“Parents’ Chance” increased by 30 percent…”Impact of 100 million additional marital gift tax exemption”.
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This year, it has been revealed that the proportion of individuals in their 30s who received apartments and other collective buildings as gifts from direct ancestors has increased. This is analyzed as a result of the introduction of the ‘deduction for gifted property due to marriage,’ which increased the deduction limit from the existing 50 million won ($41,600) to a maximum of 150 million won ($124,900).
According to the analysis of the data from the Court Registry Information Plaza by the Woori Bank Real Estate Research Lab on the 27th, the proportion of individuals aged 30-39 who received collective buildings (apartments, row houses, multi-family houses, officetels, stores, etc.) as gifts in February this year was 16.1%, up 1.6% points from the previous year (14.5%). The proportion of inheritors in their 30s has been decreasing every year, from 21.6% in 2020 to 20.5% in 2021, and 18.3% in 2022, but it has been on the rise this year.
The only age group under 49 that saw an increase in the proportion of collective building inheritors compared to last year is the 30s. The company analyzed that this is because of the additional deduction of 100 million won ($83,100) for the property gifted within 2 years before and after the marriage registration date (total 4 years) by the direct ancestor who is the donor, which became possible as part of the government’s low birth rate measures. In the case of newlywed couples, they can receive a total of 300 million won ($249,800) in gift deductions.
The existing deduction limit for gifted property between direct ancestors and direct descendants was 50 million won ($41,600) for 10 years (20 million won ($16,600) for minors).
However, it was found that the age group of donors and recipients is gradually increasing due to aging. The proportion of collective building donors aged 70 and over increased from 23.1% in 2020 to 37% this year. Over the same period, the proportion of recipients in their 50s also rose from 20.1% to 26.6%.
The total number of collective building donors decreased for three consecutive years, from 83,890 in 2020 to 76,830 in 2021, 54,083 in 2022, and 32,450 last year. There is an interpretation that the real estate market has contracted since the sudden increase in the base rate in the second half of 2022, and the elderly with limited labor income after retirement are delaying the gift of real estate assets, which has reduced the enthusiasm for gifts.
Young-Jin Ham, the head of the Woori Bank Real Estate Research Lab, said, “The transfer of real estate assets between generations is gradually being delayed in the trend of low birth rates and aging,” and “In Korea, where the proportion of real estate assets is high, policy considerations are needed to help the transfer of assets to the recipients, such as reducing the tax burden on gift tax, along with the efficient operation of assets held after retirement by the elderly, etc.”
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