Family Loan Gift Tax Calculator

Estimate whether a family loan has enough interest to reduce gift-tax exposure in a Korea-related scenario.

Family loan gift tax calculator

Check a Korea-related family loan against deemed gift benefit, appropriate interest, relationship deduction, report credit, and withholding tax.

Annual deemed gift benefit

₩13,800,000

Status

Taxable

Threshold gap

-₩3,800,000

Interest-free principal limit

₩217,391,304

Gift tax payable

₩0

Withholding on paid interest

₩0

Relationship deduction

₩50,000,000

Report credit

₩0

The family-loan lib keeps the 4.6 percent appropriate interest rate, KRW 10 million annual benefit threshold, relationship gift deductions, 3 percent report tax credit, and 27.5 percent non-business loan interest withholding. This English finance calculator uses the Korean feature lib for the displayed numeric result. KRW is used for money inputs and outputs in this batch, fixing the old P2 USD scenario stub for these pages.

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Family loan gift tax calculator

This English guide translates the Korean family-loan gift tax calculator for appropriate interest, deemed gift benefit, relationship deductions, gift tax payable, report credit, and interest withholding.

Appropriate interest and deemed gift benefit

Korean gift-tax rules can treat below-market family loans as a deemed gift when the benefit is large enough. The calculator preserves the 4.6 percent appropriate interest rate and compares it with the agreed interest rate.

The annual deemed gift benefit is the difference between appropriate annual interest and agreed annual interest. The Korean guide uses the KRW 10 million annual benefit threshold: if the annual benefit is below that threshold, gift tax is generally not triggered by the interest benefit alone.

Relationship deduction and gift tax

Gift tax is not determined by the loan benefit alone. The calculator also applies 10-year relationship deductions, including KRW 600 million for spouse, KRW 50 million for parent-to-adult-child or child-to-parent cases, KRW 20 million for parent-to-minor-child, KRW 10 million for other relatives, and no basic relationship deduction for unrelated persons.

When applicable, the marriage or birth deduction can add KRW 100 million for lineal-descendant cases. The result then applies progressive gift-tax brackets and the 3 percent report tax credit to estimate tax payable.

Withholding and documentation

If interest is actually paid, the borrower may need to withhold 27.5 percent on non-business loan interest and report it. That withholding is separate from the gift-benefit calculation.

The Korean guide emphasizes documentation: written loan agreement, actual transfers, clear interest terms, repayment schedule, and proof of repayment. Without evidence, a purported loan can be challenged as a gift even when the calculator shows a low deemed-benefit amount.