Real Estate Accounts for Bulk of Inheritances in Korea

It has been reported that real estate accounts for approximately 60 percent of all inheritance transactions in Korea. Among them, land inheritances made up the largest proportion.

In a report submitted to Representative Lim Tae-hee of the Grand National Party (GNP) by the Ministry of Finance and Economy on Thursday, the total value of inherited properties in 2005 reached 3.6389 trillion won, and real estate accounted for 59.3 percent, or some 2.1588 trillion won. Among real estate, land made up the biggest share by far: 44.9 percent, or 1.6332 trillion won.

Apart from real estate, securities and financial assets made up 34.5 percent, or 1.2550 trillion won. This was followed by art and other assets amounting to 6.2 percent.

The National Tax Service recently announced that it will launch an investigation into 1,472 people who bent rules to hand down real estate to their spouses or children.

In 2004, the total amount of inheritances, 4.2103 trillion won, surpassed the amount of 2005. Real estate accounted for 48.5 percent, or 2.404 trillion won. However, the total proportion of inheritances in the form of real estate has been on a gradual decline since 2000: from 69.6 percent (2.074 trillion won) in 2000 to 70.1 percent in 2001 to 64.1 percent in 2002 to 62.2 percent in 2003 to 48.5 percent in 2004, and a slight upturn in 2005 to 59.3 percent.

Inheritance and gift taxes have also risen over the same period, from 856 billion won in 2002 to 1.315 trillion won in 2003 to 1.708 trillion won in 2004 and to 1.873 trillion won in 2005. The total amount surpassed the two trillion won mark for the first time in 2006 with 2.39 trillion won.

ddr@donga.com