South Korea to significantly tighten reporting requirements for foreign real estate transactions…proceeds from crypto sales must also be submitted as proof of funds

The government will significantly strengthen reporting obligations for real estate transactions to curb property speculation by foreigners. In particular, to prevent inflows of overseas funds and circumvention financing via virtual assets, it will require proceeds from the sale of virtual assets to be included in funding source plans.

On the 9th, the Ministry of Land, Infrastructure and Transport (MOLIT) said it will implement, starting on the 10th, amendments to the Enforcement Decree and Enforcement Rules of the Act on the Reporting of Real Estate Transactions reflecting these measures. Under the revisions, foreigners purchasing property in Korea on or after the 10th must, in addition to existing reporting items, mandatorily report their stay status (visa type), a domestic address, or whether they have a place of residence for at least 183 days.

In addition, regardless of nationality, when entering into a housing transaction contract after obtaining a land transaction permit, submission of supporting documents that can substantiate the funding source plan will be mandatory along with the plan itself. The plan will newly include details of overseas funding sources such as overseas deposits, overseas loans, and the names of overseas financial institutions, and under the “other funds” category it will require specifying proceeds from the sale of virtual assets in addition to existing proceeds from stock and bond sales. In effect, raising funds using virtual assets will also become subject to official reporting and verification.

Moreover, regardless of nationality or whether the property is in a land transaction permit zone, for real estate sale-and-purchase contracts signed on or after the 10th, parties must also attach documents proving payment of the deposit—such as the sales contract and a receipt for the down payment—when filing the transaction report. However, this requirement is waived when the parties jointly file the report without using a licensed real estate agent.

MOLIT previously, through a targeted probe into illegal real estate activities by foreigners last year, identified a total of 416 suspected violations and notified relevant agencies. Going forward, starting in March, it plans to jointly inspect with local governments whether owner-occupancy obligations in land transaction permit zones are being met, and from August it plans to launch additional targeted investigations into illegal inflows of overseas funds and abnormal transactions involving virtual assets.

MOLIT First Vice Minister Kim Yi-tak said, “Through this revision, we have established an institutional basis to more closely scrutinize even illicit transactions that exploit overseas funds and virtual assets.”