Affordable housing continues to be a concern, not just for those looking for a place to live, but also policy makers searching for solutions.
It’s getting new attention now, notably in New York City where those vying to be the next mayor are arguing over ways to ease the Big Apple’s housing crunch.
But housing shortages and rising residential costs have been around, and everywhere, for ages.
Just in my lifetime, my young parents were struggling to find affordable housing for their newly increased family of three (me!) in a West Texas oil boom town.
When a builder announced a new project, as soon as my dad headed to his job at the rig, my mother went to the sales office and stood in line to nab one of the small, cinderblock, swamp-cooler topped, but affordable structures before construction had even started on a single house. In case you're wondering, she didn't have to tote me along; my grandparents were able to babysit.
I heard this story every time I complained about where we lived. Message received, Mom. And I lived in that house, mostly happily except when the cooling unit acted up, until I went off to college and then set out on my own.
Crackdown on real estate speculators: However, one thing about housing supply and affordability has changed in these past [not specifying how many] decades.
Nowadays real estate speculators are helping limit housing supply and driving up the prices of available homes.
It’s a worldwide issue. It’s also one that can lead to legal troubles, including tax evasion.
That’s the case in South Korea, where officials recently tightened housing regulations to curb speculative housing demand in the country’s capital region.
Those efforts, which focused on real estate deals in some of Seoul’s pricier neighborhoods, also led to the discovery of apartment-linked tax evasion that amounted to millions in tax losses.
And yes, some buyers of those high-priced properties are from the United States.
Real estate related tax evasion: Officials with South Korea’s National Tax Service (NTS) said transaction data from 2022 through this April revealed 49 cases of alleged tax evasion.
They included 16 involving illicit gift schemes, 20 tied to undeclared income, and 13 related to unreported rental income, according to a report in the Korean Herald via the Asian News Network.
The accused tax cheats collectively owned 230 apartments, according to reports, with 70 percent concentrated in Seoul’s wealthiest districts. Some properties were valued at more than ₩10 billion Korean won, or $7.2 million in U.S. dollars.
As for the uncollected taxes connected to the real estate purchases, NTS officials estimate South Korea’s total revenue losses from the cases range from ₩200 billion to ₩300 billion, or $144 million to nearly $216 million in American currency.
High-priced apartments owned by foreigners: Foreign buyers also got extra scrutiny, especially in the NTS’ targeted review of high-priced apartment purchases.
These properties often are purchased by non-citizens, since many times they have overseas accounts and facilities that can help them circumvent the limits faced by South Korean buyers.
The NTS investigation found purchasers came from 12 countries, with about 40 percent identified as ethnic Koreans. Chinese and American nationals accounted for more than two-thirds of the total buyers.
In the three most expensive districts in southern Seoul, data show that four out of five foreign owners did not reside in their units, suggesting purchases were made for investment purposes.
The NTS also noted that for the real estate deals that were part of its three-year-plus investigation, foreign nationals purchased 26,244 apartments at a cost of 7.97 trillion won (more than $5.68 billion U.S.), with both the number and value of non-resident transactions on the rise.
“We will apply the same level of scrutiny to foreign nationals acquiring apartments in Korea as we do to domestic buyers,” said Min Joo-won, NTS director of investigation, during a press briefing on the investigation. “We are committed to fully tracing the source of funds and imposing proper taxes using all available tools, including financial account tracking and forensic analysis.”
The agency said it would prioritize cases involving funds transferred through “expedient means,” such as gifts routed through untraceable overseas accounts.
South Korean tax officials also pledged to work with foreign tax authorities to ensure proper investigation and enforcement.
“If the source of funds appears to originate overseas or raises money laundering concerns, we will request information from the relevant authorities to fully trace the funds and impose appropriate taxes,” Min said.
Tax Felon Friday: U.S. citizens’ alleged involvement in South Korea’s real estate/tax evasion investigation qualifies this case for inclusion on the ol’ blog’s special Tax Felon Friday page.
There you’ll find posts on all sorts of tax miscreants, domestic and international, ranging from those who are just charged and/or indicted to those convicted and/or confessed and sentenced.
If you want more tax crime posts, notably those that were published long before I gave them a special end-of-week feature, you can peruse, what else, the tax crimes category. You'll find this post at the top of that collection right now, so just scroll down for more.
Taxes and real estate: Finally, this post also is a reminder that your tax data is critical in connection with domestic real estate transactions.
Lenders want to see your tax filings to ensure that you made/make enough to cover your housing loan.
Also, it’s a good reminder to not cheat on your taxes, regardless of where you call home.
U.S. citizens living abroad still must file a tax return (but not until June 15) with the Internal Revenue Service each year. Be sure to report on that Form 1040 all your income, including international and U.S. earnings
You also might find these items of interest:
- ‘Bitcoin Jesus’ fighting extradition to face U.S. tax charges
- Treasury targets Mexican timeshare scams that fund cartel
- IRS announces 2025 tax year allowances for international locales with expensive housing
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