Lim Gwang-hyeon, commissioner of South Korea’s National Tax Service, warned multi-homeowners not to rush into gifting homes ahead of the end of a temporary suspension of heavier capital gains taxes, saying the tax burden is often higher for gifts than for sales.
In posts on X (formerly Twitter) and Facebook on Tuesday, Lim said the market expects more home gifts before the suspension ends, but “when you calculate the actual tax burden, gifting is often more disadvantageous.” He added that people should not consider “schemes” aimed at avoiding taxes.
Home gifts in Seoul totaled 3,075 cases in the first quarter of this year, up 94.4% from a year earlier.
Lim cited a simulation: For an apartment in Seoul’s Daechi-dong with a market price of 3 billion won that has been held for 10 years and was bought for 1 billion won, a sale before May 9 would generate about 650 million won in taxes. A gift, he said, would result in about 1.38 billion won in taxes — more than double.
He also cautioned that if someone else pays the gift tax on the recipient’s behalf, additional taxation may apply. Assuming taxes are paid properly, he said, taxpayers should consider whether gifting is economically reasonable.
Lim warned against improper gifting practices, including gifting a home with a loan and then having parents repay it, or undervaluing a property below market price. Such actions could amount to tax evasion, he said, adding that the NTS plans to conduct a full review. In those cases, he said, penalties of up to 40% could be imposed on top of the original tax due.
“Tax justice is a very important value,” Lim said, adding that the agency will provide guidance and consultations so taxpayers can make reasonable decisions before the suspension ends.
* This article has been translated by AI.
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