Since the implementation of the marriage gift tax exemption, there has been an increase in its use as a means for newlyweds to secure housing funds. However, experts advise that the tax benefits can vary based on eligibility requirements and the method of gifting, making prior verification essential.
Last month, 28-year-old office worker Kim held a wedding ceremony and prioritized consulting a tax advisor before signing a contract with the venue. This was because he planned to receive a gift from his parents to fund the deposit for their new home. The total amount his parents agreed to contribute was 320 million won, the maximum amount that can be utilized under the marriage gift tax exemption. Kim coordinated the timing of the gift and the marriage registration to meet the exemption requirements.
The marriage gift tax exemption, which took effect on January 1, 2024, allows individuals to receive up to 150 million won tax-free when receiving gifts from direct ancestors such as parents or grandparents. This includes the existing adult child gift exemption of 50 million won over ten years, plus an additional 100 million won for the marriage exemption.
Both the bride and groom can apply for the exemption, and when combined with the additional relative exemption of 10 million won each, couples can receive a total of up to 320 million won without incurring gift tax.
The exemption applies to gifts received within two years before and after the marriage registration date. For example, if the marriage registration occurs on July 10, 2026, gifts received from July 10, 2024, to July 10, 2028, would qualify. This applies equally to first marriages and remarriages.
Tax professionals report a steady increase in consultations regarding the marriage gift tax exemption. Lee Jeong-ok, head of the tax team at Shinhan Financial Group, stated, "The marriage exemption can be utilized up to 100 million won over a lifetime, making it a popular option for newlyweds looking to cover housing costs such as home purchases or rental deposits. Recently, many consultations have focused on maximizing tax benefits by combining the marriage exemption with other gifts rather than relying solely on it."
Lee added, "The marriage exemption applies not only to gifts from parents but also from grandparents. There are also cases where grandparents' gifts are considered in light of inheritance tax planning."
However, if grandparents directly gift to grandchildren, it is classified as a skipped generation gift, which typically incurs a 30% surcharge on the calculated tax amount. Nevertheless, if the marriage exemption is applied and no gift tax is incurred, the surcharge will not be applied. Tax professionals note that some families are utilizing this strategy to gift funds in advance while considering inheritance tax implications.
Meanwhile, some experts argue that the marriage gift tax exemption primarily benefits households that can receive financial support from parents or grandparents, limiting its overall policy effectiveness.
Marriage Exemption vs. General Gifts: How Much Tax Difference?
The tax benefits of the marriage gift tax exemption can be illustrated through real-life examples. If a child with no prior gift history receives 150 million won from their parents, applying the marriage exemption would mean both the basic exemption of 50 million won and the marriage exemption of 100 million won are applied, resulting in a taxable amount of zero. Consequently, no gift tax would be owed.
In contrast, if the marriage exemption is not applied, only the basic exemption of 50 million won is recognized, leading to a taxable amount of 100 million won. In this case, the calculated tax would be 10 million won, and even with the timely filing tax credit, the gift tax burden would still be approximately 9.7 million won.
Check 10-Year Cumulative Taxation and Gift Reporting
Experts emphasize that understanding existing gift history is as crucial as the marriage exemption itself.
The marriage exemption is an additional benefit to existing exemptions, but gifts received from the same individual within the last ten years are subject to cumulative taxation. If the basic exemption of 50 million won has already been utilized, the taxable amount could be higher than expected, making prior verification necessary.
Even if no gift tax is incurred, it is advisable to file a report. This documentation can serve as important evidence during future funding plan submissions or when clarifying the source of funds.
Parties acquiring property in designated land transaction approval zones should also be cautious. If the gift details in the funding plan submitted during the approval application differ from those in the actual transaction report, additional clarification may be required.
Lee stated, "The marriage exemption can be applied if the gift is received after confirming the marriage intention through invitations and the marriage registration occurs within two years thereafter. It is important to note that the marriage exemption and childbirth gift exemption cannot be applied simultaneously; one must be chosen."
* This article has been translated by AI.
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