In recent years, if there is one area where both the ruling and opposition parties have been united in tax reform, it is the policy on the rental business. In most tax reforms, the two sides have shown fierce differences in their positions and have been at odds with each other, so there have been many cases where the tax reform bills have not been enacted as laws, but when it comes to the rental business, there has been an atmosphere of strangely cracking down, and there have been rapid changes.
The most notable part of this year's revision is the corporate tax on rental corporations. The lower 10% section is being eliminated, which means the corporate tax section for net profits of up to 200 million won is being eliminated. If this continues, corporations whose main business is rental will face an increase in corporate tax of about 20 million won per year. This is a part that clearly reflects the view that rental businesses are intended for tax evasion.
In addition to this, there are several taxes that have been revised in the past and are applied to corporate stocks. In connection with the brokerage transaction of real estate owned by a corporation, there are often cases where brokerage transactions are made with stocks rather than real estate, and there is a lot of misinformation about this. In particular, unlisted stock transactions are not included in the scope of brokerage, so caution is required.
When trading stocks of a rental corporation, the personal real estate transfer tax rate is applied, not the stock transfer tax 25%. If the profit is large, it is taxed at the highest rate of 45%, and the stock valuation amount varies depending on whether the corporation's real estate holding ratio exceeds 80% compared to assets, or is between 50% and 80%. Sometimes, when trading stocks of real estate corporations, brokerage corporations sometimes inform that the general stock transfer tax rate is imposed and trade stocks as if they were real estate. However, since this is not the area of a licensed broker and the incorrect tax rate is provided, it can cause big problems later.
In the case of stock transactions of a rental corporation, the local tax imposes a deemed acquisition tax. In the case of transactions between non-related parties, when the transaction of real estate corporation shares exceeds 50%, the acquisition tax is imposed as if the real estate is acquired by an individual. Compared to the 4.6% imposed based on the sales price in real estate transactions between individuals, 2% is a relatively low tax, but it is not a small amount. It is the most commonly omitted tax in real estate corporation share transactions in each region of the country.
The above two have been applied since the tax law was revised a long time ago. There are many cases where people mistakenly explain that there is no acquisition tax if you trade stocks instead of corporate real estate, or that there are high taxes for real estate transactions, so they encourage corporate stock transactions, but this can lead to big problems.
However, the value of utilizing corporations in real estate is still there. It is still more advantageous than individuals in terms of income tax and other tax rates, and there are still various ways to conduct capital transactions. This is why real estate professionals must be alert to the tax law revisions that are made every year and leave opposing opinions when legislation is in progress. Tax reforms that are disadvantageous to rental businesses, etc., are always a major factor in blocking transactions.
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