A view based on corporate tax law

In case a company plans to acquire a realestate (a house), the acquiring shall be within the business purpose stated onthe business registration document, and reasonable amount of profit shall begenerated from the acquired from a real estate. Otherwise, such acquiring canbe categorized as non-business asset.A view based on corporate tax law

In this case all expenditures are notapproved as expense and furthermore, if it is recognized as a company isacquiring personal assets, it can be treated as prepayment in full or causeother problems.

If it has to be stay within the purpose ofbusiness, leasing business or house leasing business shall be stipulated withinthe document. If not, cases such as a company is using a real estate fordormitory or place for employees can be an example of using a house for theirown business.

Profit generated by reasonable causes, suchas leasing a real estate to a third party based on market price will not causeany issues. However, in case a real estate is used by employees does not fit acriteria of dormitory, reasonable amount of leasing fee has to be set.

Review for property tax and gross realestate tax

In case a company acquires a house, burdenof property tax and comprehensive real estate tax is the same as that of anindividual. However, a company can benefit by lowering tax base as assets arerecognized by a company. 

Tax review for disposing 

VAT 

On the other hand, if a company isdisposing real estate, the company is free from the VAT burden if a size of thereal estate is less than 85㎡. However, in case the sizeof the real estate exceeds 85㎡, VAT shall be burdened.VAT amount is 10% of the price of the building.

Transfer income tax 

In case of transferring a property held by a company does not bear transfer incometax. However, when transferring a house or non-business real estate, additional10% of the gains on capital gains shall be burdened as “income tax on capitalgains on land, etc”. The company shall bear up to 33% (22% for corporate taxand 11% foradditional tax for transfer income) of tax for transferring a house

 On the other hand, when a multi house ownertransfers, the maximum tax rate for a two-house owner can be up to 57.2% (46.2%of the basic tax rate (including 4.2% of local income tax) and 11% of the addedtax rate (including 1% of local income tax). In the case of the three- house themaximum tax rate can be up to 68.02% (46.2% of the basic tax rate and 22% ofadded tax rate)