Inheritance tax is not paid in one go — ten-year installments and the interest they cost

The inheritance tax bill reads ₩87.3M. What was inherited is one apartment, and the account holds nothing like that. Must the home be sold in a hurry? No. Inheritance tax is not a tax paid in one go. The law opens three ways to spread it: a split deferring half for two months, installments paid yearly for up to ten years, and payment in kind with real estate instead of money. But all three open only if applied for within the filing deadline. Most people count only how much the tax is and think about how to pay it after the bill arrives, when the door has already closed. It is often mistaken for interest-free financing, but there is interest. We count how ₩87.3M becomes two payments of ₩43.65M or eight of ₩10.91M, and what interest that costs.

Step ② Installments: above ₩20M, inheritance tax can be spread over up to ten years, gift tax five. The first payment falls on the filing deadline and the rest yearly, so ten years means eleven payments. Each payment must exceed ₩10M, so a smaller tax shortens the period by itself: ₩87.3M allows at most seven years, eight payments of ₩10,912,500. No surcharge on the first payment; from the second, 3.1% a year on the balance, ₩9,472,050 in total, ₩96,772,050 with the tax. ₩300M becomes eleven payments over ten years of ₩27,272,727 with ₩46.5M in surcharges. Most people get confused here: the surcharge is not a fine but interest for the deferral. Security such as a mortgage or tax payment guarantee insurance is required; without it, or without the ₩10M minimum, the application is rejected. A mortgaged home must be cleared with the tax office before sale, and paying the remaining installments at once stops further surcharges.

The ₩87.3M payment plan is three lines. ① Above ₩10M the split, above ₩20M installments; ② if cash in hand plus cash raised within two months covers it, the split is cheaper; ③ if not, installments with the longest period keeping each payment above ₩10M and the property to mortgage. With those three lines, payment preparation is done. ₩87.3M is ₩43.65M twice over two months or ₩10.91M yearly over seven years, and the home need not be sold. Compare the ₩9.47M surcharge with loan interest: borrow if the loan rate is below 3.1%, use installments if above, and take the two-month split first either way.

All three steps are passed: the split above ₩10M, installments above ₩20M, payment in kind without cash. ₩87.3M is ₩43.65M twice at no interest or eight payments over seven years with ₩9,472,050 in surcharges. Miss the filing deadline and all three doors close, leaving only penalties. Two things to do now: put the tax and the way to pay it on the same sheet, and confirm the property for security and the ₩10M minimum before filing. The surcharge rate changes yearly and in-kind conditions vary by asset, so consult a tax adviser.