'Acquisition Tax Burden to Increase'... This Year's Proportion of Gifted Housing Transactions Hits Record High

Despite the Transaction Cliff, 1 in 10 Housing Transactions Is a 'Jeung-yeo' (Gift Transfer)

[Image source=Yonhap News]

[Asia Economy Reporter Kwak Min-jae] Despite an unprecedented transaction freeze, the proportion of gifts in nationwide housing transactions this year has reached an all-time high. Analysts suggest that the increased acquisition tax burden from gifts starting next year has influenced this trend.

According to the 'Housing Transaction Status' statistics from the Korea Real Estate Board on the 19th, out of 806,972 nationwide housing transactions from January to October this year, 73,005 were gifts, accounting for 9.0% of the total. This is the highest figure on a cumulative basis from January to October since related statistics began in 2006. Last year, gifts accounted for 8.5% (137,248 cases) out of approximately 1.62 million total housing transactions, and in 2020, 7.5% (152,427 cases) out of about 2.02 million transactions were gifts.

The area with the highest proportion of housing gifts is Seoul. During the same period, housing gifts in Seoul numbered 10,613, making up 12.5% of all transactions. Notably, Nowon-gu had the highest gift proportion at 27.9%, meaning one out of every four housing transactions was a gift. This was followed by Jongno-gu (21.4%), Yongsan-gu (19.6%), Seodaemun-gu (17.9%), and Jung-gu (16.1%) in terms of gift transaction proportions.

In the provinces, Daegu had the second-highest gift proportion at 11.9%, followed by Jeju (11.8%), Jeonnam (11.7%), and Daejeon (9.9%). Gyeonggi-do's gift proportion was 8.6%, and Incheon was 8.1%.

The increase in the gift proportion is due to the rising acquisition tax burden from gifts starting next year. The standard for gift acquisition tax, which the recipient must pay, is changing from the standard market value assessed at 60-70% of the market price to the recognized market price (actual market price), resulting in higher taxes.

More stringent tax-saving conditions have also had an impact. Until now, if a house was gifted to a related party and sold after the deferred taxation period (5 years) had passed, the capital gains tax could be somewhat reduced by calculating the gains based on the gifted amount rather than the acquirer's purchase price. However, starting next year, the deferred taxation period will be extended to 10 years. The gifted real estate must be held for more than 10 years to avoid an increased tax burden.

Meanwhile, the cumulative nationwide apartment price decline from January to November this year was 4.79%, the largest since the Korea Real Estate Board began compiling data in December 2003. Additionally, the nationwide apartment sales transaction volume from January to October was about 262,000 cases, marking a record low.

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