With the end of the capital gains tax surcharge deferral coming on the 9th, gifts of apartment buildings and other multi-unit properties in Seoul surged last month.
According to the Supreme Court Registration Information Plaza on the 3rd, the number of registrations due to gifts of multi-unit properties in Seoul (apartments, row houses, multi-family homes, officetels, etc.) totaled 1,980 last month, up 47.2% from the prior month (1,345). On a monthly basis, it was the highest in 3 years and 4 months since December 2022 (2,384).
Nationwide, gift cases totaled 5,560, also the highest since December 2022 (9,342).
By district, Songpa District recorded the most gifts of multi-unit properties last month with 161. That was an increase of nearly double (96.34%) from the prior month (82). Next came Yangcheon District with 135, Nowon District 118, Seocho District 115, Yongsan District 106, Gangnam District and Dongjak District with 104 each, and Gwangjin District with 100. Yongsan District saw the largest increase from the prior month (54) at 95.3%.
In the market, there is growing weight behind the view that gifts of multi-unit properties in Seoul will continue to rise. For now, simple gifts are not subject to land transaction permits even for apartments, while gifts with assumed debt are subject to land transaction permits, but because of timing gaps in district office approvals, the number of April contract signings and transaction reports increased, making it highly likely that registration counts after April will also rise.
The share of direct transactions for apartments in Seoul also rose markedly last month. An analysis of transaction data reported to the Ministry of Land, Infrastructure and Transport (MOLIT) real transaction price system showed that the number of direct transactions for Seoul apartments increased from 109 in February this year to 185 in March. April still has about a month left before the reporting deadline, but direct transactions have already reached 234, far exceeding March's count. Of the 4,544 transaction reports in April, 5.15% were contracted as direct transactions without going through a brokerage office.
For apartments contracted in April, Seocho District had by far the highest share of direct transactions at 15.8%. It was followed by Gangnam District (7.8%), Yeongdeungpo District (7.3%), and Gwangjin District (7.3%).
Experts say some of the direct transactions are likely low-price transfers to family members or relatives—related parties—ahead of the implementation of the capital gains tax surcharge.
Under the Inheritance Tax and Gift Tax Act, if the reported price does not fall outside the lesser of 30% below the actual transaction price recorded within the past three months and 300 million won, it is deemed a normal transaction and gift tax is not imposed. For this reason, low-price transfers occur frequently during downturns when actual quick-sale transactions increase.
A licensed real estate agent in Seocho District said, "Ahead of the capital gains tax surcharge, some multi-homeowners hoped to pass properties to their children and chose a low-price sale method," adding, "From a quick-sale price, you can go as much as 300 million won lower, so it seems they viewed now as a good opportunity for low-price transfers."