Gift tax is a tax levied on the transfer of property to another person free of charge. Nevertheless, there is a deduction for gift property, which is the amount of gift tax exemption between family members. Let’s learn more about gift tax exemption and gift tax exemption limit.
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Gift tax exemption
gift-property-deduction
gift-property-deduction
The standard for gift property deduction, which is the range of gift tax exemption, is the gift amount summed up over 10 years. What is worth noting in the gift tax exemption between family members is the gift to direct ascendants and direct descendants. 증여세 면제 대상
The gift tax exemption limit between husband and wife is 600 million won for 10 years. When donating property to an adult child, the gift deduction amount is up to 50 million won for 10 years up to 50 million won. The range of gift tax exemption for adult grandchildren is also up to 50 million won for 10 years. Conversely, if a child or grandchild gives a gift to their parents or grandparents, the same can be donated up to 50 million won for 10 years. 좋은뉴스
However, since minors can receive a gift deduction of 20 million won for 10 years, up to 140 million won can be gifted free of charge in the case of quick-footed parents. This is because the gift tax exemption period is 10 years.
A gift of 20 million won at the age of 1
Donated 20 million won at the age of 11
Donated 50 million won at the age of 21
Donated 50 million won at the age of 31
Child gift tax exemption
The sales price of apartments nationwide has risen to the point where it is impossible to buy an apartment unless you donate it to your children. Since the gift tax exemption amount is too low compared to the apartment sales price, expedients or illegal acts are naturally committed. One of them is how to get gift tax exemption by transferring cash.
There must be a lot of people who are looking for a gift tax exemption to help their children’s housing funds. Even if you do not commit illegality, there is a way to increase the gift tax exemption limit and deliver it. What if, before exploring this method, we insist that we are lending rather than giving to our children? Even in this case, the tax authorities consider it a gift.
This is because there are very few cases in which parents lend large sums of money to their children according to Korean social norms. However, when the following three conditions are met, it is acknowledged that it is lent to a child. Of course, the same goes for children or grandchildren lending to their parents or grandparents.
A clear IOU must be drawn up between parents and children, and there must be a history of financial transactions in which money actually came and went.
The source of the lending parent’s funds must be clear
When repaying loaned funds, the child must also have a clear source of funds
When lending money, it means that the interest rate set by the Ordinance of the Ministry of Opportunity and Finance, 46/1,000 per year, that is, at least 4.6% per year, must be confirmed by the lender’s financial transaction history.
When 100 million won is lent: 100,000,000 / 100 * 4.6 = 4,600,000 → In other words, there must be a record of financial transactions in which interest is sent to the person who lent 4.6 million won each year.
When 200 million won is lent: 200,000,000 / 100 * 4.6 = 9,200,000 → In other words, there must be a record of financial transactions in which interest is sent to the person who lent 9.2 million won each year.
Fortunately, the chances of being taxed by the tax authorities are very slim. The reason is that there is a gift method using expedients rather than the gift tax exemption standard. Although the price of the apartment has risen too high, it is judged that the government closes its eyes to some extent because the gift exemption standard is absurdly low.
Child gift tax exemption limit 2023
Have you heard of the gift tax exemption limit of up to 250 million won for children’s housing funds? In conclusion, gift tax exemption is possible. This is because the Ministry of Strategy and Finance announced in the tax law revision bill in 2015 that the amount of gift will be added to the amount of inheritance in the event of a parent’s death and will be levied as inheritance tax. At this time, those whose inherited property to be passed down to their children is less than 1 billion won will actually be exempted from gift tax. This is because inheritance tax is not paid if the combined inheritance is less than 1 billion won.
Of course, some say that this article or content is wrong, so you will need a clear rationale. Let’s take a look at the following inheritance and gift tax questions and answers.
Certificate, Seomyeon-2016-Inheritance-Gift-4687 [Inheritance and Gift Tax Division-573], 2018.06.21
[ title ]
Gift of profits according to free money loan, etc.
[Gist]
Gift tax is imposed in cases where profits are obtained by borrowing money from others free of charge or at an interest rate lower than the appropriate rate, but the case where the profits are less than 10 million won is excluded.
[ Reply ]
Whether or not the transaction in your query falls under a money consumption loan is a matter to be determined by integrating the specific facts of the relevant funds transaction, such as the contract, interest payment, details of borrowing and repayment, source and use of funds. In the case of a loan at a lower interest rate, the value calculated in accordance with each subparagraph of Article 41-4, Paragraph 1 of the 「Inheritance Tax and Gift Tax Act」 is the value of the gifted property of the borrower. However, if the value is less than 10 million won, it is excluded from taxation, and the rule on adding the value of donated property under Article 47, Paragraph 2 of the same Act does not apply.
To summarize this content, if the annual interest rate of 4.6% is less than 10 million won, even if there is no financial transaction history for interest, it means that the gift tax is excluded.
As mentioned earlier, when I loaned 200 million won to my children, I said that I had to leave 9.6 million won in annual interest in my financial history. However, since it is less than 9.6 million won and 10 million won, there is no need to leave financial details. If you consider that the amount of gift tax exemption for children is 50 million won for 10 years, 50 million won is passed on as a free gift, and 200 million won is borrowed by writing a borrowing certificate and lending it to your child.
Of course, it is better to go to a notary office and get the IOU notarized. This is because you can avoid suspicion that you have written an IOU only then when an investigation comes out from the tax office in the future.
The maximum gift tax exemption limit is KRW 217,391,304, provided that the annual interest rate of 4.6% does not exceed KRW 10 million. If you add 50 million won to the amount of gift tax exemption for children, you will be able to deliver up to 267,391,304 won without gift tax. As a result, it is possible to exempt gift tax up to 250 million won for children’s housing funds.
100 million donation tax investigation
To report a gift of 50 million won between parents and children, all you have to do is visit the local tax office and report that you donated 50 million won. If necessary, you may request financial transaction details, identification cards, and seals.
There are often parents who donate about 100 million won for their children’s housing funds. For that reason, there are many people who ask whether a gift of 100 million will result in a tax investigation, and how much gift tax they will have to pay when they receive a gift of 100 million from their parents. It is natural to report tax when the gift tax exemption limit is exceeded, but let’s think about it in more detail.
In principle, 50 million won is subject to gift tax exemption, and gift tax must be paid on the remaining 50 million won. The gift tax rate for 50 million won is 10%, so you have to pay 5 million won as gift tax. However, if the annual interest rate of 4.6% is less than 10 million won, considering that there is no need to have a financial history for interest, a gift of 100 million won is not subject to tax investigation. Of course, it is necessary to write an IOU and notarize it.
If you know how to exempt from gift tax like this, you will be able to contribute to your children’s housing funds without worrying about tax investigations. At the end of 2022, it is expected that the tax law will be amended to increase the gift tax exemption limit. It is hoped that the plan for exemption from gift tax related to apartments will be appropriately announced. If the tax law is revised, it is hoped that illegal acts such as cash gift tax exemption will not occur.