When divorcing, is the payment of consolation money also a situation where gift tax is imposed?

First, you must distinguish between the person receiving the consolation money and the person paying it.

For the person receiving the consolation money: consolation money is a kind of compensation for the mental suffering caused by the divorce, and the payment of consolation money does not constitute a gift under Article 2, Subparagraph 6 of the Inheritance Tax and Gift Tax Act.

Therefore, the imposition of gift tax, which is a tax levied on property received as a gift, does not apply, so you do not need to worry.

However, where it is recognized as substantially constituting a gift, such as a sham divorce for the purpose of tax evasion, there is room for gift tax to be imposed.

In addition, consolation money does not constitute income under Article 4 of the Income Tax Act. Therefore, income tax, which is a tax levied on income, is not an issue.

Considering your situation, where you receive ownership of real estate as consolation money, you must pay acquisition tax, local education tax, and the special rural development tax under the Local Tax Act.

Where you receive real estate as consolation money, it is regarded as a gratuitous acquisition other than inheritance, so it is correct that acquisition tax of 3.5% applies. Because ownership of the real estate is transferred and asset value is thereby transferred, which can be regarded as substantially similar to a sale, capital gains tax is imposed.

If you are in the position of transferring ownership of the real estate as consolation money, you are deemed to have obtained an economic benefit, namely the consolation money and the extinguishment of the child support obligation, in return for transferring that real estate, so it constitutes a transfer for value under the Income Tax Act. Therefore, if capital gains arise, capital gains tax must be paid.