enforce them starting on the 10th.
First, if a foreigner enters into a transaction contract on or after the 10th to purchase real estate in Korea, the person must report residency status (visa type) and address or whether the person has resided for at least 183 days, which previously were not required. This is a residency qualification requirement for recognizing tax liability under the Income Tax Act and other laws.
In addition, regardless of whether a person is domestic or foreign, if a person obtains land transaction permission and enters into a dwellings transaction contract on or after the 10th, the person must submit a funding plan and supporting documents for it—documents that previously were not required—when filing the transaction report.
Overseas financing details such as overseas deposits, overseas loans, and names of overseas financial institutions have been added to the funding plan report, and the category for other funding sources will include not only proceeds from stock and bond sales but also proceeds from virtual currency sales.
Regardless of nationality or whether the area requires land transaction permission, if a person enters into a real estate sales contract on or after the 10th, the person must attach documents proving payment of the deposit—such as the sales contract and receipt for the deposit—when filing the transaction report.
The Ministry of Land, Infrastructure and Transport conducted a planned investigation last year to crack down on illegal acts by foreigners in the real estate market and detected a total of 416 suspected violations, which it referred to relevant agencies including the Korea Customs Service, the Ministry of Justice, and the Korean National Police Agency. Specifically, there were 326 dwellings, 79 officetels, and 11 land cases.
Starting in Mar., authorities will conduct joint inspections with local governments on compliance with the actual residency requirement in land transaction permission zones, and beginning in Aug., they will launch a planned investigation into abnormal transactions to check for illegal inflows of overseas funds, actively responding to illegal real estate activities.
Kim Ei-tak, first vice minister of the Ministry of Land, Infrastructure and Transport, said, "With the implementation of this amendment to the Real Estate Transaction Reporting Act, we have established a foundation to more closely scrutinize the inflow of illegal funds and expedient transactions," and added, "We will continue to respond strictly to various types of illegal real estate activities and, when necessary, pursue institutional improvements in parallel to establish an order in the real estate market that protects end users."