[Korean Law Insights] Reporting Requirements for Koreans Residing in the U.S. Real Estate Transactions in Korea
- K-Law Consulting_Administration
- Aug 29, 2022
- 3 min read
Updated: Mar 27
[Published on August 23, 2022 edition of the "Korean Law Insights" column in the Korea Daily’s Economic Expert Section]
One of the most frequently asked questions by Koreans residing in the U.S. concerns real estate in Korea.
In particular, many inquire with concern about whether they must go through especially complicated procedures when trading or managing real estate in Korea after immigrating to the U.S. and obtaining permanent residency or U.S. citizenship. Today, I will discuss several reporting requirements that U.S. permanent residents and citizens should be aware of when conducting real estate transactions in Korea.
First, let’s examine the procedures required when dealing with real estate in Korea. For permanent residents, since they still hold Korean nationality, the procedures are essentially the same as those required for a Korean resident conducting a real estate transaction.
For example, when buying or selling real estate, a real estate transaction report must be filed within 30 days of signing the sales contract. However, if a licensed real estate agent is involved in the transaction and has prepared and provided the contract, the agent is responsible for submitting the real estate transaction report.
In reality, since real estate agents are commonly involved in Korean real estate transactions, the transaction report requirement rarely becomes an issue. However, if an individual has lived in the U.S. for an extended period and their Korean resident registration has been revoked, additional steps may be necessary before completing the property registration.
Next, let’s look at the case of U.S. citizens. Under Korean law, U.S. citizens are considered foreigners who have lost Korean nationality and acquired U.S. nationality. Because of this, pre-approval from the Korean government may be required before signing a contract to purchase land in restricted areas such as military facility protection zones or cultural heritage protection zones.
Additionally, similar to the real estate transaction report, U.S. citizens must report the acquisition of real estate in Korea, but many find this confusing. First, if a U.S. citizen purchases Korean real estate through a monetary transaction (sale and purchase), a real estate transaction report must be filed.
If a person acquires real estate in Korea through a contract other than a sale (e.g., a gift), they must file a foreign real estate acquisition report within 60 days of signing the contract. Additionally, if ownership is acquired for reasons other than a contract (e.g., inheritance or auction), the report must be filed within six months of acquiring ownership. Failure to comply with these reporting obligations may result in a fine, so caution is advised.
What U.S. citizens need to be particularly cautious about is when they acquired ownership of real estate in Korea while still holding Korean nationality and later obtained U.S. citizenship. Upon acquiring U.S. citizenship, they automatically lose their Korean nationality, and the property in Korea is then considered to be owned by a foreigner. Therefore, they must file a real estate continued ownership report within six months of acquiring U.S. citizenship. Failure to comply with this requirement may result in a fine of up to 1 million KRW.
Not filing a real estate retention report does not mean one loses ownership of the property. However, over time, issues related to resident registration cancellation, name changes, or nationality changes may arise, making it difficult to resolve ownership matters. This could also complicate the future sale of the property. Therefore, it is important to be mindful of this reporting obligation as well.
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Jin Hee Lee/K-Law Consulting Korean Attorney
[Reference link in original Korean]
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