"Blocked Loans for Millennials and Gen Z"...Cheon Haram Slams Kang Shincheol's Son for Buying Reconstruction-Benefit Property with '7 Billion Family Loan'

Aunt and Uncle Lent 715.5 Million Won Over 10 Years
Zero-Interest Loan of 215.5 Million Won Sparks Gift Tax Evasion Suspicions
Asset Omission Triggers Questions Over Source of Funds
Kang Shin-chul Explains, "Supplemented Immediately After D

Controversy is spreading as it has been revealed that the eldest son of Kang Shincheol, nominee for Minister of National Defense, borrowed over 700 million won from his maternal aunt and uncle-in-law to purchase a commercial property in Yangji Village, Bundang-gu, Seongnam, Gyeonggi Province, which is slated for reconstruction. In particular, among the borrowed funds, 215.5 million won was set as an interest-free loan for 10 years. The opposition parties are raising suspicions that this may have been a strategic gift arrangement, taking into account gift tax standards under the tax law.

Cheon Haram, acting leader and floor leader of the Reform New Party, held a press conference at the National Assembly Communication Office on the 7th, raising suspicions that Kang Shincheol, the nominee for Minister of National Defense, concealed the details of his son's purchase of a commercial property in Yangji Village, Bundang, in the personnel hearing request. Yonhap News

On September 8, Cheon Haram, acting leader and floor leader of the Reform New Party, claimed via his social network service (SNS) account that the nominee’s eldest son, born in 1996, secured the funds to acquire the Yangji Village commercial property from the candidate’s sister-in-law and brother-in-law—namely, the son’s aunt and uncle-in-law. According to Cheon, documents submitted by Kang’s side indicate that his son borrowed a total of 715.5 million won from his aunt and uncle-in-law over 10 years. Cheon further pointed out that the 215.5 million won borrowed from the uncle-in-law was interest-free, criticizing, “I’ve never before heard of or seen an ‘uncle-in-law chance.’”

The controversy intensified because the amount borrowed interest-free was 215.5 million won. The current Inheritance and Gift Tax Act considers any financial benefit gained by borrowing money from others either free of charge or at a lower-than-market interest rate as deemed gifted property. However, if this benefit is less than 10 million won per year, it is excluded from taxation.

If the reported appropriate interest rate of 4.6% is applied to the 215.5 million won, the annual interest benefit would be about 9,913,000 won—just 87,000 won below the 10 million won threshold. Cheon raised suspicion that the interest-free amount was specifically structured to remain below the level that would trigger a tax burden. However, the tax law does not define 217 million won as a uniform “interest-free loan limit,” and whether taxation actually applies is determined based on the lending relationship, conditions, and other circumstances.

Cheon insisted, “Although technically it’s described as a loan, it is in effect no different from a meticulously planned family gift,” adding, “Which aunt and uncle-in-law would lend over 700 million won for 10 years to a young person who has worked for only a year?” He also mentioned recent lending regulations, saying, “Millennials & Gen Z in their 20s and 30s are blocked from taking out loans to secure a newlywed home, yet some people receive 700 million won from their relatives to buy a commercial property slated for reconstruction.” He argued that this could provoke a sense of deprivation among young people. Cheon also urged President Lee Jaemyung to withdraw the nomination of Kang, noting it runs counter to the administration’s drive to eradicate real estate speculation.

Kang Sinchul, nominee for Minister of National Defense, is answering questions from reporters as he enters the Defense Convention in Yongsan-gu, Seoul, where a hearing preparation office was set up on the 3rd. Photo by Yonhap News

The timing of the property purchase is also a point of contention. It was reported that Kang’s eldest son bought a commercial unit within Yangji Village on June 30 for 700 million won. According to some reports, the date of the contract coincided with the day the Yangji Village residents’ representatives applied for designation as the project executor for reconstruction to Seongnam City, and the city designated the project executor about a month later, on July 27. Because this commercial property could potentially secure priority rights for apartment allocation during reconstruction, suspicions have arisen that the purchase may have been speculative in nature.

It also surfaced earlier that the commercial unit was omitted from the list of reported assets attached to Kang’s personnel hearing request. Cheon claimed that, although the nominee’s son already owned real estate worth some 700 million won, the asset declaration submitted by the nominee made no mention of this fact, raising allegations of concealment. Kang’s camp stated that the omission was not intentional. The personnel hearing preparation team explained that, upon discovering on the 4th that the son’s property had been left out, they immediately notified the National Assembly and related agencies and supplied the necessary additional documents. They explained that the property was acquired after this year’s regular asset reporting and that it was not added due to the reporting being based on the regular data.

Kang’s side also denied allegations of de facto gifting by means of intra-family loans. They stated that the son’s purchase of a commercial property in Bundang was a legitimate transaction that fully complied with all legal procedures and tax standards. The down payment of 70 million won was reportedly prepared by the son using his savings and other funds, while the remainder and acquisition tax were financed through a properly documented loan agreement, including promissory notes.

Kang’s side further asserted that the property is being normally leased to tenants and that all tax procedures, such as reporting rental income, have been strictly observed. Accordingly, at the upcoming personnel hearing, the main issues are expected to include the son’s real repayment ability for the 715.5 million won loan from relatives, whether or not interest has actually been paid, how the interest-free loan conditions were determined, the relationship between the timing of the acquisition and the lottery for reconstruction apartments, and the process of the omission from the asset report.

This content was produced with the assistance of AI translation services.