Exempt Mandatory Reporting of Housing Transactions in Seven Dongs in Gangnam

Mandatory reporting of housing transactions, that requires paying an acquisition and registration tax according to the real price of the transaction, has been lifted for seven dongs (a “dong” is an administrative unit for a district bigger than a street, but smaller than a ward (“gu”)) in Gangnam, Seoul, including Pungnap-dong in Songpa-gu and Gil-dong in Gangdong-gu.

In addition, the period prohibiting apartment lot reselling in six speculation-ridden areas (Busan, Daegu, Gwangju, Ulsan, Changwon, and Yangsan) has been shortened from “until registration after sale” to “one year after sale.”

The Construction and Transportation Ministry announced yesterday that as of November 10, it would lift the restriction on seven dongs in Seoul that are designated as green-belts or cultural preservation areas where house price hikes are unlikely.

As a result, housing transactions in the following areas do not need to be reported in their real prices to the ward office: Pungnap-dong, Goyeo-dong, and Macheon-dong in Songpa-gu; Hail-dong, Amsa-dong (excluding Complex 1 and 2 of the Gangdong Shiyong reconstruction apartment), Gil-dong in Gangdong-gu, and Seigok-dong in Gangnam-gu.

However, housing transactions in the rest of the areas in Gangnam-gu, Songpa-gu, and Gangdong-gu, as well as in Yongsan-gu and Bundang-gu in Seongnam, and the Gyeonggi Province in Gwacheon still have to be reported in terms of their real price.

When a transaction is reported in its real price, the acquisition and the registration taxes imposed on this transaction is greater by three times or more compared to the local tax imposed based on the standard assessment.

The ministry plans to maintain the speculation-ridden areas as they are now. It, however, decided to shorten the period prohibiting apartment lot resale in six local cities including Busan. Instead, the profits made from these sales will have to be reported to the National Tax Service to be thoroughly taxed.

Such measures lifting some restrictions on real-estate transactions are seen to be the government’s effort to revive the housing market and the local housing construction industry, which have diminished significantly recently.

Kwang-Hyun Kim kkh@donga.com