Like inheritance tax, gift tax is also one of the wasteful taxes. If I share the assets I’ve earned through hard work with my family, I feel like I’m losing money because I have to pay taxes. But if you have to pay anyway, it’s good to know more about gift tax. Below we will provide you with an exemption check and calculator.
What is gift tax?
First of all, gifting refers to giving one’s own property, such as real estate or cash, to another person free of charge. When such a gift is made, a gift tax is imposed.
In other words, gift tax refers to a tax on property received from someone without compensation. Usually, when thinking about gift tax, there are many cases that only think about transactions between family members. In addition to transactions between relatives, if property is acquired free of charge from another person, all of them are subject to gift tax. 증여세 면제 대상
Cases of gift tax 좋은뉴스
Let’s take a look at a few representative examples.
In the case of receiving the trust property or the profits generated from the property by trusting another person’s property
In the event that a person who has not paid the insurance premium or has received and paid the insurance money during the insurance contract period receives the insurance money
When the property is transferred at a value of 70% or less of the standard market price or 130% or more of the standard market price, or the difference between the standard market price and consideration is more than 300 million won
If you use someone else’s property or receive services from someone else for free (limited to cases where the value of donated property is 10 million won or more)
Where a person other than the debtor has benefited from debt repayment
When money is lent free of charge or borrowed at a low interest rate (limited to cases where the value of donated property is 10 million won or more)
In the case of transfer of property between spouses and lineal ascendants and descendents (when the fact of transfer in exchange for payment is not clearly confirmed)
In the case of using real estate for free (if the profit from using it for free is more than KRW 100 million) or borrowing money after providing real estate as collateral for free (if the profit from using the collateral is more than KRW 10 million)
If it is judged that the value of the property acquired by a minor, etc. has increased due to the contribution of another person
If the source of the funds for acquiring the property or the funds for repaying the debt is unclear
Gift tax exemption
If you are a domestic resident, you are obligated to pay gift tax on all gifted property in and out of Korea. However, if the party is not a specially related person and the gift tax is exempted by foreign laws for the gifted property, the payment obligation is exempted.
Except for the above special cases, gift tax must be paid. However, there is an exemption limit. There has been talk of raising the exemption limit from the government, but that hasn’t changed yet.
Gift tax exemption limit
In case of gift from spouse: KRW 600 million
In case of receiving a gift from a direct ascendant: 50 million won
In case of receiving a gift from a direct descendant: 50 million won
In case of gifting to other relatives: 10 million won
However, not every gift is exempted, and gift tax is calculated on the sum of 10 years. For example, if you gifted 500 million won to your spouse 8 years ago and then gifted an additional 200 million won, you are exempted up to 600 million won, but you must pay gift tax on the additional 100 million won.
Please see below for how to calculate gift tax.
How to Calculate Gift Tax and Using the Calculator
Gift tax is taxable on property acquired free of charge from another person. If you are a domestic resident, you are obligated to pay if you receive all domestic and foreign property. property received from someone without payment
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Gift tax exemption method
If so, you may be wondering if there is any way to get tax-free. I’d like to look at a few examples. First of all, inheritance tax is not levied on the division of inherited property among the members of the heir, the return of gifted property (excluding money) within 3 months, scholarships, congratulatory money, congratulations and condolences, etc.
Looking at other cases,
Where inherited property is acquired in excess of the statutory share by dividing the inherited property by agreement between the heirs
In case the retained portion of the inherited property is returned under the Civil Act
Money and valuables for disaster relief, medical expenses, living expenses of dependents, education expenses, etc. recognized according to social norms
When it is recognized as necessary in terms of social norms, such as souvenirs, money for congratulations, money for favors, etc.
In case of redistribution of inherited property within the inheritance tax reporting deadline (6 months)
Marriage items corresponding to household items necessary for daily life (excluding luxury items, houses, and vehicles)
If the gifted person returns the gifted property within the deadline for reporting the gift tax (three months)
In order for a homeless worker to acquire or lease a house with a total area of 85 square meters or less, the housing acquisition subsidy given from the company (joint) Labor Welfare Fund is 5/100 or less of the housing acquisition price, or the housing rental deposit is 100 of the total value. If less than 10/10
However, please note that in the case of monetary property, not only the original gifted property but also the returned portion are taxed regardless of the time of return.
Above, we learned about the tax exemption method for checking the gift tax exemption. I hope this helps you a lot.