Tax Probe into Speculative Real Estate Investment Expanded

The tax probe in the speculative real estate investment will be expanded to the whole Capital city area from current Kangnam-ku and Seocho-ku in Seoul.

The National Tax Service announced its plan for a thorough tax investigation on those who evaded the tax after making profits from the transference of their properties by selling the apartment lots less than a year past since the purchase date during January 2000 through October 2001.

Lee Joo-Seok, the director of the Investigation Bureau of NTS, said "We have worked on the selection of the target for the tax probe based on the materials of the current apartment price and the transfer tax income for two weeks. The detail tax probe plan including the selected areas of the tax probe and the deployed number of tax collectors will be released tomorrow morning."

Mr. Lee added that "The target of this tax investigation will include some of the short-term traders of apartments but will particularly focus on those who transferred the apartment lots and the short-term traders of the reconstructed apartment complexes."

The expansion of the tax probe is intended to prevent the spread of the speculative investment area to the Kangbuk area, Kyonggi, Sungnam, Bundang, Kwancheon after the launch of the tax probe in the real estate transaction in Seoul on January 9th.

Mr. Lee hinted that the tax probe will focus on the areas in which the apartment prices surged recently, saying that "The rise and the trends in apartment prices are quite different from Seoul."

Real estate business circles are anticipating that the tax investigation of the NTS will concentrate on areas such as Yongsan, Songpa, Kangdong-Gu, or Kwancheon, where many new apartments were built and sold during January 2000 – October 2001 and consequently hiked the apartment prices.

Meanwhile, NTS will conclude the first investigation on 1074 suspects of the speculative investments in Kangnam and Seocho this month.

Kwang-Am Cheon iam@donga.com · Jae-Seong Hwang jsonhng@donga.com