Seoul Real Estate Gifts Exceed Last Year's Total

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Rising Trend in Real Estate Gift Transfers in Seoul

The number of real estate gift transfers in Seoul has shown a consistent upward trend this year. Specifically, the volume of gift transfers for collective buildings, such as apartments, has already exceeded the total recorded for all of last year. This increase is being interpreted as a reflection of expectations regarding rising home prices, which has led more individuals to opt for gift transfers rather than traditional sales.

According to data from the Supreme Court's Registration Information Plaza, the number of gift transfers for collective buildings in Seoul between January and October this year reached 6,720 cases. This surpasses the total of 6,549 cases recorded throughout the entire previous year. The monthly figures also indicate a growing trend: 419 cases in January, 671 in April, 740 in July, 881 in September, and 837 in October.

A significant portion of these gift transfers took place in the Gangnam Trio districts, which include Gangnam, Seocho, and Songpa. These areas accounted for 21.6% (1,453 cases) of all gift transfers in Seoul. When including Yangcheon-gu, where Mok-dong is located, nearly one-third of all gift transfers occurred in these four autonomous districts. This concentration highlights the popularity of these areas among high-net-worth individuals.

Experts suggest that affluent individuals are increasingly choosing gift transfers over sales, driven by the expectation of rising property values. By transferring properties to their children, they can avoid capital gains tax liabilities while potentially benefiting from future appreciation. This strategy is seen as more advantageous than selling properties, especially in a market where price increases are anticipated.

Another factor contributing to the rise in gift transfers is the government’s policy of increasing tax burdens on property owners. Holding onto a home incurs heavy holding taxes, such as the comprehensive real estate tax and property tax. Selling a property, on the other hand, may result in capital gains tax liabilities. As a result, many property owners are reconsidering their options.

With the postponement of the surcharge on capital gains tax for multiple homeowners set to end in May next year, there are predictions that more property holders will choose to pay gift taxes and transfer properties to their children. This decision is based on the expectation that if home prices continue to rise, transferring properties before an increase will allow them to avoid the surcharge rate on the comprehensive real estate tax for multiple homeowners. Additionally, it could help reduce potential capital gains tax liabilities.

This shift in behavior underscores a broader trend in the real estate market, where strategic planning and tax considerations are playing a critical role in property transactions. As the market continues to evolve, the dynamics of gift transfers are likely to remain a key topic of discussion among investors, policymakers, and homeowners alike.

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