Cheong Wa Dae on the 22nd said that President Lee Jae-myung set 1.77 billion won as a collateral mortgage in the process of selling an apartment in Bundang, saying, "Only the party to the transaction is different; it is the same as a bank loan." It also said it would not receive interest for deferring the payment of the balance from the buyer. Although the seller is playing the role of a bank as "private finance," it said the president would not charge interest out of consideration for the buyer. This can be interpreted for tax purposes as a kind of "gift."
Han Moon-do, a professor in the Department of Real Estate at Seoul Digital University, appeared that day on Fact Mill, Cheong Wa Dae's YouTube channel, and answered the question from host Deputy Spokesperson Ahn Gwi-ryeong—"How is this different from a bank loan?"—by saying, "It's the same act." Han said, "A bank has money to receive from a party, and the president also has money to receive from the buyer. That has been set up," adding, "If it's not repaid, it becomes a problem, but if repayment is made, it is a transaction that considered the buyer so that the buyer can obtain union membership status."
Han said, "This cannot be seen as a difference (from a bank loan)," and, "Only the party is different; seeing the rest as the same is accurate." This is so-called "seller financing." Earlier, Cheong Wa Dae said it was "a transaction carried out through real estate in a customary manner," adding that the two sides are not in a special relationship. However, some say that if it is interest-free, the possibility of taxation under the Inheritance and Gift Tax Act cannot be completely ruled out even if they are not in a special relationship such as relatives.
Fact Mill is a YouTube channel operated independently by Cheong Wa Dae. It airs interviews intended to communicate the government's position on major pending issues, with Cheong Wa Dae aides or ministry chiefs appearing in person. The host introduces various issues or sensitive controversies, and the relevant policy official answers by explaining the government's intent.
Recently, Vice Chairman Kwon Dae-young of the Financial Services Commission did an interview saying he would clear up misunderstandings related to "debt forgiveness" under the "inclusive finance" policy line. Earlier, the senior secretary for growth economy and the secretary for autonomy development at Cheong Wa Dae appeared to explain, respectively, the IMF World Economic Outlook Update and the government's position on unauthorized occupation of national and public land.
◇ Interest-free is subject to gift tax… amid controversy, Cheong Wa Dae says "handled by the rules"
Deputy Spokesperson Ahn, who hosted the interview that day, said, "If payment of the balance is deferred for several months, the interest is considerable, but it has been confirmed that interest will not be charged."
Han also said, "It appears the president showed consideration for the buyer," adding, "Of course, some may ask why not charge interest, but considering that this is not one to two years but three to four months (until the promised time to pay the balance), interest is not being charged." Han added, "If the buyer does not pay on the balance due date, amounts such as interest are guaranteed under the Civil Act, so it can be executed by calculating as arrears interest," and said, "From the buyer's standpoint as well, it seems likely the balance date will be observed and things will be wrapped up."
As the gift controversy grew, Cheong Wa Dae said the buyer would pay gift tax. A Cheong Wa Dae official said that afternoon, "The gift tax issue arising from the interest-free arrangement will be handled under the relevant rules."