City Park’s Preconstruction Buyers Face Tax Audit for Underreporting “Premiums”

Buyers of preconstruction units at Yongsan City Park Housing Commercial Complex underreported the premiums they paid to seal the contracts to the ward office by more than 50 percent.

The National Tax Service (NTS) plans to launch an investigation into whether or not they evaded taxes as soon as they report the Yongsan buyers’ report of their estimates of capital gain taxes to a regional office.

In a speech at a 21st Century Female CEOs’ League meeting, Lee Yong-seop, the NTS commissioner, said, “We will start intensive investigations of preconstruction buyers of City Park, where there is a speculative trend.”

Among the 760 preconstruction buyers of City Park, a total of 93 -- 72 buyers of apartment units and 21 buyers of “officetel” units -- sold their preconstruction purchases and submitted a notarized copy of their contracts to the district office, said the NTS. Among them, 86 have completed the transfer of ownership.

“The contracts indicated that only four people paid premiums that matched the going rates,” Kim Cheolmin, the director of the NTS’s investigation Bureau 3, said. “More than 50 percent of them underreported premiums by more than 50 percent.” He added, “If they report taxes based on the contracts, most of them will face tax audits.”

The NTS estimated the price of a 44-square-meter unit, City Park’s smallest, at 150 million won, and the price of a 90-square-meter unit, its largest, at one billion won.

However, about 38 buyers who underreported premiums as much as 50 percent and 38 who underreported them by 60 percent through 90 percent will face tax audit. The NTS plans to maintain the similar level of inspection on Doosan Weave the State complex in Buchoen, which started to solicit buyers on April 19 and reconstruction apartment units in the south of Seoul.

Ji-Wan Cha cha@donga.com