When receiving gifts of money or other property, the party should check any tax issues involved. When the gifts cross the national borders or involve foreign parties, it becomes more complicated. It could entail an additional filing with a government of a foreign country where the foreign party resides. Today, we are going to introduce what report and tax liability the parties should take care of and under what condition, when a U.S. resident receives a U.S located house as a gift from his Korean resident parent.
Report to the Bank of Korea
According to Article 7-46 and 7-44 of Foreign Exchange Transaction Regulation(FETR), when a resident of Korea gifts a real property, which is even located abroad, to any non-resident, the Korean resident(devisor) should report the transaction in advance to the Bank of Korea.
The nationality of the parties doesn’t matter here. Only the place of residence does matter. The Korean Tax authority (National Tax Service) has an internal rule to apply to decide who is a resident and who is not.