Lee & Ko
Can anyone (including foreigners) own and occupy real estate in your jurisdiction (including shares in property owning companies)? Are there any restrictions?
Foreigners can acquire real estate in South Korea subject to reporting in accordance with the ACT ON REPORT ON REAL ESTATE TRANSACTIONS, ETC. However, foreigners who intend to acquire property located in certain zones including military facility protection zones, designated cultural heritage protection zones, ecological and scenery conservation areas, etc. shall obtain government permission before entering relevant contracts. As the acquisition procedure differs depending on whether the land is subject to reporting or subject to permission, special attention is required. Furthermore, in cases where foreigners indirectly acquire real estate by owning 10% or more of the voting shares of a property-owning company established in South Korea, prior notification/registration in accordance with the Foreign Investment Promotion Act is required.
Are there restrictions on lending for the purchase of real estate by foreign companies? If so briefly give an outline?
There are no restrictions on lending for the purchase of real estate by foreign companies.
Buying
Please provide a short summary of the fees and costs (including tax) relating to buying real estate in your jurisdiction.
Taxes imposed when purchasing real estate include acquisition tax (1% ~ 4% of the acquisition price, depending on the cause of acquisition, amount of acquisition price and type of the property) and special rural development tax and local education tax as a form of surtax on acquisition tax. Also, stamp tax and registration fee shall be charged for the registration of real estate. If the seller falls under “entrepreneur” pursuant to the VALUE-ADDED TAX ACT, value-added tax may be imposed on the applicable building (land is exempted from value-added tax).
Owning
Are there taxes applicable to owning real estate and can the burden of the taxes be passed to someone else (e.g. a tenant or an occupier - not being the owner
Taxes applicable to owning real estate include a property tax of 0.1 ~ 0.5% of the value of real estate depending on the type of real estate, and 20% of such property tax is levied in the name of local education tax. If the owned real estate exceeds a certain size (generally KRW 900 million for housing (KRW 1,200 million for sole property owners), KRW 500 million for land), a comprehensive real estate holding tax (0.5% ~ 5.0%), and special rural development tax (20% of comprehensive real estate holding tax) are additionally imposed. However, it is possible to pass on the tax to a tenant or occupant by agreement between the parties.
Tax Breaks
Are there tax breaks or other incentives for foreigners to buy real estate in your jurisdiction? If so, what are they?
In cases where foreign capital-invested companies (companies established in Korea by foreigners under the FOREIGN INVESTMENT PROMOTION ACT) engaging in the industry support services business or high-technology business as prescribed by law acquire real estate, or in cases where foreign capital-invested companies moving into foreign investment zones (meaning the zones appointed and announced under the FOREIGN INVESTMENT PROMOTION ACT), the acquisition tax and property tax may be reduced. Further, when foreign capital-invested companies receive permission for constructing buildings for business purposes or register real estate for business purposes, they may be given benefits regarding some costs.
How is the ownership of Real Estate evidenced in your jurisdiction?
In South Korea, ownership of real estate is transferred by registering in the registry and ownership of real estate is evidenced by such registration. Even if a real estate sales contract has been executed and full payment been made, ownership of such real estate cannot be acquired unless registration has been made.
Is it possible to keep the identity of owners of real estate confidential in your jurisdiction?
The registries of real estates are public in South Korea and personal information of the person/entity holding property rights are included in the real estate registry. There is no special institutional mechanism that precludes disclosure thereof. [Provided, in cases where real estate is acquired through an investment trust fund without legal personality, it can be difficult to identify the beneficial owner because the trustee of the fund (typically a bank) becomes the registered titleholder, and the registry itself does not disclose information about the fund or that the trustee holds the real estate in the capacity of the fund’s trustee.]