Multi-homeowners in Seoul are increasingly turning to gifts and direct transactions as a temporary suspension of heavier capital gains taxes nears its end. With the surcharge set to return, some owners are seeking tax savings through methods beyond straightforward sales, including gifts with debt assumed by the recipient and below-market transfers among family members.
According to the Supreme Court’s registry information system, Seoul recorded 1,980 gift-transfer registrations for multi-unit buildings last month, up 47.2% from 1,345 the previous month. It was the highest monthly total since December 2022, when there were 2,384 cases, the most in three years and four months. Multi-unit buildings include apartments, row houses, multi-family homes and officetels.
Nationwide, gift-transfer registrations totaled 5,560, the highest since December 2022, when 9,342 cases were recorded. At that time, demand surged ahead of a change in the gift acquisition tax base from the officially assessed price to a market-recognized value. This time, the rise is widely seen as an effort to reduce tax exposure ahead of the end of the capital gains tax surcharge suspension for multi-homeowners. With sales of homes with tenants allowed through May 9, more owners appear to be transferring homes to children in the form of gifts that include the assumption of debt.
By district in Seoul, Songpa led with 161 cases, followed by Yangcheon with 135, Nowon with 118, Seocho with 115, Yongsan with 106, and Gangnam and Dongjak with 104 each. Yongsan nearly doubled from 54 the previous month, up 95.3%. The increase across both high-priced areas such as Gangnam and Yongsan and districts including Yangcheon and Nowon suggests tax-driven demand is spreading citywide.
Direct apartment transactions in Seoul are also rising. Data from the Ministry of Land, Infrastructure and Transport’s real transaction price disclosure system show 109 direct deals in February, 185 in March and 234 in April. Direct deals accounted for 5.15% of 4,544 reported apartment transactions in April. Such transactions bypass licensed brokers and often include deals between family members or other related parties.
In April, Seocho had the highest share of direct deals at 15.8%. Gangnam posted 7.8%, while Yeongdeungpo and Gwangjin each recorded 7.3%. Market observers said some of the activity reflects demand to transfer homes to family or relatives at prices below market levels before the surcharge resumes.
Under the current Inheritance and Gift Tax Act, even transactions between related parties are treated as normal — and not subject to gift tax — if the reported price is within the smaller of (1) 30% below the actual transaction price within the past three months or (2) 300 million won. That rule is one reason some multi-homeowners appear to be using direct transactions to dispose of holdings before higher taxes apply.
The suspension of the capital gains tax surcharge for multi-homeowners ends May 9. Starting May 10, multi-homeowners selling homes in regulated areas will face an added 20 percentage points for two-home owners and 30 percentage points for those with three or more homes, on top of the basic tax rate. Including local income tax, the effective top rate can rise to 82.5%.
The government has announced supplementary steps to reduce disruption. If a land-transaction permit is applied for by May 9, sellers can avoid the surcharge if they complete the transfer process — including final payment and registration — within a set period. For the three Gangnam districts and Yongsan, the deadline to complete the transfer is Sept. 9. For Seoul’s other 21 districts and 12 areas in Gyeonggi Province, the deadline is Nov. 9.
Homes with tenants are also covered by an exception. If a lease existed as of Feb. 12 and a land-transaction permit is applied for by May 9, the owner-occupancy requirement is deferred until the lease ends, but only when the buyer is a person without a home.
An industry official said last-minute tax-saving moves by multi-homeowners are likely to continue. The official added that when a simple sale is difficult, more owners may consider gifts, gifts with debt assumed by the recipient, or direct transactions between related parties. The official cautioned, however, that below-market transfers and debt-assumption gifts could later be scrutinized by tax authorities, making it important to carefully assess pricing and the requirements for transferring liabilities.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.