“Let's gift before taxes rise”
Homeowners concentrate assets to children
Sharp increase in minor gifts centered in Gangnam and Yongsan

“Gifting is better than inheritance”
Early gifting rush due to rising home prices and concerns over property tax

This year, with rising home prices and anticipated changes to the tax system, including property taxes, there has been a significant increase in the number of people gifting their homes. In particular, the number of minors and people in their 20s who received real estate in Seoul surged by more than 40% in just one year.

According to the Court Registration Information Plaza on October 22, the number of minors aged 0 to 18 who applied for ownership transfer registration for collective buildings (such as officetels, apartments, row houses, and multiplex houses) in Seoul due to gifting from January to September this year was 187. This represents a 42.7% increase compared to 131 during the same period last year.

Not only minors, but also young adults aged 19 to 29 saw a sharp rise in home inheritances. From January to September this year, 716 people in this age group received homes, a 48.5% increase from 482 during the same period last year. The growth rates for minors and those aged 19 to 29 were 18.9 percentage points and 24.7 percentage points higher, respectively, than the overall increase of 23.8% across all age groups who received gifts.

Within Seoul, gifts to minors were especially prevalent in areas with relatively high real estate prices. From January to September this year, the number of minor recipients in the three Gangnam districts and Yongsan District, which are considered prime locations in Seoul, was 84. Given that the total number of minor recipients across all 25 districts in Seoul was 187, these four districts accounted for a remarkable 45% of the total.

Homeowners appear to be gifting properties to their children as a way to prepare for possible increases in property taxes. Although President Lee Jaemyung pledged during the presidential election not to use tax policy to control real estate, concerns have persisted that the tax burden on high-priced homes or multiple property owners could be strengthened as home prices rise.

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As discussions about tax reform, especially the strengthening of property taxes, have become more active, multiple homeowners are facing increasing concerns. For them, reducing the number of homes they own through gifting is a way to avoid heavy taxation on multiple properties. As a result, it has become advantageous to transfer homes to their children, even if they are minors. If home prices are expected to rise further, gifting is more beneficial than inheritance, and considering progressive tax rates, it is better to gift properties as early as possible.

During the previous Moon Jae-in administration, a sharp increase in gifts was also observed due to soaring real estate prices and higher property tax rates. The number of home and building gifts steadily increased from 33,043 cases (5.36 trillion won) in 2017, surpassing 40,000 the following year. In 2019 and 2020, the figures reached 43,066 cases (8.01 trillion won) and 46,546 cases (9.87 trillion won), respectively. In 2021, both the number and value of gifts surged to 84,665 cases, amounting to 24.22 trillion won. As the tax burden grew, more people chose to pay gift taxes and transfer assets to their children rather than pay annual taxes.

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At that time, the trend of gifting among young adults in their 20s and 30s was particularly notable. In 2017, there were 2,985 cases of gifts to people in their 20s (515.1 billion won), but by 2021, this had increased to 14,389 cases (4.42 trillion won). For those in their 30s, the number grew from 6,871 cases (1.38 trillion won) to 20,913 cases (7.52 trillion won). Over five years, the number of gifts received by people in their 20s and 30s increased 3.5 times, and the total value rose 6.3 times.

Recently, the possibility of a property tax increase has grown even stronger. In July, Jin Sungjun, then Policy Committee Chair of the Democratic Party, stated that additional tax measures could be considered if instability in the real estate market continued. In August, Kim Yongbeom, Policy Chief at the Presidential Office, said, "It is a mistake to think the government will not use taxes." On October 16 (local time), Deputy Prime Minister and Minister of Economy and Finance Koo Yooncheol also suggested the possibility of a comprehensive tax system overhaul, including strengthening property taxes, if the upward trend in home prices in the Seoul metropolitan area does not subside.

Yoon Sumin, a real estate specialist at NH Nonghyup Bank, said, "As the burden of property taxes increases and additional taxes on multiple homeowners are emphasized, more people are choosing to gift their properties. If the government signals an intention to raise property taxes, the pace of gifting will naturally accelerate." She added, "If you gift property quickly while its value is still low, your children will benefit more when prices rise. Many people are likely thinking that, assuming home prices continue to increase, it is better to gift now."

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