Increase in Homebuyers Among Teens and 20s... National Tax Service Cracks Down on 'Eomppa Chance' Illegal Gift Transfers

National Tax Service Launches Tax Investigation on Minors and Others Acquiring Houses Under Suspicion of Illegal Gift Transfers

[Sejong=Asia Economy Reporter Kim Hyun-jung] #A, a teenager in his late teens with no income at all, started a restaurant using several hundred million won in deposit and interior costs as startup capital. Despite the restaurant's modest sales, he acquired a high-priced house worth tens of billions of won the following year. It was confirmed that he did not report gift tax despite receiving startup and housing funds from his wealthy father B, leading to a tax investigation by the National Tax Service.

Amid the recent increase in housing acquisitions by minors under their 20s, the National Tax Service is launching tax investigations into young individuals who acquired houses through disguised gifts and other tax evasion suspicions.

◆Sharp rise in housing purchases by minors under 20s= On the 19th, the National Tax Service announced that after a detailed analysis of recent housing acquisition transactions by young individuals, it detected multiple tax evasion suspicions involving disguised gifts for housing acquisition and has begun tax investigations. The investigation targets a total of 97 people: 51 young individuals with no income or in the early stages of their social life with no means to raise funds, and 46 business operators who acquired apartments through income concealment and improper corporate fund outflows.

This tax investigation originated from monitoring the recent trend of increased housing transactions among those under 20. According to the Korea Real Estate Board, while overall housing transaction volume has been declining since peaking in the fourth quarter of last year, the number of acquisitions by those under 20 has actually increased. Their share of total transactions rose from just 4.3% in the second quarter of last year to 6.1% in the second quarter of this year.

Especially in Seoul, where housing prices are relatively higher, the acquisition share increased from 4.6% in the second quarter of last year to 6.9% in the second quarter of this year. Considering this situation, the National Tax Service used ownership tax information to analyze tax evasion suspicions related to housing transactions and identified some disguised gift cases.

◆Teens using 'Dad's chance' but not paying gift tax detected= Among the investigation targets, 40 young individuals were suspected of disguised gift tax evasion related to funds for acquiring high-priced apartments. These include cases where young individuals with minimal income acquired expensive apartments without reporting gift tax, having received acquisition funds from parents or other special relations through disguised gifts, or cases where they succeeded rental deposits (so-called gap investment) but the purchase price beyond the deposit is suspected to have been paid by the parents.

Their investments sometimes extend to villas. According to the Korea Real Estate Board, villa (multi-family and row houses) transaction volumes have been increasing with 17,338 cases in January, 17,929 in February, 20,111 in March, 20,929 in April, and 22,551 in May, while prices are also on the rise. The National Tax Service identified 11 individuals aged from their teens to early 20s who acquired villas by bearing large debts or succeeding jeonse deposits (gap investment), suspected of receiving acquisition funds as gifts from parents or acquiring properties under their names to evade multi-homeowner regulations.

◆Embezzling company funds to trade reconstruction apartments= Additionally, the National Tax Service monitored transaction trends in major reconstruction apartment complexes in the metropolitan area. They selected 46 individuals suspected of having unclear sources of funds, including ▲young individuals lacking financial capacity who acquired expensive apartments through disguised gifts, ▲cases suspected of acquiring apartments with concealed income from their operated businesses due to minimal reported income, and ▲cases suspected of acquiring high-priced reconstruction apartments through improper corporate fund outflows.

The National Tax Service emphasized, "For young individuals, we will thoroughly verify whether acquisition funds were gifted from parents or other special relations by tracing the flow of funds to the end," adding, "In cases where debts are recognized as actual borrowings during the investigation, we will rigorously manage the ability to repay such debts afterward."

They further explained, "For business operators suspected of income omission, we will meticulously verify reported details, including whether income amounts were omitted, whether fabricated expenses were recorded, and whether improper accounting was used to siphon funds."

This content was produced with the assistance of AI translation services.