Intensive Tax Probes into Multi-Home Landlords in Gangnam 3 Districts and Han River Belt over 280 Billion Won in Suspected Evasion

[The Financial News] Landlord A, who runs a residential leasing business, owns eight high-priced apartments in Gaepo in Gangnam and Jamsil in Songpa, Seoul, as well as 19 more apartments nationwide, which he rents out. However, A used the lump-sum key money (jeonse deposits) received from tenants to lend funds to others, but failed to report the resulting interest income. In addition, he set up another corporation for housing rental and sales, and reported private expenses such as overseas travel for his family and luxury goods purchases as corporate expenses.


According to the National Tax Service (NTS) on the 30th, it is launching intensive tax investigations into multi-home landlords like A who concealed rental income and claimed private or unjustified expenses, as well as companies that rented out apartments using false discount-sale advertisements and then sold them at high prices.
Residential landlords who meet certain statutory requirements can receive various tax benefits, including reductions in Capital Gains Tax, Comprehensive Real Estate Holding Tax, Acquisition Tax, and Property Tax. However, the NTS has found that some multi-home landlords enjoyed these benefits while underreporting rental income or inflating deductible expenses, thereby evading taxes they were obligated to pay.
The current investigation targets a total of 15 entities: seven multi-home landlords who own at least five apartments in Seoul, including the Gangnam 3 Districts and the Han River Belt; five corporate-style residential leasing businesses that own at least 100 apartment units; and three firms that leased apartments through false advertising and then sold them at high prices. The total amount suspected of tax evasion by these entities is estimated at about 280 billion won.
The 15 entities under investigation collectively own 3,141 rental apartment units, with an officially assessed value of 955.8 billion won. Of these, 1,850 units are located in the Seoul metropolitan area and 1,291 units are in other regions. In particular, 324 rental units are in the Gangnam 3 Districts and the Han River Belt, with an assessed value of 159.5 billion won. The most expensive rental apartment by official valuation is in the Apgujeong Hyundai Apartment Complex in Apgujeong-dong, Gangnam District, at 5.8 billion won.
In another case similar to A, landlord B owns around 200 apartments in Seoul and Gyeonggi Province. Exploiting the fact that his counterparties were ordinary individuals rather than business operators, he failed to report rental income from about 40 of those units. B also improperly claimed interior renovation costs for rental apartments as purchase expenses for another business unrelated to housing rentals.
Ahn Deok-su, Director General for Tax Investigation, National Tax Service, stated, "The NTS will continue to scrutinize multi-home landlords who receive tax reductions through various incentives yet avoid their tax burden by using irregular methods to evade taxes."

syj@fnnews.com Seo Young-jun Reporter