Reasons to Avoid 'Encumbered Gift' and 'Low-Price Transfer' When Gifting a 1 Billion Won Apartment and Practical Strategies

An analysis has revealed that when gifting an apartment worth 1 billion won to a child, methods such as encumbered gifts or low-price transfers, which are used to reduce taxes, may instead lead to tax audits or additional tax burdens. According to a video from the YouTube channel 'Channel Genesis Park', the types of taxes incurred and the risks involved vary depending on the gifting method, so a choice suited to the asset situation is necessary.

Encumbered Gifts and Low-Price Transfers: Unexpected Tax Traps

Gifting methods are largely divided into general gifts, encumbered gifts, and low-price transfers to related parties. Based on a 1 billion won apartment, a general gift results in taxes of approximately 260 million won. On the other hand, an encumbered gift, which transfers debt along with the property, has the advantage of lowering the tax burden to less than 100 million won if the requirements for tax exemption for a single-home owner are met.

However, the video warned of the risks of encumbered gifts. If the donor is a multi-home owner or transfers a house within a regulated area, heavy capital gains tax may be applied, and within a Land Transaction Permit Zone, an obligation for the recipient to move in immediately for actual residence may arise, potentially incurring additional costs. In the case of low-price transfers, there is a high possibility of being subject to investigations into the source of funds or tax audits when trading at a price lower than the market value. In particular, it was pointed out that if a direct transaction is made at a price excessively low compared to the market value, gift tax may be imposed on the difference.

General Gifts Using Rental Deposits and Household Separation Strategies

The video suggested 'general gifts', which carry less risk, as an alternative. In particular, if the child lacks the cash to pay the gift tax, a method was mentioned where the gifted house is immediately rented out, and the resulting deposit is used to cover the gift tax.

The specific process is as follows. First, while the parents are still residing there, the title is transferred to the child after paying the acquisition tax. Afterward, the house is rented out to secure a deposit, and this deposit is used to pay the gift tax. The child can use the secured deposit to reside elsewhere as a tenant and maintain household separation. In this process, parents can make strategic moves, such as moving to another residence, to reduce the burden of holding taxes.

Timing of Gifts Considering Asset Value Appreciation and Policy Changes

For efficient gifting, the possibility of the target house's value increasing and changes in policy must be considered together. The video explained that areas such as non-regulated areas in Gyeonggi Province could be advantageous for gifting, citing an example of a complex where prices rose significantly within one year.

In conclusion, gifting is an area that requires a comprehensive consideration of the types of assets held, the proportion of the child's asset growth, and changes in government policy. The video preferred general gifts in terms of cash flow and stability, and suggested that if the parents are capable of economic activity, it may be appropriate to grow the assets first and then gift them, rather than forcing an early gift of high-value assets.