Gift tax
lastmod 2025-08-19created 2025-08-194 edits
Interest-free loans between parents and children
- https://www.youtube.com/watch?v=Hf6im_1TDLM - "Write an interest-free IOU between parents and children like this and you will never get a tax audit" A tax accountant formerly with the National Tax Service explains how to write the most airtight IOU the state allows.
- https://www.youtube.com/watch?v=0-MMWNrj6yk - "How much can you lend your child without interest? The perfect way to write an interest-free IOU without tax worries" A tax accountant formerly with the National Tax Service explains.
- https://www.youtube.com/watch?v=ah2F9EGSlW8 - This is how tax audits on IOUs between parents and children happen. - YouTube
- Why an IOU between parents and children is essential : Naver Blog
See Korean: 차용증.
How to write a loan agreement between parents and children
- Interest on IOUs between parents, children, and family members and how to write them (real estate funding source investigations) : Naver Blog
- If you don't know this when writing an IOU between parents and children, you will owe gift tax by an inheritance lawyer
- How to write an IOU between individuals or family members, fixed-date confirmation, interest-free IOU template : Naver Blog
So how should an IOU be written when money changes hands between parents and children?
5 things an IOU between parents and children must include
- Write a loan agreement - clearly state the loan amount, interest rate, and repayment deadline.
- Fixed-date confirmation or notarization is required - if notarization is too costly, getting a fixed-date confirmation at a court for 600 won is a realistic alternative.
- Pay interest regularly - the National Tax Service decides whether something is a gift based on the statutory appropriate interest rate (currently 4.6% per year).
- Even with an interest-free loan, gift tax may apply if the benefit is 10 million won or more per year.
- Follow through on the principal repayment plan - if you only write the IOU and never actually repay, it may be treated as a gift.
- Judgment based on income level - if the child is judged to have no ability to repay, that alone may cause it to be deemed a gift.
See also
Favorite site
- Gifting jeonse or housing funds to children: exempt up to 250 million won?
- National Tax Service > Tax filing guide > Individual filing guide > Gift tax > Explanation by item > Gifts subject to the basic tax rate
- Differences between capital gains tax, gift tax, and inheritance tax: what taxes apply to inherited property? – Samjjeomsam Help Center