Ruling Party Says Lee Sold Home as Prices Rose; Opposition Says Interest-Free Loans Between Parents and Children Invite Tax Audit

[Financial News] Controversy continues over President Lee Jae Myung's sale of a Bundang apartment that had a mortgage set at 1.77 billion won. The ruling camp has highlighted the fact that he sold the property even though redevelopment would almost certainly push prices higher, while the opposition says a large interest-free mortgage should be subject to a tax audit.
Kang Jun-hyun, chief spokesperson for the ruling Democratic Party of Korea (DPK), told reporters at the National Assembly of the Republic of Korea on the 22nd that "if the president had kept the home, he could have chosen to retain his status as a redevelopment association member and enjoy the sales rights and profits," adding that "given the stage at which redevelopment is now moving forward in earnest, this sale was not a deal to pocket gains, but a decision to give up the association member's sales rights on his own."
The point, he said, is that Lee gave up the gains from redevelopment. That matches the explanation the Blue House released the previous day. In a media notice, the Blue House stressed that "the presidential residence was a single home where the president and his wife had lived for 28 years, and it was sold at a price below market value, giving up the redevelopment gains in order to show a commitment to normalizing the real estate market."
However, there has been little rebuttal to the criticism that he rushed the sale by placing a mortgage on the property in order to secure a fair price before the deadline for transferring redevelopment association membership. In a fact-check broadcast on the Blue House's online communication YouTube channel, Ahn Gwi-ryeong only explained, alongside Han Mungo, a professor in the real estate department at Seoul Digital University (SDU), that the mortgage was set to facilitate the transfer of association membership.
Professor Han said, "People do not buy an apartment in order to settle in cash without obtaining association membership. To accommodate that, the president completed the registration in advance and set a mortgage for the remaining balance," adding that "it is accurate to say that the president led by example and sold the home while even considering the buyer's convenience, without calculating that prices would rise further through redevelopment."
The main opposition People Power Party says the interest-free mortgage itself is problematic because it amounts to a way around lending regulations. The fact that no interest would be charged despite the 1.77 billion won maximum claim amount was disclosed by Ahn Gwi-ryeong on the YouTube broadcast.
People Power Party leader Jang Dong-hyuk said, "Even between parents and children, interest-free loans are treated as abnormal transactions and subject to a tax audit. If this is allowed, gifts disguised as loans could become limitless," adding that "the National Tax Service announced just two months ago the types of cases subject to tax audits, including 'cash-rich individuals not affected by lending regulations' and 'people with excessive private debt.' That is exactly President Lee."
He also questioned the National Tax Service's decision not to audit a recent Gangnam listing that advertised a so-called "600 million won homeowner loan," saying, "Whether it was because they knew about it or because of outside pressure, this is an unusual presidential free pass. From now on, if someone says, 'The president did it too,' what will the National Tax Service say?"
In response to the opposition's claim that it would conduct a tax audit, the National Tax Service told this paper that in real estate transfer transactions, there is no tax issue as long as the seller properly reports and pays capital gains tax.
Seoul Metropolitan City Mayor Oh Se-hoon also joined the criticism. He said, "The president had a way, but ordinary homeowners who are limited by a 200 million won loan cap have no way out."
Meanwhile, Lee will personally chair a major real estate forum on the 23rd. The meeting is expected to cover lending restrictions, tax reform, and housing supply, and attention is focused on whether he will also address the controversy over the sale of his home.
[email protected] Kim Yun-ho Reporter