Inheritance tax and gift tax difference and tax rate information
상속세 증여세 차이
Inheritance tax and gift tax have in common that they are taxes levied on those who receive property for free, and the tax rate is the same, but there is a difference in the timing of imposition and the exemption limit.
First, if we look at the tax rate applied according to the tax base section,
10% below KRW 100 million
Between KRW 100 million and KRW 500 million, 20% progressive deduction amount KRW 10 million
Between KRW 500 million and KRW 1 billion, 30% progressive deduction amount KRW 60 million
Between KRW 1 billion and KRW 3 billion, 40% progressive deduction amount KRW 160 million
50% progressive deduction over KRW 3 billion KRW 460 million
The difference between inheritance tax and gift tax
Inheritance tax is levied on the date of commencement of inheritance when the property owner dies, but gift tax is levied whenever the property owner is alive and gives away.
Inheritance tax is calculated by applying the tax rate based on the entire inherited property and then distributing it according to the inheritance ratio, while gift tax applies the excess progressive tax rate to the gifted property for each recipient.
Inheritance tax deduction limit
1. Basic deduction of KRW 200 million
2. Personal deduction
ㅇ Deduction for children: number of children X 50 million won
ㅇ Deduction for minors: number of minors X 10 million won X remaining years until the age of 19
ㅇ Deduction for the elderly: Number of seniors X 50 million won (those aged 65 or older)
ㅇ Deduction for the disabled: number of disabled people X 10 million won X years of life expectancy
3. Batch deduction: the larger amount between basic deduction + personal deduction and KRW 500 million
4. Spouse inheritance deduction: up to 3 billion won
5. Financial property deduction: When the value of financial property is included in the value of inherited property as of the date of commencement of inheritance, the value obtained by subtracting financial liabilities from the value of financial property is deducted.
The limit that can be deducted by summing up gift tax for 10 years is
1. Spouse 600 million won
2. 50 million won for lineal ascendants (20 million won for minors)
3. 50 million won for direct descendants
4. 10 million won for other relatives (blood relatives within the 6th degree and relatives within the 4th degree)
Inheritance tax calculation method
Inheritance taxable amount = total inherited property value – non-taxable and non-taxable amount – public charges. funeral expenses. Debt – Pre-gifted property
Inheritance tax base = Inheritance tax amount – Inheritance deduction – Appraisal fee
Inheritance tax calculation = Inheritance tax base X tax rate
Inheritance tax payment period is within 6 months from the end of the month to which the date of commencement of inheritance belongs, and gift tax is within 3 months from the end of the month to which the date of inheritance belongs.
If the property owner died on March 13, 2023, the inheritance tax must be paid by September 30, and if the gift was made on the same day, the gift tax must be paid by June 30.
As a way to reduce inheritance tax and gift tax, you can use gifting in increments of 10 years within the limit of gift tax exemption, distributing gifts to multiple people, or gifting by skipping generations.
[Source] Inheritance tax and gift tax difference and tax rate guide |