More Inheritance Going Directly to Grandchildren | Be Korea-savvy

More Inheritance Going Directly to Grandchildren

(image: Dwonderwall/flickr)

(image: Dwonderwall/flickr)

SEJONG, Oct. 18 (Korea Bizwire) The amount of money inherited by grandchildren, skipping a generation, has nearly doubled over the past five years despite higher taxes, records showed Thursday.

Some 1.48 trillion won (US$1.31 billion) worth of wealth was transferred to grandchildren from grandparents in 8,388 cases last year, according to the tally provided by the National Tax Service for a parliamentary audit.

The sum marks a continued increase from 759 billion won in 2013, 819.4 billion won in 2014 and 971 billion won in 2016. Compared with 2013, last year’s amount is an increase of 95.4 percent.

On average, 175 million won was inherited per case over the past five years.

Skipping a generation in inheritance had been a common way for the rich to save on tax payments by giving wealth directly to the ultimate beneficiary. To remove the loophole, the tax agency started levying extra taxes for such inheritance, adding 30 percent of the due gift tax to the total.

Despite the heavier taxes, the practice is still favored by the elderly whose children are also aged. In such cases, giving directly to grandchildren is more advantageous, tax officials say.

The fast rising property prices also make such a practice more beneficial in taxes, they say.


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