Pre-sale rights 'hand-off transactions' tax bomb watch out...a change in the interpretation of the tax code

The National Tax Service has warned that the tax calculation method for so-called "damage transactions," which are also used in the market for pre-sale rights, could change and face a transfer tax bomb.

' is an abbreviation of 'remaining premium' and refers to a trading transaction on the condition that the buyer bears the seller's transfer tax on behalf of the buyer.

As of the 7th, the National Tax Service said special attention is needed to prevent unexpected tax problems as the Ministry of Strategy and Finance changed its interpretation of how to calculate capital gains tax during loss transactions.

Previously, the transfer tax borne by the buyer during the loss transaction could only be calculated by adding it to the transfer price for the first time, but the changed interpretation requires that all capital gains taxes borne by the buyer be added to the transfer price.

Accordingly, the transfer tax should not be added to the value for the first time, but the transfer price should be calculated by adding all the second and third transfer taxes calculated based on this.

Accordingly, for example, if you buy the right to sell it for 1.2 billion won and sell it as a loss transaction for 1.7 billion won, the tax amount according to the existing interpretation will be 545 million won, but the tax amount according to the changed interpretation will nearly double to 966 million won.

It is three times the amount of transfer tax and local tax paid for general transactions, not loss transactions.

The IRS stressed that in the event of a "loss transaction," buyers are prone to the temptation of a so-called "down transaction" in which real estate transactions are reported lower than they actually are to reduce the burden of transfer taxes, but this is a clear violation.

If a down transaction is caught, both sellers and buyers will face disadvantages such as imposing an unfair underreporting penalty, excluding tax exemption and reduction, and imposing fines.

The National Tax Service said it will strengthen inspections of abnormal transactions such as loss of sales rights and down transactions that capitalize on the preference for new apartments.