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 into relevant contracts. As the acquisition procedure differs depending on whether the land is subject to reporting or subject to permission, special attention 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 particular restrictions on lending for the purchase of real estate by foreign companies.
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).
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 600 million KRW for housing, 500 million KRW for land), a comprehensive real estate holding tax (0.5~2.0% ) 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.
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 such transfer with the court registry and ownership of real estate is evidenced by such registration. Even if a real estate sale and purchase contract was executed and the purchase price was fully paid, ownership may not be acquired unless registration has been made.
Is it possible to keep the identity of owners of real estate confidential in your jurisdiction?
The real estate registry is available for public perusal in South Korea and the identity of the person/entity holding property rights is stated in the real estate registry. There is no special institutional mechanism that precludes disclosure thereof.