Unlike some Asian countries that do not allow or strictly limit foreign ownership of real properties, South Korea has a buoyant market that permits foreigners to purchase real estate and even land in Korea. The major restrictions on ownership of real estate for non-Koreans was lifted during the 1997 Asian Financial Crisis based on the advice of the IMF. The lifting of these restrictions, led, in part, to a commercial and residential real estate boom. The major benefit to Korea was in the high-end commercial and high-end residential real estate space.
While the majority of the restrictions were lifted by the Korean government, foreign buyers of real property are required to follow specific legal requirements provided under the Korean law that are not, in most cases, required of Koreans. For an explanation of some of the remaining restrictions of the purchase of real property by non-Korean please see: Restrictions on Foreigners Purchasing Property in Korea.
The requirements are divided, in short, into two categories: the first one are requirements for foreign buyers of real estate who are residents of South Korea and the second are requirements for foreign buyers who are not residents of the country. If you are interested in understanding Korean acquisition taxes, please see: Korean Real Estate Acquisition Taxes for Expat Buyers of Real Estate.
|Resident Foreigner||Non-Resident Foreigner|
|Applicable laws: Foreigner’s Land Acquisition Act of Korea and Registration of Real Estate Act of Korea.9||Applicable laws: Foreigner’s Land Acquisition Act of Korea, Registration of Real Estate Act and Foreign Exchange Transaction Act of Korea.|
|Execute a sales contract between the resident foreign buyer and seller||Near Identical Requirements for Resident Foreigners and Non-Resident Foreigners.|
|Foreigner’s Land Acquisition Act provides that within 60 days from execution of Sales Contract, the purchase must be registered or reported to the office of Si/Gun/Gu.|
The foreigner who fails to report or made a false report with regard to the purchase of land shall be liable to pay a fine up to 3 million won. This fine can be used by the Korean Immigration Service to ban a foreigner from entry into Korea, fine the foreigner or strip the foreigner of his visa.
|Same requirements and penalty for Resident Foreigners and Non-Resident Foreigners.|
|The Registration of Real Estate Act dictates the procedures to register the property of a foreign buyer:|
Registration of property:
(1) by the applicant or his agent by submitting the documents directly to the registry; or
(2) by sending the documents for registration via a computerized data processing system.
|Same requirements and for Resident Foreigners and Non-Resident Foreigners.|
|Resident foreigners, in most cases, do not need to report the purchase and submit the sales contract and the copy of the property registration to a foreign exchange bank. However, exceptions do exist.||The Foreign Exchange Transaction Act provides that the non-resident foreigner who is purchasing real estate property in Korea shall report the said purchase and submit the sales contract and the copy of property registration to a foreign exchange bank.|
Buyers and investors in real estate, in Korea, should also make themselves aware of the possible additional costs they may incur in their purchase of properties such as acquisition taxes, registration tax, V.A.T., etc. Additionally, it is a good idea to understand the basics of passing title, inheritance, rental income taxation law and various other necessaries that are required to make an adequate judgment on the purchase of property in Korea. Some Korean law firms, including this law firm, assists foreigners in the acquisition of commercial and residential real estate in Korea.
You may schedule an initial free consultation with a Korean lawyer at: Schedule a Call with an Attorney in Korea.
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