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Over-Speculation Designation May Increase Tax Burden, Hinder Lot Resale Rights

Over-Speculation Designation May Increase Tax Burden, Hinder Lot Resale Rights

Posted July. 11, 2004 22:11,   

한국어

Yeongi county and Gongju city in South-Chungcheong province, which have been confirmed as sites for a future administrative capital, and four neighboring areas, including Nonsan city and Gyerong city, will be designated as over-speculated districts in the near future.

In addition to Gongju city, already designated a housing speculation area, Yeongi county, Nonsan city, Gyerong city will be pushed to receive the same designation.

It is expected that this regulation will result in increasing inconveniences and a loss of means for actual land purchasers or local residents, because a transfer income tax will be imposed based on the actual purchase price, which will cause a larger tax burden.

The new administrative capital construction promotion committee announced on July 11 that “signs of increasing speculation are being observed around Yeongi county, Gongju city and neighboring areas after we announced the result of the evaluation of the proposed sites.” He added, “We will come up with relative measures to be taken after we hold an ‘anti-real estate speculation in proposed sites conference’ on the afternoon of July 12.”

The committee will request the Minister of Construction and Transportation to designate four areas, including Yeongi county, Gongju city, Nonsan city and Gyerong city, as over-speculated districts. For Yeongi county, Nonsan city, and Gyerong city, the committee is also set to ask for designations as housing speculation areas.

The committee will also investigate disguised transfers to proposed sites, excessive property purchasers, and the right of apartment resellers to sell in lots. It will prosecute offenders and even delve into where monies come from, if necessary.

The reselling of rights to sell in lots is prohibited from the point of acquisition until the transfer of ownership registration occurs in over-speculated areas.

A transfer income tax will be imposed based on an actual purchase price instead of a tax standard value, in housing-speculation areas. If imposed based on an actual purchase price, a transfer income tax will increase by almost 20 percent, since a standard tax value is about 80 percent of an actual purchase price.

“It seemed like an appropriate measure to discourage speculation”, said Lim Ye-chul, head of a licensed real estate agency in Chochiwon, Yeongi county, South-Chungcheong province, and added, “It might be a little late, however, because speculators from other areas have already completed their deals for some sold apartments”

Involved municipalities, however, are opposed to this measure, questioning whether the areas need designation as over-speculated areas.

“The phenomenon is not that serious except for some apartments in Yeongi county, according to our investigation into involved municipalities,” said Kim Chang-hun, housing department chief at the Choongnam provincial office, and added, “It is expected that the designations as over-speculated areas will contract the construction economy, be followed by recess of local economies, and become a detriment to actual buyers.



Kwang-Hyun Kim Myung-Hun Jee kkh@donga.com mhjee@donga.com