Gift a home with a tenant's deposit attached and the tax changes shape — the same ₩600M becomes ₩101.85M or ₩67.05M
Gifting a ₩600M apartment to a child outright means gift tax of ₩101.85M on the whole ₩600M. If the child takes over the ₩300M jeonse deposit, it is an encumbered gift: the ₩300M deposit counts as a sale and only the remaining ₩300M as a gift, giving ₩38.8M gift tax plus ₩28.25M capital gains tax, ₩67.05M in total. That is ₩34.8M less, for a home bought for ₩300M and held ten years.
Conditions used in the video
- Gifted property
- apartment worth ₩600M
- Debt the child assumes
- ₩300M jeonse deposit
- Parent's cost · holding
- ₩300M · bought 10 years ago
- Recipient
- adult child (₩50M gift deduction)
- Capital gains tax
- standard rates · no one-home exemption or multi-home heavy rate (assumed)
Results
- Outright gift (gift tax)
- ₩101.85M
- Encumbered gift (total)
- ₩67.05M (₩34.8M less)
- Child's gift tax (₩300M gift portion)
- ₩38.8M
- Parent's capital gains tax (₩300M sale portion)
- ₩28.25M (₩150M gain · 20% long-term deduction · ₩2.5M basic deduction · incl. local income tax)
- If bought for ₩500M and held 3 years
- total ₩44.76M
- Gratuitous acquisition tax rate
- 3.5% (heavy rate in regulated areas above a threshold)
Why it works this way
Two families gift the same ₩600M apartment to a child, and one pays ₩101.85M in tax while the other pays ₩67.05M. The difference is the deposit.
If the child takes over the deposit, that ₩300M is treated as sold by the parent.
- ₩300M depositsale → parent's capital gains tax ₩28.25M
- Remaining ₩300Mgift → child's gift tax ₩38.8M
- Total₩67.05M · ₩34.8M less
For a home bought for ₩300M and held ten years.
The saving turns on the gain. A larger gain means more capital gains tax and the total can even go up, while a home bought for ₩500M and held three years has a smaller gain and falls to ₩44.76M. Between family members the debt must actually be assumed and proven, and the 3.5% gratuitous acquisition tax applies as well.
The legal basis
Drawn from government announcements and the statutes themselves as primary sources, covering only the relevant part.
Inheritance and Gift Tax Act Article 47(1) (Encumbered gifts)
In force Current (checked 2026-09-05)
Debt secured on the gifted property and assumed by the recipient is deducted from the value of the gift. That debt is treated as a transfer (Income Tax Act Article 88).
What this means
The deposit portion becomes a sale and only the rest is a gift. The tax splits into two shapes.
Run it on your own numbers
The calculator opens with these conditions already filled in. Change the figures and your own case comes straight out.
Open the Gift With Debt Calculator
Frequently asked
Is an encumbered gift always cheaper?
No. The larger the gain on the sale portion, the higher the capital gains tax. Enter the cost and holding period and compare both figures.
Does the child really have to repay the deposit?
Yes. For encumbered gifts between family members, the tax office checks afterwards that the debt was actually assumed. If the parent repays it, that portion becomes a gift again.
What about acquisition tax?
The gift portion carries the 3.5% gratuitous acquisition rate and the sale portion the purchase rate. See the paired lecture for details.
Results are estimates based on the inputs and on the rules as at the stated date. They may differ from a lender's actual assessment, and the rules change often. Take professional advice before any decision that matters.