Jeju Real Estate Investment Analysis: Acquisition Tax-Focused Investment in Doyuville Phase 2

Jeju Real Estate Agency | Investment Analysis Report Date: May 2024 Jeju Doyuville Phase 2 Bulk Purchase (Sales) Acquisition Tax-Focused Investment Analysis Report Retirement Asset Planning and Tax Optimization Guide 1. Executive Summary This report analyzes the acquisition tax risks and tax-saving strategies for the bulk acquisition (purchase/sales) of seven units in Doyuville Phase 2, located in Cheongsu-ri, Hangyeong-myeon, Jeju City. The transaction allows for 'single ownership,' which can be the simplest and safest structure from an acquisition tax perspective. Key Conclusion: The application of the 'Local Low-Cost Housing Special Provision (official price under 200 million KRW)' results in significant tax differences. - Optimistic Case (Special Provision Applied): Acquisition tax approximately 21.56 million KRW (1.1%) - Worst Case (Special Provision Not Applied): Acquisition tax approximately 243.04 million KRW (12.4%) - Risk Gap: A tax difference of about 221.48 million KRW necessitates prior verification. - Target: This structure is optimized for retired investors seeking stable rental income and retirement preparation. 2. Transaction Overview and Assumptions - Total Sale Price: 1.96 billion KRW - Number of Units: 7 units (bulk) - Price per Unit: 280 million KRW - Official Price: 189 million KRW (as of 2025) - Exclusive Area: 61.45㎡ (National Housing Scale) - Building Scale: RC structure, 4 floors / Semi-new - Location: Cheongsu-ri, Hangyeong-myeon, Jeju City (5 minutes from Sinchang Windmill Coastal Road) 3. Core Logic of Acquisition Tax Design 3.1 Tax Composition and Basic Rate The basic acquisition tax rate for residential property purchases is 1% for amounts under 600 million KRW. Each unit is priced at 280 million KRW, falling within this basic rate. Additionally, with an exclusive area under 85㎡, the Rural Special Tax (0.2%) is likely to be exempt. 3.2 Risk of 'Simultaneous Acquisition of 7 Units' Under general tax law, if one person acquires 7 units simultaneously, the heavy tax rate for multiple homeowners (up to 12%) applies, potentially resulting in an acquisition tax of about 240 million KRW. 3.3 Impact of Local Low-Cost Housing (Official Price Under 200 Million KRW) Exception Under the revised tax law effective from January 2, 2025, homes outside the metropolitan area with an official price under 200 million KRW are excluded from the count of homes for acquisition tax purposes. This means the basic rate (1%) can be applied regardless of the number of existing properties owned, offering a powerful tax-saving opportunity. 4. Tax Simulation by Scenario - A. Individual Sole Ownership (No Prior Ownership): Low-Cost Housing Exception Applied: 19.6 million KRW acquisition tax, 1.96 million KRW local education tax, 0 rural special tax, total 21.56 million KRW (1.1%) - B. Individual Sole Ownership (2 Prior Properties): Exception Not Applied, Worst Case: 235.2 million KRW acquisition tax, 7.84 million KRW local education tax, 0 rural special tax, total 243.04 million KRW (12.4%) - C. Corporate Acquisition: Exception Not Applied, Corporate Heavy Tax: 235.2 million KRW acquisition tax, 7.84 million KRW local education tax, 0 rural special tax, total 243.04 million KRW (12.4%) - D. Divided Acquisition (2-Person Family): Low-Cost Housing Exception Applied to Each: 19.6 million KRW acquisition tax, 1.96 million KRW local education tax, 0 rural special tax, total 21.56 million KRW (1.1%) * The above calculations assume rural special tax exemption, and actual taxation depends on the judgment of the relevant authorities. 5. Comparative Analysis of Ownership Structure Alternatives 5.1 Individual Sole Ownership (Recommended for Retirees) - Advantages: Clear ownership and simple management. Acquisition tax minimized with low-cost housing exception. - Disadvantages: Owning 7 homes makes it difficult to receive capital gains tax exemption upon sale. - Suitable for: Retired investors focusing on long-term rental income rather than short-term capital gains. 5.2 Family Distributed Acquisition (Considering Gift/Inheritance) - Description: Refers to 'distributed acquisition by household,' not joint ownership with spouse or children. - Advantages: Provides an exit strategy by easing the progressive tax rate on capital gains upon asset disposal. - Suitable for: Those with large asset sizes and long-term succession plans. 5.3 Corporate Acquisition (Professional Investors) - Risk: If the low-cost housing exception is not applied, the 12% heavy tax cannot be avoided, posing the greatest risk. - Advantages: High operational efficiency with cost processing and loan interest deductions. 6. Why Doyuville Phase 2 is Better than Seoul's Small Buildings - Profitability: 6.28% yield, three times higher than Seoul's small buildings (around 2%) when leveraging. - Stability: Significantly lower vacancy risk in residential real estate compared to commercial property sales with chronic vacancy rates (over 10%). - Value Assessment: Reasonably priced at 1.96 billion KRW compared to current real estate market prices, with potential for capital gains during Jeju real estate upturns. - Management Convenience: Semi-new RC building with an elevator, easier maintenance than outdated commercial or building sales properties. 7. Customized Scenarios for Different Investors 7.1 Retirement/Rural Relocation Type (Recommended for Retirees) - Plan: Live in one unit and rent out the remaining six, securing about 8 million KRW per month for retirement living expenses. Establish a reliable 'second salary' system in addition to national and retirement pensions. 7.2 Education Fund Procurement Type - Target: Parents of students in Jeju English Education City (15 minutes by car). Cover high international school tuition with rental income while generating an additional annual surplus of about 51 million KRW. 7.3 Pure Real Estate Investment Type - Strategy: Operate all 7 units for rental, then execute an exit strategy by bulk sale (sales) for 2.2 to 2.5 billion KRW or individual unit sales (total target of 2.1 billion KRW) in 3-5 years depending on market conditions. 8. Execution Checklist and Decision Flow ✅ Immediate Action Plan - Verify Official Price: Confirm 189 million KRW as of 2025 (check risk of official price for 2026) - Inquire with Authorities: Submit a prior written inquiry to Jeju City Tax Office about 'low-cost housing special provision applicability' - Hire Experts: Simultaneously engage a tax accountant (for filing) and a legal professional (for registration and special agreement setting) - Contract Special Terms: Specify conditions for 'contract cancellation or price adjustment if special provision not applied' 📊 Decision Flowchart - 7-Unit Bulk Purchase Consideration - Is the official price per unit under 200 million KRW? - Yes: High likelihood of low-cost housing special provision applicability - No: Acquisition tax heavy risk (about 240 million KRW imposed) - If No: Consider purchase hold or price renegotiation - If Yes: What is the investment purpose? - Retirement/Cash Flow: Recommend individual sole acquisition (simplified management) - Asset Succession/Exit Strategy: Family distributed acquisition (advantageous for capital gains tax savings) - Professional Business: Corporate consideration (essential to confirm special provision applicability) 9. Location Analysis (Summary) - Pristine Nature: Cheongsu Gotjawal Firefly Village (5-minute walk) - Leisure/Tourism: Sinchang Windmill Coastal Road (5-minute drive), Hyeopjae and Geumneung Beaches (12 minutes) - Education/Infrastructure: Jeju English Education City and Shinwa World (15 minutes) - Future Value: Direct beneficiary of western Jeju development and English Education City expansion [Legal Disclaimer and Consultation Inquiries] This report serves as a tax law interpretation and simulation material and does not have legal effect. Actual taxation may vary based on the laws in effect at the time of acquisition and the factual judgment of the relevant tax authorities. Please ensure verification with tax professionals and tax authorities before making final decisions. Jeju Real Estate Agency Specialists in Permanent Residency Real Estate · Auction Purchase Application Agency · Corporate Real Estate Investment Consulting Consultation Inquiries: 010-5711-2023 (Huh Cheonrim, Representative/Certified Real Estate Agent) Email: xuqianlin123@naver.com Address: 1st Floor, 6-5, Inda 14-gil, Jeju City