"Let's Pass Down Apgujeong"... Gift Transfers in Three Gangnam Districts Hit Five-Year February High [Real Estate AtoZ]

More Urgent Sales in Gangnam Due to Multi-Homeowner Regulations
Reduced Burden in Gift Tax Valuation
Gift Transfers Expected to Increase Further After Higher Capital Gains Tax Takes Effect

A real estate sales notice is posted near Apgujeong Rodeo Station in Gangnam-gu, Seoul. Photo by Yonhap News Agency

Last month, the number of gift (donation) applications in Seoul's three Gangnam districts (Gangnam, Seocho, and Songpa) reached its highest level for the month of February in the past five years. This is believed to have been influenced by President Lee Jaemyung's mention of strong regulations on owners of multiple homes at the end of last January.

According to the Court Registry Information Plaza on March 17, the number of ownership transfer applications for collective buildings (such as apartments and officetels) in the three Gangnam districts for the purpose of donation reached 205 cases last month. This is the highest figure since February 2021, when the Moon Jae-in administration was in office, which saw 329 cases. At that time, donations surged ahead of the implementation of heavier capital gains taxes, and a similar phenomenon has occurred this year. By district, Gangnam-gu recorded 87 donation applications, the highest for February since 2021 (135 cases). Songpa-gu and Seocho-gu also reported 62 and 56 cases, respectively, marking the highest levels in five years.

A private banker (PB) responsible for high-net-worth clients in Apgujeong-dong, Gangnam-gu, said, "Many homeowners in Apgujeong are elderly, so they have already been considering donations. With the capital gains tax surcharge issue combined with redevelopment, they believe there is a much higher chance that house prices will rise further, making donation a more advantageous option."

The increase in urgent sales in the Gangnam area also appears to have influenced the decision to donate. Since the gift tax is based on the market value at the time of the donation, a drop in house prices makes donation more favorable. Recently, a low-floor 82.5-square-meter unit in Hyundai 3rd Apartment in Apgujeong-dong appeared as an urgent sale for 4.7 billion won, and in the Gangnam area, properties are being listed at prices 600 million to 700 million won lower than the prevailing market price. The number of properties for sale in Gangnam-gu has also increased by 43% compared to the beginning of the year, surpassing 10,000, while Seocho (52%) and Songpa (72%) have also seen a surge in listings as owners of multiple homes put their properties on the market. Lee Kyunggu, Deputy CEO of Hana Tax Corporation, said, "If these urgent sales are completed, it will reduce the transaction price that is recognized as the market value for calculating gift tax. A lower transaction price is advantageous for calculating the gift tax."

With the full-scale implementation of the capital gains tax surcharge scheduled for May 9, donations are expected to increase even further. Instead of selling properties and bearing the high capital gains tax, more people are likely to choose donation in the hope of long-term value appreciation. Yoon Sumin, Real Estate Specialist at NH Nonghyup Bank, said, "More people may shift to donation rather than selling at a low price. I believe the upward trend in donations will continue."

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