With the reopening of the residential real estate market in the Seoul metropolitan area due to the government’s deregulation, there have been a number of suspected cases of ‘down trading’. In order to save on transfer taxes, the transaction price is declared lower than the actual transaction price.
According to a frontline brokerage firm on the 5th, a condominium ticket for ‘Sanseong Station Jaipurgio’ in Sujeong-gu, Seongnam-si, Gyeonggi-do, is being traded at a price that is about 200 million won cheaper than that of a member’s tenancy, raising suspicions of a down-trading case.
At the time of the complex’s launch, Seongnam City was a speculative overheating zone, and the sale of apartments for general sale was restricted until the title was registered, and for special supply for five years. However, as the regulated area was lifted from the 1-3 measures earlier this year, it became possible to sell the sales rights from April 7.
According to the Ministry of Land, Infrastructure, and Transport’s actual transaction prices for apartments, a 59-square-meter condominium unit dedicated to the complex was sold for KRW 550.8 million to KRW 590 million in April and May. This is about 200 million won cheaper compared to the actual transaction price of 750 million to 795 million won for the same area in the same period.
The exclusive 74㎡ condominium was also sold for between 651 million and 729.6 million won, up to 250 million won less than the actual transaction price of 900 million won. The industry believes that there is no reason for a difference of more than 200 million won, as member tenancy and condominium rights differ in some options and are mostly similar.
Frontline brokerages are suspicious of ‘down trading’. Although the restriction on the exclusive sale of condominium rights has been lifted, the capital gains tax has not yet been relaxed, so the burden is heavy. Currently, if you sell a condominium within one year from the date of winning the subscription, you have to pay 77% of the market price difference, and if you sell after one year, you have to pay 66% in transfer tax (including local income tax).
For this reason, the sale price is deliberately lowered to reduce the market price difference for the seller, and the buyer pays the transfer tax instead of buying at a lower price토토사이트, which is called a ‘down trade’. According to the Real Estate Transaction Reporting Act, if the actual sale price is different from the declared amount, the transaction party must pay a penalty of 2-5% of the actual transaction price.
However, not all downward transactions are caught, and downward transactions are especially common in residential areas.
“The same situation will occur not only in Seongnam-si, but also in new apartment buildings nationwide,” said an official from A brokerage in Sinheung-dong, explaining, “It is quite rare to be caught and fined.”
“Since the downward transaction is reported as the actual transaction price, there are many buyers who think it is the market price, and confusion among buyers is intensifying,” another brokerage head said.
As the transaction of condominiums has become more active, it was found that downsizing is not only prevalent in the Seoul metropolitan area, but also nationwide. In Daegu, where a housing bubble is expected this year, a number of down transactions are reportedly taking advantage of the market downturn. Changwon City, Gyeongnam Province, also announced last month that it would conduct a detailed investigation into transactions suspected of downsizing in the sale and occupancy of new apartments in Seongsan-gu.