Real Estate Tax Evasion Cases Surge: Nearly 20,000 Cases Investigated in Five Years
SEOUL, Sept. 18, 2024 – South Korean tax authorities have investigated over 20,000 cases of real estate tax evasion over the past five years, recovering 1.6 trillion won in unpaid taxes. A significant portion of these cases-90%-involved individuals improperly avoiding capital gains taxes by acquiring apartments from their parents at significantly undervalued prices, a practice often referred to as a “short donation.”
According to data submitted to the National Tax Service and reviewed by National Assembly Planning and Finance Committee member Jin Sung-jun, the Ministry of Land, Infrastructure and Transport and local governments flagged suspicious transactions. The IRS later confirmed tax evasion in approximately half of these cases.
The most common form of evasion accounted for 86.3% of all cases, involving either underreporting the sale price or utilizing family members to facilitate short-term ownership transfers at artificially low values. Other detected schemes included 2,604 cases involving unclear funding sources for expensive property purchases, resulting in 22.12 billion won in collected taxes, and 311 cases of fraudulent information or land splitting.
Seoul accounted for the largest share of investigations, with 8,363 cases resulting in 60.87 billion won in recovered taxes – representing four out of every ten cases nationwide. Busan followed with 3,928 cases (282.1 billion won), Incheon with 2,589 cases (184.1 billion won), and an additional 2,120 cases (142.6 billion won) were identified elsewhere.
“Real estate tax evasion, such as short donation, is a serious problem of deepening wealth inheritance and adding polarization of our society,” stated Representative Jin.
