Tax reduction methods such as difference in inheritance tax and gift tax, gift with burden
상속세 증여세 차이
As you live in the world, there will come a day when you will find out about inheritance tax and gift tax, and you will have to check how much inheritance and gift tax you will pay, and what are the ways to save tax. How to save taxes such as capital gains tax, comprehensive real estate tax, and gift tax through legal gifting can also be a good investment technique, so if you know it once, it seems like it could be useful information. The main difference between inheritance and gift is that gift is voluntary during life, whereas inheritance occurs through death. In addition, since the tax rates for inheritance tax and gift tax are the same, and the calculation method and deduction amount are different, you must decide which of inheritance and gift tax is advantageous to you.
Difference between inheritance tax and gift tax
inheritance tax
Inheritance tax and gift tax difference
Inheritance tax refers to the tax levied on inherited property when the property is transferred free of charge to family or relatives upon death. Inheritance tax is levied on the basis of the deceased. If 3 billion won is inherited by a spouse, son, and daughter by 1 billion won each, the spouse, son, and daughter will have a joint tax liability and pay the inheritance tax obtained by multiplying 3 billion won by the tax rate. Inheritance commencement date is the time of death and must be reported within 6 months from the end of the month in which the inheritance commencement date belongs (in the case of the ancestor’s resident). It’s possible.
How to calculate inheritance tax
Inheritance tax = [(value of inherited property + property donated in advance within 10 years – debt burden, utility bills, funeral expenses – inheritance deduction) x tax rate (tax base)] – progressive deduction amount
* In the case of inheritance deduction, the basic deduction is 200 million won, and the spouse can receive a minimum of 500 million won and a maximum of 3 billion won. For example, if you have a spouse and children, at least 1 billion won (flat deduction of 500 million won + spouse deduction of 500 million won), and if you have no children and only have a spouse, at least 700 million won (basic deduction of 200 million won + spouse deduction of 500 million won) ), if there is no spouse, at least KRW 500 million (batch deduction) can be deducted. In addition, if you voluntarily report within the reporting period, you can receive an additional 3% inheritance tax deduction.
** Inheritance tax rate and gift tax rate (same tax rate)
Inheritance tax and gift tax difference (tax rate)
Statutory Inheritance Rank
① Spouse (joint rank with lineal descendants or lineal ascendants, if any), ② Lineal descendants, ③ Lineal ascendants, ④ Siblings, ⑤ Collateral blood relatives within the fourth degree of relationship
gift tax
Inheritance tax and gift tax difference
Gift tax refers to a tax borne by the person to whom the property was gifted (donee) when property is gifted from another person (donor). In addition, the gift tax must be reported and paid by a giftee who has received the property free of charge, and must be reported within three months from the end of the month in which the date the property was donated. When gifting, the deduction amount is KRW 600 million for spouses, KRW 50 million for direct ascendants (KRW 20 million for minors), and other relatives can receive deductions of up to KRW 10 million.
For example, if an apartment with a market price of 1 billion won is donated to a spouse, gift tax is imposed only on 400 million won minus the gift property deduction amount of 600 million won. If you subtract 10 million won, the gift tax becomes 70 million won. And if you voluntarily report within the reporting period, you can receive an additional 3% gift tax deduction of 2.1 million won, bringing the final tax amount to 67.9 million won. If additional real estate is gifted, a 4% gift acquisition tax must be paid.
How to calculate gift tax
Gift tax = value of gifted property + gifted property within 10 years – debt burden – gifted property deduction
gift deduction amount
Inheritance tax and gift tax difference (gift deduction amount)
Tax reduction method such as donation of burden
How to save taxes will also be an important investment technique. It will be important to calculate the related taxes such as inheritance tax, gift tax, capital gains tax, and acquisition tax in advance and determine which method is advantageous to you.
(1) Distributed donation
Gift tax is levied on the basis of the property received by the recipient, and the tax rate decreases as the number of recipients increases. For example, if you donate 300 million won to your son, the son will have to pay 38.8 million won in gift tax. If you subtract 50 million won, which is the gift property deduction amount, from the gift amount of 300 million won, the tax base amount is 250 million won. If the gift tax rate is 20% and the progressive deduction of KRW 10 million is subtracted, the calculated tax amount is KRW 40 million.
On the other hand, if you donate 300 million won to your son and 100 million won each to your son, daughter-in-law, and grandson, you can lower the gift tax rate. For reference, if you adjust the amount for each recipient, you can get a lower gift tax, so calculating the optimal case can be a good way to save tax.
Classification Son Gift of 300 million won Distributed gift
son daughter-in-law grandson (minor)
Value of donated property 300,000,000 100,000,000 100,000,000 100,000,000
Gift property deduction 50,000,000 50,000,000 10,000,000 20,000,000
Gift tax tax base 250,000,000 50,000,000 90,000,000 80,000,000
Gift tax rate 20% 10% 10% 10%
Calculated tax amount 40,000,000 5,000,000 9,000,000 8,000,000
Household tax increase to be omitted – – – 10,400,000
Tax credit (3%) 1,200,000 150,000 270,000 312,000
Gift tax 38,800,000 4,850,000 8,730,000 10,088,000
In addition, gift tax can be deducted from gift property every 10 years, so if you donate 20 million won to a minor child and 50 million won to an adult child every 10 years, you can donate without gift tax. For example, if a child is born, 20 million won is donated, 20 million won is given again when the child is 10 years old, 50 million won is gifted at the age of 20, and 50 million won is gifted at the age of 30. can do it And if this gifted amount is invested in various products such as stocks through the child’s securities account, you can get the effect of gifting a larger amount without gift tax. Therefore, giving a gift as early as possible can be a shortcut to tax savings.
(2) Gift with burden
A burden-bearing gift is a gift to a child together with a loan or charter deposit, and the recipient pays gift tax only for the amount excluding the loan or charter deposit, so gift tax can be saved. Instead, the recipient must pay the acquisition tax on the real estate, and the donor must pay capital gains tax on the amount because it is considered to have received a price for the transfer of the loan or deposit. It would be good to compare the case of a general gift and a burden gift and find a way to reduce taxes. If you use a gift tax calculator on the website, you can easily calculate it, so you can easily compare the calculated tax amount.
For example, an apartment bought for 200 million won 10 years ago became 500 million won, and if you give a gift to your child when you rent this apartment for 300 million won, a gift tax of 20 million won will occur. When you donate 500 million won as a general gift, the gift tax is 80 million won, so 60 million won is a tax savings. However, although the capital gains tax due to a burden-bearing gift is calculated at approximately KRW 38 million, if the parents own a house for one household, the capital gains tax is exempt from taxation, so the tax reduction effect can be increased. In conclusion, if the donor is a house for one household, the tax reduction effect can be maximized through the gift with burden, and in the case of multi-homed people under the current Income Tax Act, capital gains tax is heavily taxed. It’s good to be able to do a thorough comparison.