Full Verification of Ultra-High-Priced Housing Over 3 Billion Won; Caution Needed Regarding the '80% Rule' When Explaining Sources of Funds

The National Tax Service is conducting full verifications of ultra-high-priced housing acquisition transactions of 3 billion won or more from 2014 to the present. According to the video, full verification does not immediately mean a formal tax investigation for all subjects. The core lies in verifying whether the acquisition funds match one's own economic capacity—that is, whether the real estate was acquired through one's own means.

Criteria for Excluding Gift Presumption of Funds Source and Misconceptions about the '80% Explanation'

The National Tax Service operates criteria for excluding the presumption of gifts regarding property acquisition funds. In accordance with the Inheritance Tax and Gift Tax Act, funds within a certain range are not presumed to be gifts, taking into account age, income, and property status. For example, for those aged 40 or older, there are administrative standards that exclude gift presumption within the range of less than 300 million won for housing purchase funds and less than 100 million won for other assets (a total limit of less than 400 million won). However, this is not a tax-exempt limit for gift tax, and if the actual fact of a gift is confirmed, it can be subject to taxation.

The commonly known information that "one only needs to explain 80% of the house price" requires caution. According to the current Enforcement Decree of the Inheritance Tax and Gift Tax Act, if the unproven amount is less than the smaller of 20% of the real estate acquisition value or 200 million won, the gift presumption criteria are not applied. For example, in the case of a 2 billion won apartment, the standard would be 200 million won, which is the smaller amount between 20% (400 million won) and 200 million won. If the unproven amount is less than this standard, there is a high possibility that no additional tax issues will arise, but if the actual fact of a gift is confirmed later, it becomes a separate issue.

4 Recognizable Sources of Funds and How to Prove Borrowed Money from Parents

Funds that can be recognized when explaining the source of funds are largely classified into four categories. First is after-tax income, such as salary or business income reported to the National Tax Service. Second is proceeds from the sale of existing real estate, stocks, or cryptocurrency. In this case, the standard is not the total transaction amount, but the actual amount deposited into the bank account after excluding loan repayments and capital gains tax. Third is loans from financial institutions. However, if a parent repays the loan on behalf of the child, separate gift issues may arise. The last is pure cash, such as savings and deposits. However, since the process of forming cash must be proven, this is the most difficult part in practice.

In the case of borrowing money from parents, simply writing a loan agreement is not enough. The National Tax Service checks the parent's ability to mobilize funds, whether the money was actually transferred via account, and whether interest and principal are being repaid. In particular, the child's repayment ability is key. It is known that if the annual interest profit is less than 10 million won—meaning up to approximately 217 million won based on the principal—there are no gift tax issues even if borrowed interest-free, but this is only a standard for interest income. If the child is judged to have no repayment ability, the entire transaction may be considered a gift even if the amount falls below the threshold.

Differences Between a Request for Explanation and a Formal Tax Investigation and Response Strategies

There are procedural differences between a request for explanation from the National Tax Service and a formal tax investigation. If it is confirmed that there are no problems through the materials submitted during the request for explanation stage, the matter can be closed, and if missing taxes are clear, it may be closed through an amended return. On the other hand, if one does not respond appropriately to a request for explanation, there is a high possibility of it turning into a formal tax investigation. According to the Framework Act on National Taxes, a formal tax investigation must, in principle, be notified in advance 20 days prior, but exceptions may apply in cases where there is a concern regarding the destruction of evidence.

For an efficient explanation, rather than blindly printing out bank statements, the task of matching numbers by the source of acquisition funds should precede. It is important to organize the flow of funds by item, such as deposits, real estate sale proceeds, loans, gifts, and borrowings, and to prepare supporting documents corresponding to each item.