Acceleration of Land Inheritance... Last Year's Land Gifts Also Reach Record High

The surge in gifts triggered by strengthened transaction and holding taxes has led to a record high number of pure land gift transactions.

According to the statistics on ‘Pure Land Transaction Status (by Transaction Cause)’ from the Korea Real Estate Board on the 21st, the number of pure land transactions made through gifts nationwide last year reached 213,143, surpassing 200,000 for the first time. This is the largest scale since related statistics began in 2006. In particular, the increase in transaction volume last year was significant at 9.1% compared to the previous year. Land gifts were 184,053 in 2018, 185,483 in 2019, a 0.8% increase, and 195,336 in 2020, marking a 5.3% increase from the previous year.

The increase in land gifts last year is attributed to strengthened tax policies related to land. After the Korea Land and Housing Corporation (LH) employees’ land speculation scandal in March last year, the government introduced strong land regulation measures. From 2022, the capital gains tax rate on land transactions held for less than one year was raised by 20 percentage points from 50% to 70%. For short-term holdings under two years and non-business-use land, the capital gains tax surcharge rate was increased by 10 to 20 percentage points. A real estate industry official explained, "As news about the increase in land capital gains tax rates, especially the surcharge on non-business-use land, spread through the media, there was a nationwide trend of gifting and selling at low prices." Although the measure was criticized as excessive regulation and failed to pass the National Assembly in December last year, many landowners had already completed their gifts by then.

With the government’s roadmap for the realization of official land prices, land official prices are expected to surge by around 10% this year, making it likely that the gifting trend will continue in the first half of the year. An industry insider said, "Official land prices are usually announced at the end of May, and if gifts are made before the announcement, gift tax is calculated based on the 2021 official land prices." They added, "If you are considering disposing of or gifting land, it is better to complete it before June."

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