Minors set a new record for annual real estate rental income, earning 59.3 billion won in a single year. Notably, even newborns and high school students alike were found to have generated rental income, raising concerns that the intergenerational transfer of wealth is accelerating.

Last year, 734 newborn babies were recorded to have received an average inheritance of 100 million won. Image to aid understanding of the article. Photo by Asia Economy DB

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According to data received by Assemblyman Kim Youngjin of the Democratic Party of Korea, a member of the National Assembly's Strategy and Finance Committee, from the National Tax Service on September 11, there were a total of 3,313 minors aged 18 or younger who reported real estate rental income for the 2023 tax year. Their combined rental income amounted to 59.37 billion won, which averages out to 17.92 million won per person. Compared to the previous year (3,294 minors, 57.993 billion won), this represents an increase of 19 individuals and 1.377 billion won in total income, marking an all-time high.

Breaking down the real estate rental income by age group, there were 311 preschool children (ages 0-6) who earned a total of 4.581 billion won in rental income. Among them, even 11 infants aged 0-1 recorded a combined rental income of 149 million won, averaging 13.55 million won per person. Among elementary school students (ages 7-12), 1,038 earned a total of 16.894 billion won in rental income, or about 16.28 million won per person annually. Middle and high school students (ages 13-18) numbered 1,964 and earned a total of 37.893 billion won in rental income, which averages 19.29 million won per person.

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The number of minors earning not only real estate rental income but also business income is also on the rise. In 2023, 13,744 minors reported business income, up by 2,400 from the previous year. The majority were high school students aged 16-18, totaling 10,619. Their combined business income reached 59.558 billion won, an increase of 9.299 billion won from the previous year. Even among preschool children, 110 earned a total of 826 million won in business income. For elementary school students, there were 310 individuals earning 2.973 billion won, and for middle school students, 175 individuals earning 3.845 billion won.

Assemblyman Kim analyzed, "Recently, due to the effects of early inheritance and gifting, minors' real estate rental income is increasing," and added, "In the case of business income, even preschoolers and elementary school students, who are unlikely to actually run a business, are reporting such income." He went on to emphasize, "In cases of irregular inheritance or gifting where proper tax obligations are not fulfilled, the National Tax Service must conduct thorough investigations and verification."

This trend is also evident in gift statistics. According to data on gift tax decisions submitted by the National Tax Service to Assemblyman Park Sunghoon of the People Power Party, also a member of the National Assembly's Strategy and Finance Committee, there were 734 cases of gifts made to newborns (age 0) last year, totaling 67.1 billion won. This amounts to an average of 91.41 million won per person.

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The total value of assets gifted to newborns surged from 9.1 billion won in 2020 to 80.6 billion won in 2021 and 82.5 billion won in 2022, before dropping to 61.5 billion won in 2023. However, the figure rose again last year, indicating that even newborn babies continue to inherit assets averaging around 100 million won each.

Assemblyman Park Sunghoon stated, "There is a possibility of expedient practices and tax evasion in the process of gifting assets to young children," and stressed, "Tax authorities must strictly block the illicit transfer of wealth through proactive tax investigations and post-management."