Gift a home to your spouse and their cost rises to the market value at the gift — so would selling soon after shrink the gain? Income Tax Act Article 97-2 closes that route. If a resident sells land, a building or the like received from a spouse or lineal ascendant or descendant within 10 years (shares: 1 year) counting back from the sale, the gain is worked out with the cost the donor paid when acquiring it, while gift tax paid goes into expenses. This is usually called carryover basis. The checker shows whether it applies from the relationship, dates and exceptions.
1. Gifted by a spouse or lineal relative and sold within 10 years: cost = what the donor paid (Art. 97-2(1)1).
2. Gift tax paid is an expense (item 3), and holding runs from the donor’s acquisition (Art. 95(4)).
3. Three exceptions — expropriation after a gift 2+ years before the project notice, a sale that would become one-home exempt, and carryover tax being lower (para. 2).
Checker
Updates as you type. Period: 10 years (shares 1 year) counted from the registered ownership (Art. 97-2(3)); we treat a sale before the anniversary as within, after it as passed, and flag the day itself. The gain rows are our simple sums (other expenses left out) and do not decide item 3, which compares final tax.
The provisions
| Type | What the source says | Worth noting (ours) |
|---|---|---|
| Art. 97-2(1) | For assets under Art. 94(1)1 and 3 (or as set by decree) received by a resident within 10 years (1 year for Art. 94(1)3 assets) before the sale from a spouse (including where the marriage has ended by the sale, except by death) or lineal ascendant or descendant (except one who has died by the sale), the following apply … | Divorced spouses included, widowhood excluded |
| Items 1–3 | 1. Cost is the amount when the spouse or relative acquired the asset 2. Their expenses are included 3. Gift tax paid by the resident is an expense | The donor’s purchase price, not the gift value |
| Para. 2 (not applied) | 1. Gift 2+ years before the project approval notice, then bought by agreement or expropriated 2. Applying it would make the sale an exempt one-home sale (incl. high-value homes) 3. Final tax with it is lower than without | Not applied where it would help the taxpayer |
| Art. 97-2(3) | The years in para. 1 follow the ownership period on the register. | Registration, not the contract date |
| Art. 95(4) proviso | Under Art. 97-2(1), holding runs from the day the donor acquired the asset | Affects the holding deduction |
| Art. 101(2) | Where a resident gifts to another related party (not spouses or lineal relatives under Art. 97-2(1)) who sells within 10 years of the gift and their gift tax plus capital gains tax is lower than if the donor had sold, the donor is treated as the seller, unless the gain really belongs to the recipient. | Gift tax then not charged (para. 3) |
How much it moves — our example
| Case (our example) | Carryover | Worth noting (ours) |
|---|---|---|
| Husband bought land for KRW 300m, gifts it to his wife at 800m (gift tax assumed 100m), sold 2 years later for 850m | Applies — gain 850m − 300m − 100m = 450m | Without it: 850m − 800m = 50m |
| Listed shares (major shareholder) gifted by a father on 1 October 2025, sold 22 October 2026 | Period passed | Shares: 1 year — 1 October 2026 has passed |
| Same land sold on the 10th anniversary of the gift | Boundary day | Ask the tax office whether that day is within |
The 100m gift tax in the first row is an assumption for the sum (our example); work out gift tax with the gift tax calculator. The tax doesn’t differ by the full gap between the gains — the holding deduction, basic deduction and rates come first, and para. 2 item 3 compares the final tax.
How it differs from Article 101
Under Art. 97-2 the recipient pays capital gains tax on a gift from a spouse or lineal relative, with the cost swapped. Under Art. 101(2), for other related parties, if the tax burden falls the donor is treated as the seller and no gift tax is charged (para. 3). Pick “other related party” and the checker only flags Art. 101(2) for review; it doesn’t compare tax.
Checklist
- ☐ The gift registration date on the register
- ☐ Proof of the donor’s cost and expenses
- ☐ The gift tax receipt
- ☐ Whether the home qualifies for the one-home exemption
Questions that remain
Does divorce get me out of it?
No. The text includes marriages ended by the time of the sale; only an end by death is excluded.
Is it 10 years for older gifts too?
We read the current text only, not the amendment history or transitional rules. For an older gift, check the period with the tax office.
What are “other assets set by decree”?
Delegated to the decree, which we didn’t read; the checker marks them “not judged”.
Sources
- Korean law database (law.go.kr) — Income Tax Act Arts. 97-2, 95(4), 101(2)–(4) — source (current text, effective 1 July 2026, Act No. 21221; checked 22 October 2026). Art. 97-2(1) (10 years, shares 1 year, spouse and lineal relatives, items 1–3), para. 2 exceptions, para. 3 register period, Art. 95(4) holding start, Art. 101(2) other related parties and 10 years, para. 3 no gift tax, para. 4, Art. 94(1)1 and 3 asset types.
- Not read. The decree’s “other assets” and gift tax computation (delegated by Art. 97-2(5)); transitional rules of the 10-year amendment.
- What we added. The “worth noting” column and the Korean everyday gloss.
Where to check further
- Your tax office or Hometax — whether carryover applies and the final-tax comparison.
Written on 22 October 2026. The content is from the source; the glosses are ours.
