Supreme Court nominee faces scrutiny over sublease of brother-in-law’s apartment

Supreme Court nominee Kim Seong-su is facing allegations that he avoided gift tax by renting apartments connected to his brother-in-law at prices far below market rates.

Records submitted to the National Assembly, along with resident-registration data and property documents, show that Kim lived from February 2011 to June 2021 in a 25-pyeong apartment in Seoul’s Gangnam district. He paid a 350 million won deposit for the lease on the Yeoksam e-Pyeonhansesang apartment, which was owned by his brother-in-law.

From June 2021, Kim lived in a 43-pyeong apartment in Dogok Rexle that his brother-in-law had rented. Kim signed a sublease requiring a 350 million won deposit and monthly rent of 800,000 won. Seoul real estate transaction data put the market deposit for the Yeoksam apartment at 400 million to 430 million won when the contract was made. Comparable deposits for the Dogok Rexle apartment ranged from 1.2 billion to 2 billion won.

People Power Party lawmaker Joo Jin-woo said the deposit was “absurdly low” and argued that the gap between the deposit and market prices could be subject to gift tax. He called it a typical method of evading gift tax by receiving a substantial benefit from a relative.

Kim’s confirmation hearing preparation team said his mother-in-law had encouraged the arrangement because she was concerned about her unmarried son. The nominee’s family and his brother-in-law moved into the apartment together in 2021, the team said. It added that the arrangement would be handled through an appropriate process once the confirmation hearing concluded.

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The difference from the market deposit is legally subject to gift tax. It is a typical gift-tax evasion scheme involving a substantial benefit from his brother-in-law.