From an Economic Review report dated July 26, 2019.
Because the comprehensive real estate holding tax is assessed per person, spouses who split ownership between them lower the tax base and reduce the tax. It is also worth knowing that gifts between spouses — that is, joint ownership — qualify for a gift tax deduction of up to KRW 600 million over ten years.
Jonghoon Kim, a partner at Law Firm Changchun, explained: "Lifetime gifts have been increasing lately. On the premise that asset values will rise, passing real estate on in advance has become a trend." He added: "Judged by tax rates alone a gift offers no advantage, but because property prices can surge within a year or two, many people bring the timing of the gift forward to pay the minimum gift tax and let their children enjoy the subsequent increase in value."
Those seeking to reduce the gift tax burden can also use a "gift with assumption of debt" — a structure in which liabilities such as a jeonse deposit or a mortgage are transferred along with the gift. Because gift tax is paid only on the property value net of those liabilities, the higher the jeonse-to-price ratio, the greater the saving.