Headquarters of the National Tax Service in Sejong (National Tax Service)
SEJONG -- The nation’s tax authority said Thursday that it has launched a full-fledged investigation into people engaging in irregular transfers of assets to their children.
The action is aimed at turning up the heat on people, who sought to evade gift taxes by transferring their homes to children at prices lower than those on the trading market, according to the National Tax Service.
Over the past several years, more and more homeowners were found to have chosen to give their homes to their children, instead of selling the homes to others as they face high capital gains taxes levied under the Moon Jae-in administration. Apartment prices have surged at a fast pace in recent years over a severe supply shortage, high liquidity in the market and the government‘s tight rules on the property market. These tight rules ran counter to the government’s intention of curbing housing prices.
The NTS said it selected 227 individuals who allegedly dodged gift taxes during the process of transferring their assets -- including homes -- to their children.
While some parents have tried to evade gift taxes by arbitrarily lowering their housing prices below market value, some even paid interest and principal on mortgages issued to their children.
An NTS official said some children in their 20s or 30s in the wealthy bracket have concealed these practices. They do this by secretly using their parents‘ assets in an alleged bid to evade capital gains taxes or gift taxes.
He said that irregular donations “hamper taxation justice” and bring about more critical polarization of wealth between “the haves and have-nots.”
But some online commenters say that the government was seeking to put the blame on homeowners after failing to stabilize the real estate market and sharply raising property taxes.
“A core issue is not gift taxes, but the situation that the government created by blocking active trading of homes via irregular tax hikes. A series of real estate policies for the past five years have frustrated ordinary households,” a market commenter said.
By Kim Yon-se (firstname.lastname@example.org