The volume of real estate gift transfers in Seoul this year has been consistently rising. Particularly, the number of gift transfers related to multi-family buildings, like apartment complexes, has already exceeded the total from the entire previous year. This trend is seen as an indication of expectations for increasing property values, which has contributed to the rise in gift transfers.
As per the Supreme Court’s Registration Information Plaza on the 21st, the total number of gift transfers for residential buildings in Seoul between January and October this year reached 6,720, exceeding the 6,549 cases reported during the entire previous year. Monthly data indicates a growing trend: 419 instances in January, 671 in April, 740 in July, 881 in September, and 837 in October.
Notably, 21.6% (1,453 cases) of gift transfers in Seoul happened within the Gangnam Trio areas (Gangnam, Seocho, and Songpa). When adding Yangcheon-gu, which includes Mok-dong, almost one-third of all gift transfers in Seoul occurred in these four autonomous districts.
This has resulted in analysis indicating that wealthy people are choosing gift transfers over sales, expecting home prices to increase. It suggests that they find it more beneficial to transfer properties to their children rather than sell their apartments.
Another study highlights the government’s approach of raising tax obligations as a possible cause. Not selling a house leads to significant holding taxes, including the overall real estate tax and property tax, whereas selling brings about capital gains tax responsibilities.
Due to the delay in the capital gains tax surcharge for multiple homeowners (base rate of 42% plus an additional 20%), which is anticipated to conclude in May next year, there are predictions that more individuals who own multiple properties will opt to pay gift taxes and transfer their real estate to their children. This strategy is being considered because, if property values increase in the future, transferring the assets beforehand could help them evade the higher surcharge on the overall real estate tax for multiple homeowners, as well as lower their capital gains tax liability.
