Gift Tax Saving Tips: Giving 100 Million Won to Children
As retirement approaches, the baby boomer generation is often concerned about their children's marriages and inheritance. When it comes to inheritance, parents with significant assets should pay attention to the gift tax deduction for marriage or childbirth.
The current deduction for gift property is 50 million won for adult children (20 million won for minor children). Starting this year, an additional deduction of 100 million won for marriage or childbirth has been introduced. By adding the new 100 million won deduction to the existing 50 million won, it is possible to give gifts up to 150 million won without incurring gift tax. Let's examine a few important points to consider:
First, the giver and recipient. The giver is the direct descendant, typically parents or grandparents of the newlywed couple. The recipient is the newlywed couple who are married or have given birth. Therefore, if a newborn is designated as the recipient, the childbirth gift deduction cannot be applied.
Second, the timing of the gift. For marriage, it must be within 2 years before or after the marriage registration date. Regardless of whether there is a wedding ceremony, if the marriage registration date is within 2 years, the marriage gift deduction can be considered. Similarly, for childbirth, the gift must be given within 2 years from the date of the child's birth.
Lastly, the deduction limit (100 million won). The marriage gift deduction and childbirth gift deduction are combined to apply a unified deduction limit of 100 million won. Some may be confused about whether they can receive a deduction of 100 million won for marriage and another 100 million won for childbirth, but it's important to be mindful of the limit. For the baby boomer generation approaching retirement, it's recommended to carefully check the newly introduced gift deduction clause to make wise tax-saving decisions.
For more details, please feel free to reach out at jz@taxjz.com or If you would like a consultation with an English-speaking Consultant/Accountant in Korea, please schedule a call at: Schedule a Call with Jz
