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Expenses of the Property Buyer in South Korea

December 08, 2020
149

Buying property in the new market always comes with expenses you might not think about at first. But there are additional costs that require your attention. Taxation is a pretty big deal, when it comes to real estate in general. But what the size of the tax depends on in South Korea? And are you obligated to pay other duties and fees? We are going to tell you below.

To learn more about general rules and schemes of buying real estate in South Korea, read our article

Taxes

The new owner of property in South Korea must pay three taxes:

for the purchase of real estate,
for improving regional education,
for improving local agriculture and fishing.

The amount of tax on the purchase of real estate varies from 1% to 3%, depending on the value of the real estate object and its area. The tax on improving regional education is equal to 10% of the tax on housing purchases. The third tax is charged only if the real estate area exceeds 85 sq. m.

Cost of housing, Korean won	Property area	Tax on Purchase	Tax on Education	Tax on agriculture	Total
Under 600 mln	Under 85 sq.m	1,0%	0,1%	0,0%	1,1%
Under 600 mln	From 85 sq.m	1,0%	0,1%	0,2%	1,3%
From 600 to 900 mln	Under 85 sq.m	2,0%	0,2%	0,0%	2,2%
From 600 to 900 mln	From 85 sq.m	2,0%	0,2%	0,2%	2,4%
From 900 mln	Under 85 sq.m	3,0%	0,3%	0,0%	3,3%
From 900 mln	From 85 sq.m	3,0%	0,3%	0,2%	3,5%

Sourse: bizwatch.co.kr

For example. The purchase of a 59 sq.m apartment in Seongbuk-gu, a Northern district of Seoul, worth 435 million Korean won ($393,000) will incur two taxes for a total of 4,785 million Korean won, or $4,300. This is a 1% real estate purchase tax – 4,45 million Korean won ($3,650), and a 0.1% regional education tax – 435,000 Korean won ($393). The third tax is not charged, since the area of the apartment does not exceed 85 sq.m.

The total tax on an apartment of the same size, but in the South-West of Seoul, in the district of Yeongdeungpo-gu, will be 18,37 million Korean won ($16,500). The amount is higher, since the cost of the apartment is about twice as much – 835 million Korean won. Accordingly, the tax on the purchase of real estate is 2%, and the tax on regional education is 0.2%.

Districts of Seoul	Seongbuk-gu	Gangbuk-gu	Yeongdeungpo-gu	Dongjak-gu	Seocho-gu	Songpa-gu
Area	59 sq.m	114 sq.m	59 sq.m	101 sq.m	59 sq.m	121 sq.m
Cost, Korean won	435 mln	498 mln	835 mln	900 mln	1,83 bln	1,84 bln
The tax on purchase, Korean won	4,35 mln	4,98 mln	16,70 mln	18,00 mln	54,90 mln	55,20 mln
Tax on education, Korean won	435,000	498,000	1,67 mln	1,5 mln	5,49 mln	5,52 mln
Tax on agriculture, Korean won	-	996,000	-	1,80 mln	-	3,68 mln
Housing bonds, Korean won	327,000	398,000	583,000	950,000	1,537 mln	1,584 mln
Notary expenses, Korean won	410,000	454,000	656,000	695,000	1,170 mln	1,175 mln
Realtor's fee, Korean won	1,740 mln	1,992 mln	4,175 mln	810,000	1,647 mln	1,656 mln

Sourse: bizwatch.co.kr

Also read: How to Rent an Apartment in South Korea

Other Expenses

The amount of the realtor's remuneration depends on the property price and varies from 0.6 to 0.9%.

Property Cost, Korean won	Realtor's Fee
Under 50 mln	0,6%
From 50 mln to 200 mln	0,5%
From 200 mln to 600 mln	0,4%
From 600 mln to 900 mln	0,5%
From 900 mln	0,9%

Other expenses include:

Stamp duty and certificate cost about 165,000-365,000 Korean won ($165-330).
Expenses on government bonds - 1.3%–3.1% of the property value.
Notary services - 0.01%-0.10% of the property price.
Registration tax - 1%-3% of the property price.
Translation service - from $50 per hour.

An example of calculating additional expenses when buying real estate in South Korea

50 sq.m one-bedroom apartment on the secondary market, located on the third floor in a four-story building in Seoul, in the Itaewon district. The price of the real estate object is about $270,000.