Full Verification of Business Loans for Home Purchases Begins

National Tax Service Commissioner Lim Kwang-hyun announced on the 19th that the agency will conduct a comprehensive investigation into cases where business loans were diverted for home purchases. Commissioner Lim stated via social media platform X that "we will respond sternly to misuse of business loans for purposes other than intended," emphasizing that "we will verify all cases recorded as business loans in fund procurement plans, and immediately convert them to tax audits if tax evasion is confirmed."

According to the National Tax Service analysis, the amount of "other loans" (which includes business loans) recorded in fund procurement plans submitted during home acquisitions in the second half of last year totaled 2.3 trillion won. This represents approximately a 35% increase compared to the same period the previous year (1.7 trillion won). The analysis suggests a sharp rise in cases where business loans were used to circumvent government regulations on mortgage loans exceeding 600 million won for personal home purchases.

Follow-up Measures to President Lee Jae-myung's Warning

This initiative is a government-wide response following President Lee Jae-myung's strong warning on the 17th via X against diverting business loans to real estate. President Lee stated that "if you deceive by claiming it's business funds and use the loan for real estate purchases, you will be criminally prosecuted for fraud," adding that "the Financial Supervisory Service and National Tax Service will jointly conduct a full investigation, which could lead to criminal fraud charges and loan recovery."

Business loans are originally intended to procure funds necessary for business operations, and diverting them for personal home acquisitions while treating the loan interest as business expenses constitutes clear tax evasion. For example, if a corporation obtains a business loan and then lends it to shareholders for home purchases, tax issues may arise. Business loan interest expenses are only recognized as deductible for business-related expenditures, and cannot be included as deductible losses if used for private purposes.

Financial Authorities Also Strengthen Enforcement

The Financial Supervisory Service is also intensifying enforcement. According to data submitted by the FSS to the office of Democratic Party Representative Park Sang-hyuk of the National Assembly's Political Affairs Committee, on-site inspections of all financial institutions in the second half of last year identified 127 cases (58.75 billion won) of individual business loan misuse. This represents a threefold increase in cases and fivefold increase in amount compared to the first half (45 cases, 11.9 billion won). Of these, 91 cases totaling 46.42 billion won in loans were recovered.

The National Tax Service plans to thoroughly verify the actual flow of funds and appropriateness of expense processing for cases recorded as business loans. If tax evasion is confirmed during the comprehensive verification process, investigations could expand to encompass the entire business establishment, requiring special attention from those planning to use business loans for home purchases.