Taxes to be paid by the purchaser when purchasing real estate
Acquisition tax- “Acquisition tax” is a local tax imposed by the special metropolitan city, special autonomous city, special self-governing province, metropolitan city, or Do (province) where the acquired real estate is located and is calculated by multiplying the acquisition value of real estate reported by the standard tax rate (Articles 8 of the Framework Act on Local Taxes, Articles 3, 7(1), subparagraph 1 of Article 8(1), the main clause of Article 10(1) and (2), and Article 11(1) of the Local Tax Act).
- Standard tax rate
· The standard tax rate of the acquisition tax varies depending on the cause of acquisition (Article 11 (1) of the Local Tax Act).
|
Cause of acquisition |
Standard tax rate |
|
Inheritance |
Farmland: 2.3% Anything other than farmland: 2.8% |
|
Gratuitous acquisition (other than through inheritance) |
3.5% Nonprofit business operator: 2.8% (Article 22 of the Enforcement Decree of the Local Tax Act) |
|
Original acquisition |
2.8% |
|
Other causes |
•Farmland: 3% •Anything other than farmland: 4% •House with acquisition value of not more than KRW 600 million: 1% •House with acquisition value of more than KRW 600 million and not more than KRW 900 million: Tax rate calculated according to the formula below (In this case, it is rounded off from the fifth decimal place to the fourth decimal place.) = Acquisition value of the house × 2 / KRW 300 million - 3)×1/100 •House with acquisition value of more than KRW 900 million: 3% |
- Method of report
· The purchaser shall submit the following documents within 60 days of the day on which he/she acquires the real estate either to the competent mayor or the head of local government (Gun or Gu) or through Wetax (Article 20 (1) of the Local Tax Act, Article 33 (1) of the Enforcement Decree of the Local Tax Act, and Article 9 (1) of the Enforcement Rule of the Local Tax Act).
1. Acquisition tax report (including buoys where it is intended to report on the grounds of housing acquisition)
2. A copy of a document verifying the acquisition value, date of acquisition, etc., such as a sales contract, a donation contract, a certificate of completion of a real estate transaction contract, a corporate ledger, etc
3. The following documents
① A copy of the application for reduction or exemption of local taxes in the attached Form 1 of the Enforcement Rules of the Restriction of Special Local Tax Act
② A copy of the receipt for the storage of taxpayers in Attached Form 4 of the Enforcement Rules of the Restriction of Special Local Taxation Act
③ A copy of Acqisition Tax Exemption Certificate of Attached Form 8 of the Enforcement Rules of the Restriction of Special Local Taxation Act on Acquisition Tax Exemption
④ Earned income withholding tax receipt or one copy of the certificate of income amount
Local education tax- “Local education tax” shall be imposed on persons liable to pay acquisition tax to secure the local financial resources required to finance and improve the quality of local education (Article 149, Subparagraph 1 of Article 150, Article 151 (1) 1, Article 11 (1) 7 and 8 of the Local Tax Act).
· Local education tax in cases of acquisition of real estate other than a house = [Real estate value at the time of acquisition × (acquisition tax rate-20/1000)] × 20/100 [Article 151 (1) 1 and Article 11 (1) 7 of the Local Tax Act]
· Local education tax in cases of acquisition of a house = [Real estate value at the time of acquisition × (acquisition tax rate 50/100)] × 20/100 [Article 151 (1) 1 and Article 11 (1) 8 of the Local Tax Act]
Special rural development tax- “Special rural development tax”is a tax imposed on persons who shall pay acquisition tax to secure the financial resources necessary to strengthen the competitiveness of agriculture and fisheries, expand infrastructure in the agricultural and fishing industries, and facilitate local development projects for agricultural and fishing villages (Article 1 and Subparagraph 5 of Article 3 of the Act on Special Rural Development Tax).
- For a person whose acquisition tax has been reduced or exempted, a different tax rate from that applied in general cases shall apply (Article 5 (1) 1 and 6 of the Act on Special Rural Development Tax).
· General special rural development tax: acquisition tax amount × 10/100
· Reduced and exempted special rural development tax: reduced and exempted tax amount × 20/100
· However, no special rural development tax shall be imposed on low-income residents and farming households (Subparagraph 11 of Article 4 of the Act on Special Rural Development Tax and Article 4 (4) and (5) of the Enforcement Decree of the Act on Special Rural Development Tax).
Method of paying acquisition tax, local education tax, and special rural development tax- It is necessary to visit the tax department of the relevant Si, Gun, or Gu office to obtain the acquisition tax bill; and banks receive the tax.