Path Opened for Heirs to Receive Acquisition Tax Refunds on Reverse Mortgages... Korea Housing Finance Corporation Supports Correction Claims

For Heirs of Trust-Based Reverse Mortgages
Tax Procedure Support Reflecting Supreme Court Ruling

Korea Housing Finance Corporation announced on December 26 that it is supporting the "acquisition tax correction claim" process, enabling heirs who have acquired proceeds from the sale of mortgaged homes after the death of a trust-based reverse mortgage customer to receive a refund of the acquisition tax they previously paid.

This support follows a Supreme Court ruling in September, which determined that when an heir acquires rights through a testamentary trust, and those rights pertain to the proceeds from the sale of real estate rather than the real estate itself, acquisition tax should not be imposed. As a result, heirs who paid acquisition tax after the death of a trust-based reverse mortgage subscriber are now eligible for a refund.

In the trust-based reverse mortgage system, even if the subscriber passes away, the spouse can continue to receive pension payments, as home ownership is entrusted to the corporation and the pension is provided in the form of a loan from a financial institution. There has been ongoing debate over whether heirs acquiring the proceeds from the sale of the mortgaged property should be subject to acquisition tax.

Reflecting the recent Supreme Court decision, the corporation has begun supporting correction claims for trust-based reverse mortgage heirs who have already paid, or will be required to pay, acquisition tax through the "Dabujim" program. The corporation offers a service to prepare correction claim documents through the law firm Logos, and applications can be submitted via the Korea Housing Finance Corporation website, the dedicated homepage, or by phone consultation.

The "Dabujim" service is a program that has been operated since September last year to ease the burden on reverse mortgage customers by providing free legal and tax support, such as will preparation, voluntary guardianship contract drafting, and legal and tax consultations, in cooperation with legal and tax experts.

Kim Kyunghwan, President of Korea Housing Finance Corporation, stated, "This service will provide practical assistance in resolving tax issues that are difficult for customers and heirs to handle on their own," adding, "We will continue to expand the necessary support to ensure that reverse mortgage customers can maintain a stable retirement."