Buyers Should Report Their Capital Source When Buying Land from the Land Transaction Zone

Beginning next March, if one wants to purchase land in a zone where land transactions are permitted, he or she will have to report their own capital account and procurement process to the local government.

As of December 14, the area where land transactions are permitted totals 6.816 billion pyeong, 22.55 percent of all Korean land.

The Ministry of Construction and Transportation (MOCT) will give advance notice of the Land Plan Ordinance and the revised enforcement regulations on December 15.

The revised bill mandates a person wishing to buy a land in the zone for land transactions to divide his or her source of funds into their own capital before purchasing land (in the form of deposits in financial institutions, land compensation, stock and bond loan) and borrowing money (in the form of loans from financial institutions and personal debt), and report their fund procurement plans to their local government.

The bill was revised to make people reveal the kind of money people use to purchase land.

Regarding the new bill, some people and businesses complain, saying, “Though it’s necessary to regulate speculation, the government should at least guarantee a person’s financial secrets.”

“A,” who is running a medium-sized construction company, decided to purchase land for pension purposes in Gapyeong-gun, Gyeonggi Province, a zone where land transactions are permitted, next January, earlier than originally planned.

“A” said, “I don’t have any particular problems with money, but I decided to purchase the land earlier on because once my financial accounts are revealed, I could be subject to a tax investigation. If the conditions are not right for me, I could withdraw the pension business plan.”

The MOCT noted that it won’t make a person reveal the bank account numbers containing their money in the plan, and that it would consider such a move a violation of privacy.

However, omni-directional tax investigations into land buyers will be possible as most of the materials collected through the procurement plan are expected be handed to the National Tax Service (NTS).

Seung-Heon Lee ddr@donga.com