Kwanghyun Lim: "For Homes with a 2 Billion Won Increase, Capital Gains Tax Is 650 Million, Gift Tax 1.38 Billion... Don't Consider Illicit Gifting"

On April 28, on his social media account

Home gifts in Seoul surged by 94.4% in the first quarter of this year

A 40% additional penalty for "illicit gifting" to evade taxes

Kwanghyun Lim, Commissioner of the National Tax Service, has issued a warning message as the temporary suspension of heavy capital gains tax on owners of multiple homes is set to end on May 9, and cases of property gifts are on the rise. He emphasized that "in normal transactions, the tax on transfer is lower than on gifts," and announced thorough investigations into illicit gift transactions.

On April 29, Commissioner Lim stated on his social media account, "While there may be exceptional cases, in most instances, when proper gift tax is paid, the tax burden from a transfer is likely to be less than from a gift," adding, "I question whether gifting is an economically reasonable choice."

Kwanghyun Lim, Commissioner of the National Tax Service. The Asia Business Daily DB

He continued, "The market expects that, with the end of the heavy capital gains tax suspension for owners of multiple homes approaching, more people will choose to gift their homes (especially after May 9)," and explained, "In fact, in the first quarter of 2026, the number of home gifts in Seoul reached 3,075 cases, a 94.4% increase compared to the same period last year."

He presented a simulation based on a scenario where an owner of multiple homes has held an apartment in Daechi-dong, E Apartment, with a market value of 3 billion won for 10 years. Commissioner Lim pointed out, "If the market value was 1 billion won 10 years ago, the capital gain would be 2 billion won, but if you sell before May 9, the tax would be 650 million won. However, if you gift the property, the tax surges to 1.38 billion won, more than double."

Commissioner Lim questioned the surge in gifts despite the higher tax burden compared to transfers, asking, "Are people really paying all these taxes when they gift their properties?" This serves as a warning against illicit gifting intended to avoid taxes.

Commissioner Lim stated, "It is best not to even consider illicit gifting as a way to evade taxes," and added, "If a parent repays a mortgage after a home is gifted with outstanding loans, or if an expensive apartment is appraised at a value lower than the market price for gifting purposes, the National Tax Service plans to thoroughly investigate all such cases. In addition to the original tax owed, violators may face additional penalties of up to 40%."

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