Ahead of the imposition of heavier capital gains taxes on multiple-home owners on the 9th of next month, National Tax Service Commissioner Lim Gwang-hyeon warned on the 29th that "if multiple-home owners make disguised gifts to their children instead of selling dwellings, they could face an additional tax of up to 40%."
In a post on X (formerly Twitter) the same day, Lim wrote, "The market expects cases of gifting dwellings to increase ahead of the end of the grace period for heavier taxation on multiple-home owners," adding, "It would be better not to even consider disguised gifts to evade taxes."
Lim said, "In the first quarter of this year, gifts of Seoul dwellings totaled 3,075, up 94.4% from a year earlier." Lim also released the results of a simulation comparing taxes when a multiple-home owner sells to another party before May 9 a Daechi-dong, Seoul, apartment purchased for 1 billion won 10 years ago and now worth 3 billion won, versus gifting it to a child.
According to Lim, based on a capital gain of 2 billion won, the tax would be 650 million won if transferred before May 9, and 1.38 billion won if gifted. Lim questioned, "Are they really paying all these taxes and making gifts?" If a gift is made, more tax must be paid than when selling dwellings, and there could be tricks to evade such taxes.
Lim said, "There may be cases that give ordinary people a sense of loss, such as gifts made with loans that parents later repay on behalf of their children, and cases where high-priced apartments are undervalued relative to market price for gifting," adding, "The National Tax Service will soon conduct thorough, across-the-board verification." He continued, "In the worst case, on top of the original tax due, an additional tax of up to 40% could be imposed."