During the 2024 Seoul Money Show Plus held at the aT Center in Yangjae-dong, Seoul on the 22nd, Kim Ho-yong, the esteemed CEO of Mirzintax and a prominent tax expert often referred to as the “Minerva Owl,” shared invaluable insights into evolving tax policies and tailored tax savings technologies.
In his engaging lecture, CEO Kim elucidated the tax-free special considerations available to owners inheriting residential properties. He emphasized the importance of understanding how these exemptions function: “For single-home owners, houses inherited after the death of parents are excluded from the tally when determining tax obligations,” he elaborated. “However, one must exercise caution; if an inherited house is transferred before selling an existing home, the tax-free benefits may be forfeited.”
As part of his comprehensive guidance, CEO Kim highlighted that first-time homeowners could benefit significantly from acquisition tax reductions, potentially saving up to 2.2 million won upon purchasing property. Specifically, if the acquisition cost of a home falls below 1.2 billion won, buyers could be exempt from both the 2 million won acquisition tax and an additional 200,000 won local education tax.
He further encouraged prospective parents to take advantage of the tax reductions associated with home purchasing, a benefit designed to support childbearing and parenting. This policy allows for a complete deduction of up to 5 million won on taxes for houses acquired by parents planning to expand their families by 2025. Eligible homes must also adhere to a maximum acquisition price of 1.2 billion won and fulfill residency requirements with their new children.
In discussing the government’s initiatives aimed at combating declining birth rates, CEO Kim elaborated on the advantages of property gift tax deductions for marriage and childbirth-related gifts. Previously, a gift tax was applied to amounts over 50 million won when gifting adult children, but now an additional deduction of 100 million won is permitted for gifts linked to marriage and childbirth. This provision applies if the gift occurs within two years before or after a marriage registration or within two years following a birth or adoption. He highlighted the government’s intention to make marriage more financially accessible: “Given the costs associated with marriage, this revamped system is a strategic move to incentivize couples to marry.” He also advocated that these benefits should extend to various family situations, including remarriage and single motherhood.
Moreover, CEO Kim provided essential advice on the nuances of financial transactions between parents and children. He warned that without the use of a documented loan agreement and interest payments, money lent by parents could be misclassified as a gift, which may attract scrutiny from the National Tax Service. “Transactions between parents and children tend to be interpreted as gifts,” he cautioned. “To avoid triggering gift tax implications, it’s crucial to maintain clear records and interest agreements.” He recommended a repayment timeline of two to three years, suggesting that agreements should be routinely updated upon expiration. Extending repayment into lengthy periods, such as 30 years, might prompt concerns that no real financial exchange occurred.
What are the key tax exemptions available for homeowners who inherit properties in South Korea?
**Interview with Kim Ho-yong, CEO of Mirzintax – Insights from the 2024 Seoul Money Show Plus**
**Interviewer:** Thank you for joining us today, Mr. Kim. Your lecture at the 2024 Seoul Money Show Plus has sparked a lot of interest. Can you summarize the key points regarding tax exemptions for inherited properties?
**Kim Ho-yong:** Thank you for having me! One of the main points I emphasized is that single-home owners who inherit properties from their parents can benefit from significant tax exemptions. Specifically, these inherited homes are not counted when calculating tax obligations. However, it’s crucial for these homeowners to be careful; if they transfer the inherited property before selling their current home, they may lose these tax-free benefits.
**Interviewer:** That’s quite insightful. What about first-time homeowners? What tax benefits should they be aware of?
**Kim Ho-yong:** First-time homeowners can really take advantage of acquisition tax reductions. If their property acquisition cost is below 1.2 billion won, they could save up to 2.2 million won. This includes a 2 million won exemption from the acquisition tax, as well as an additional 200,000 won reduction in the local education tax. It makes a significant difference for those entering the housing market for the first time.
**Interviewer:** You also mentioned tax benefits aimed at supporting families. Can you elaborate on that?
**Kim Ho-yong:** Yes, indeed. The government has introduced tax reductions to encourage childbearing and support families. Parents who purchase homes can receive a complete deduction of up to 5 million won on their taxes, provided they are planning to expand their families by 2025. The homes purchased also need to meet specific acquisition price limits, which is an essential aspect of qualifying for this benefit.
**Interviewer:** These policies sound very beneficial. How do you see these tax strategies evolving in the future?
**Kim Ho-yong:** I believe we will continue to see more tailored tax policies designed to meet the changing demographics and economic needs of homeowners in Korea. As the government aims to boost family growth and home ownership, we can expect ongoing adjustments and new initiatives that can help mitigate the financial burdens associated with these processes.
**Interviewer:** Thank you for sharing your insights, Mr. Kim. Your expertise is invaluable as we navigate these complex tax policies.
**Kim Ho-yong:** Thank you for the opportunity! It’s vital for homeowners and prospective buyers to stay informed and leverage these benefits effectively.
