{"content_id":"4mi2sesjki","slug":"korea-real-estate-tax-reform-property-capital-gains-tax","locale":"en","schema_type":"Article","category":"policy_guide","category_name":"Policy Guide","title":"Changes to Comprehensive Real Estate Holding Tax and Capital Gains Tax Under the Real Estate Tax Reform Plan","summary":"The proposed real estate tax reform plan would expand comprehensive real estate holding tax deductions for one-home households while increasing taxes on high-priced homes, and shift the focus of capital gains tax deductions from the ownership period to the residence period. However, the final tax rates and implementation schedule cannot be determined until the relevant laws and enforcement decrees are revised.","author":{"name":"Injoys Editorial Team","url":"https://injoys.com/ko/about"},"key_points":["The reform plan proposes raising the basic comprehensive real estate holding tax deduction threshold for one-home households from an officially assessed price of KRW 1.2 billion to KRW 1.4 billion.","If both the comprehensive real estate holding tax rates for high-priced homes and the fair market value ratio increase, the number of taxpayers may decline while the tax burden on some owners of high-priced homes may rise.","The capital gains tax deduction for one-home households is expected to shift to a long-term residence income deduction that favors the actual residence period over the ownership period.","The capital gains tax adjustment for multiple-home owners was presented not as a complete abolition of surtax rates, but as a phased reduction of additional tax rates in 2027 and 2028.","The reform plan should be applied to actual transactions only after confirming whether the legislation passes, its effective date, transitional measures, and detailed determination criteria."],"content_markdown":"The core direction of the real estate tax reform proposal is to favor people who have actually lived in a home for a long time over those who have simply owned one for a long time. The comprehensive real estate holding tax would expand the basic deduction for single-home households while strengthening taxation on high-priced homes, and the capital gains tax would be restructured to provide a larger deduction for the period of residence than for the period of ownership.\n\nThis article analyzes the structure and expected impact of the system based on the details of the reform proposal provided. A tax reform proposal does not take effect immediately upon announcement, and tax rates, timing, and transitional measures may change during the National Assembly’s process of amending laws and revising enforcement decrees.\n\n## Taxes That Must First Be Distinguished\n\nThe direct targets of this reform proposal are not the comprehensive income tax, but the **comprehensive real estate holding tax and capital gains tax**.\n\n- **Comprehensive real estate holding tax:** An annual property holding tax imposed on people who own homes and other real estate exceeding a specified amount as of June 1 each year.\n- **Capital gains tax:** A tax imposed on gains generated from selling a home. Although it falls under the Income Tax Act, its calculation system differs from the comprehensive income tax applied to employment income, business income, and other income.\n- **Officially assessed value:** An administrative value used as the basis for calculating property holding taxes, including the comprehensive real estate holding tax and property tax. It is not the same as the market value, which is the actual transaction price.\n- **Basic deduction:** The amount first subtracted from the total officially assessed value of homes when calculating the comprehensive real estate holding tax. The entire amount exceeding the basic deduction does not become the tax itself.\n\n## Comprehensive Real Estate Holding Tax Reform Proposal: Expanded Deduction for Owner-Occupied Single Homes\n\nAccording to the reform proposal provided, the current comprehensive real estate holding tax basic deduction of KRW 1.2 billion for single-home households would be raised to KRW 1.4 billion. The basic deduction for general taxpayers would remain at KRW 900 million.\n\n| Category | Current Standard | Direction of Reform Proposal |\n|---|---:|---:|\n| Basic deduction for single-home households | Officially assessed value of KRW 1.2 billion | Officially assessed value of KRW 1.4 billion |\n| If the owner does not reside in the home | No separate residency requirement | Proposed application of KRW 900 million deduction |\n| Basic deduction for general taxpayers and multiple-home owners | Officially assessed value of KRW 900 million | Maintain KRW 900 million |\n| Tax rate structure | Varies by number of homes | Proposed consolidation into a range of 0.5–5% |\n| Taxation of high-priced homes | Current rates and ratios apply | Direction of raising top-bracket rates and the fair market value ratio |\n\nIf implemented as proposed, owner-occupants of single homes with officially assessed values of more than KRW 1.2 billion and at most KRW 1.4 billion may no longer be subject to the comprehensive real estate holding tax. In contrast, the tax burden on high-priced homes may increase due to adjustments to tax rates and the fair market value ratio.\n\n### The Comprehensive Real Estate Holding Tax Is Not Determined by Officially Assessed Value Alone\n\nThe comprehensive real estate holding tax is generally calculated in the following order.\n\n1. Add together the officially assessed values of homes held by each taxpayer.\n2. Subtract the applicable basic deduction.\n3. Apply the fair market value ratio to determine the tax base.\n4. Apply the tax rate for each tax base bracket.\n5. Reflect overlapping property taxes, tax credits for elderly and long-term owners, and the cap on tax burden increases.\n\nTherefore, even when officially assessed values are the same, the final tax amount may vary depending on the number of homes, household composition, ownership share, age, ownership period, and whether the owner actually resides in the home. The “two- to fivefold tax increase” mentioned in the reform proposal should be viewed as an estimate based on specific price and ownership conditions, rather than a result uniformly applicable to all high-priced homes.\n\n### The Criteria for Determining Actual Residence Are Crucial\n\nIf a deduction of KRW 1.4 billion applies to actual residents and KRW 900 million to non-residents, the following matters must be specifically defined by law or enforcement decree.\n\n- Whether residence will be verified only as of the tax assessment date or whether residence for at least a specified period will be required\n- What standard will be used when registered residence and actual place of living differ\n- Whether temporary non-residence due to work, illness, education, or overseas assignment will be recognized\n- How homes jointly owned by spouses or divided among household members will be treated\n- Whether exceptions will be provided for inherited homes, temporary ownership of two homes, and low-priced homes in non-metropolitan areas\n\nUntil these criteria are finalized, an individual’s comprehensive real estate holding tax cannot be accurately calculated based solely on the “KRW 1.4 billion deduction for actual residents.”\n\n## Capital Gains Tax Reform Proposal: Shift from Ownership to Residence\n\nUnder the current special deduction for long-term ownership of a single home by a single-home household, those who meet specified requirements receive a deduction of 4% per year for the ownership period and another 4% per year for the residence period, up to a combined maximum deduction rate of 80%.\n\nThe reform proposal would replace this with a **long-term residence income deduction** and gradually reduce the deduction for ownership itself. According to the schedule provided, beginning in 2029, the ownership deduction would be 0%, while the residence deduction would be 8% per year, up to a maximum of 80%.\n\n| Item | Current System | Direction of Reform Proposal for 2029 |\n|---|---|---|\n| Ownership-period deduction | 4% per year, up to 40% | 0% |\n| Residence-period deduction | 4% per year, up to 40% | 8% per year, up to 80% |\n| Maximum combined deduction rate | 80% | 80% |\n| Main basis of deduction | Long-term ownership and residence | Actual residence |\n| Deduction cap | Calculation under current laws and regulations | Proposed at KRW 2 billion in 2028 and KRW 1 billion in 2029 |\n\nAlthough the maximum deduction rate itself would remain 80%, periods during which a home was owned but not occupied would no longer contribute to the deduction. Owners who did not actually live in the home due to long-term rental, residence abroad, or residence in another area may face a higher capital gains tax burden.\n\n### An 80% Deduction Rate Is Not the Same as an 80% Capital Gains Tax Reduction\n\nA long-term ownership or long-term residence deduction is generally not a tax credit that directly subtracts 80% from the calculated tax. Because it deducts a specified amount from taxable capital gains, the actual tax savings rate varies depending on the acquisition price, necessary expenses, taxable capital gains on high-priced homes, basic deduction, and tax bracket.\n\nThe official legislative bill must also clarify what the proposed “deduction cap of KRW 2 billion or KRW 1 billion” limits. The outcome could differ significantly depending on whether it is a cap on capital gains eligible for the deduction or a cap on the deduction amount itself.\n\n### Expected Impact by Type of Taxpayer\n\n| Taxpayer Type | Expected Direction | Key Variables |\n|---|---|---|\n| Single-home owner who has owned and continuously occupied the home for a long period | Likely to retain the maximum deduction rate | Actual residence period and deduction cap |\n| Single-home owner who has owned the home for a long time but has not occupied it | Potential increase in capital gains tax | Schedule for reducing the ownership deduction |\n| Owner of an ultra-high-priced home with substantial capital gains | Potential increase in burden due to reduced deduction cap | Acquisition price, sale price, and residence period |\n| High-priced home owner with a short residence period | Potential decrease in deduction rate | Recognized residence period and transitional measures |\n| Owner of a home acquired before the reform | Outcome depends on transitional measures | Acquisition date, residence history, and transfer date |\n\n## Additional Capital Gains Tax on Multiple-Home Owners: Phased Relief for Two Years\n\nOwners of multiple homes in regulated areas may be subject to an additional rate on top of the basic capital gains tax rate. The reform proposal provided would reduce this additional rate in 2027 and 2028 before returning to the standard additional tax rate from 2029.\n\n| Number of Homes | Standard Additional Rate | Transfers in 2027 | Transfers in 2028 | Proposed Direction from 2029 |\n|---|---:|---:|---:|---:|\n| Owners of 2 homes | 20 percentage points | 5 percentage points | 10 percentage points | 20 percentage points |\n| Owners of at least 3 homes | 30 percentage points | 10 percentage points | 15 percentage points | 30 percentage points |\n\nHere, 20% or 30% does not mean a tax rate applied directly to the sale proceeds, but rather **percentage points added to the basic tax rate**. The reform proposal is also closer to phased relief in which the additional rate increases over time, rather than a complete two-year exemption from the additional tax.\n\nActual applicability may vary depending on whether the area is designated as a regulated area at the time of transfer, whether any homes are excluded from the home count, and whether the contract date or balance payment date is used as the applicable date.\n\n## Potential Changes If Implemented\n\n### 1. Fewer Owner-Occupied Single Homes in the Mid-Price Range Subject to the Comprehensive Real Estate Holding Tax\n\nIf the basic deduction for single-home households rises to KRW 1.4 billion, some owner-occupied homes in the officially assessed value range of KRW 1.2–1.4 billion may be excluded from the comprehensive real estate holding tax. However, the outcome will vary depending on the choice of joint ownership, ownership of other homes, and household classification.\n\n### 2. Tax Burden Concentrated on Owners of Ultra-High-Priced Homes\n\nIf the rates for the top tax base brackets and the fair market value ratio are raised together, the increase in tax liability may be greater for homes with higher officially assessed values. A decrease in the total number of taxpayers does not necessarily mean a decrease in total tax revenue.\n\n### 3. Reduced Tax Benefits for Long-Term Ownership Without Residence\n\nIf capital gains tax deductions are concentrated on the residence period, deduction benefits will decline for homes held for a long period in anticipation of redevelopment or for asset ownership purposes without actual residence.\n\n### 4. Potential Increase in Listings from Multiple-Home Owners in 2027–2028\n\nThe period of relief from the additional tax may incentivize multiple-home owners to sell their homes. However, the number of listings and the effect on prices will also depend on interest rates, the rental market, transaction volume, and future policy expectations, making it difficult to draw conclusions based solely on changes in tax rates.\n\n## Matters That Must Be Confirmed Before the Law Takes Effect\n\nBefore a tax reform proposal can apply to actual tax obligations, it must pass through announcement, submission of a government legislative bill, review and passage by the National Assembly, promulgation, and amendment of enforcement decrees. Before selling a home or deciding to separate a household or change registered residence, the following matters must be confirmed.\n\n- Whether the amended law has passed the National Assembly and been promulgated\n- The effective dates of the comprehensive real estate holding tax and capital gains tax, respectively\n- Whether the applicable date is the contract date, balance payment date, or registration date\n- Transitional measures recognizing existing ownership and residence periods\n- Documents proving actual residence and the minimum residence period\n- The precise legal meaning of the deduction cap\n- Special provisions for joint ownership, inherited homes, temporary ownership of two homes, and similar cases\n- Current regulated-area designations and determination of the number of homes\n\nEstimated tax amounts in press releases or reform proposals are examples based on typical cases. Individual tax amounts must be calculated according to the final laws and regulations, actual acquisition price, necessary expenses, ownership and residence history, and household composition.","content_html":"\u003cp\u003eThe core direction of the real estate tax reform proposal is to favor people who have actually lived in a home for a long time over those who have simply owned one for a long time. The comprehensive real estate holding tax would expand the basic deduction for single-home households while strengthening taxation on high-priced homes, and the capital gains tax would be restructured to provide a larger deduction for the period of residence than for the period of ownership.\u003c/p\u003e\n\u003cp\u003eThis article analyzes the structure and expected impact of the system based on the details of the reform proposal provided. A tax reform proposal does not take effect immediately upon announcement, and tax rates, timing, and transitional measures may change during the National Assembly’s process of amending laws and revising enforcement decrees.\u003c/p\u003e\n\u003ch2\u003e\n\u003ca href=\"#taxes-that-must-first-be-distinguished\" class=\"anchor\" id=\"taxes-that-must-first-be-distinguished\"\u003e\u003c/a\u003eTaxes That Must First Be Distinguished\u003c/h2\u003e\n\u003cp\u003eThe direct targets of this reform proposal are not the comprehensive income tax, but the \u003cstrong\u003ecomprehensive real estate holding tax and capital gains tax\u003c/strong\u003e.\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\n\u003cstrong\u003eComprehensive real estate holding tax:\u003c/strong\u003e An annual property holding tax imposed on people who own homes and other real estate exceeding a specified amount as of June 1 each year.\u003c/li\u003e\n\u003cli\u003e\n\u003cstrong\u003eCapital gains tax:\u003c/strong\u003e A tax imposed on gains generated from selling a home. Although it falls under the Income Tax Act, its calculation system differs from the comprehensive income tax applied to employment income, business income, and other income.\u003c/li\u003e\n\u003cli\u003e\n\u003cstrong\u003eOfficially assessed value:\u003c/strong\u003e An administrative value used as the basis for calculating property holding taxes, including the comprehensive real estate holding tax and property tax. It is not the same as the market value, which is the actual transaction price.\u003c/li\u003e\n\u003cli\u003e\n\u003cstrong\u003eBasic deduction:\u003c/strong\u003e The amount first subtracted from the total officially assessed value of homes when calculating the comprehensive real estate holding tax. The entire amount exceeding the basic deduction does not become the tax itself.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch2\u003e\n\u003ca href=\"#comprehensive-real-estate-holding-tax-reform-proposal-expanded-deduction-for-owner-occupied-single-homes\" class=\"anchor\" id=\"comprehensive-real-estate-holding-tax-reform-proposal-expanded-deduction-for-owner-occupied-single-homes\"\u003e\u003c/a\u003eComprehensive Real Estate Holding Tax Reform Proposal: Expanded Deduction for Owner-Occupied Single Homes\u003c/h2\u003e\n\u003cp\u003eAccording to the reform proposal provided, the current comprehensive real estate holding tax basic deduction of KRW 1.2 billion for single-home households would be raised to KRW 1.4 billion. The basic deduction for general taxpayers would remain at KRW 900 million.\u003c/p\u003e\n\u003cdiv class=\"overflow-x-auto\"\u003e\u003ctable\u003e\n\u003cthead\u003e\n\u003ctr\u003e\n\u003cth\u003eCategory\u003c/th\u003e\n\u003cth\u003eCurrent Standard\u003c/th\u003e\n\u003cth\u003eDirection of Reform Proposal\u003c/th\u003e\n\u003c/tr\u003e\n\u003c/thead\u003e\n\u003ctbody\u003e\n\u003ctr\u003e\n\u003ctd data-label=\"Category\"\u003eBasic deduction for single-home households\u003c/td\u003e\n\u003ctd data-label=\"Current Standard\"\u003eOfficially assessed value of KRW 1.2 billion\u003c/td\u003e\n\u003ctd data-label=\"Direction of Reform Proposal\"\u003eOfficially assessed value of KRW 1.4 billion\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd data-label=\"Category\"\u003eIf the owner does not reside in the home\u003c/td\u003e\n\u003ctd data-label=\"Current Standard\"\u003eNo separate residency requirement\u003c/td\u003e\n\u003ctd data-label=\"Direction of Reform Proposal\"\u003eProposed application of KRW 900 million deduction\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd data-label=\"Category\"\u003eBasic deduction for general taxpayers and multiple-home owners\u003c/td\u003e\n\u003ctd data-label=\"Current Standard\"\u003eOfficially assessed value of KRW 900 million\u003c/td\u003e\n\u003ctd data-label=\"Direction of Reform Proposal\"\u003eMaintain KRW 900 million\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd data-label=\"Category\"\u003eTax rate structure\u003c/td\u003e\n\u003ctd data-label=\"Current Standard\"\u003eVaries by number of homes\u003c/td\u003e\n\u003ctd data-label=\"Direction of Reform Proposal\"\u003eProposed consolidation into a range of 0.5–5%\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd data-label=\"Category\"\u003eTaxation of high-priced homes\u003c/td\u003e\n\u003ctd data-label=\"Current Standard\"\u003eCurrent rates and ratios apply\u003c/td\u003e\n\u003ctd data-label=\"Direction of Reform Proposal\"\u003eDirection of raising top-bracket rates and the fair market value ratio\u003c/td\u003e\n\u003c/tr\u003e\n\u003c/tbody\u003e\n\u003c/table\u003e\u003c/div\u003e\n\u003cp\u003eIf implemented as proposed, owner-occupants of single homes with officially assessed values of more than KRW 1.2 billion and at most KRW 1.4 billion may no longer be subject to the comprehensive real estate holding tax. In contrast, the tax burden on high-priced homes may increase due to adjustments to tax rates and the fair market value ratio.\u003c/p\u003e\n\u003ch3\u003e\n\u003ca href=\"#the-comprehensive-real-estate-holding-tax-is-not-determined-by-officially-assessed-value-alone\" class=\"anchor\" id=\"the-comprehensive-real-estate-holding-tax-is-not-determined-by-officially-assessed-value-alone\"\u003e\u003c/a\u003eThe Comprehensive Real Estate Holding Tax Is Not Determined by Officially Assessed Value Alone\u003c/h3\u003e\n\u003cp\u003eThe comprehensive real estate holding tax is generally calculated in the following order.\u003c/p\u003e\n\u003col\u003e\n\u003cli\u003eAdd together the officially assessed values of homes held by each taxpayer.\u003c/li\u003e\n\u003cli\u003eSubtract the applicable basic deduction.\u003c/li\u003e\n\u003cli\u003eApply the fair market value ratio to determine the tax base.\u003c/li\u003e\n\u003cli\u003eApply the tax rate for each tax base bracket.\u003c/li\u003e\n\u003cli\u003eReflect overlapping property taxes, tax credits for elderly and long-term owners, and the cap on tax burden increases.\u003c/li\u003e\n\u003c/ol\u003e\n\u003cp\u003eTherefore, even when officially assessed values are the same, the final tax amount may vary depending on the number of homes, household composition, ownership share, age, ownership period, and whether the owner actually resides in the home. The “two- to fivefold tax increase” mentioned in the reform proposal should be viewed as an estimate based on specific price and ownership conditions, rather than a result uniformly applicable to all high-priced homes.\u003c/p\u003e\n\u003ch3\u003e\n\u003ca href=\"#the-criteria-for-determining-actual-residence-are-crucial\" class=\"anchor\" id=\"the-criteria-for-determining-actual-residence-are-crucial\"\u003e\u003c/a\u003eThe Criteria for Determining Actual Residence Are Crucial\u003c/h3\u003e\n\u003cp\u003eIf a deduction of KRW 1.4 billion applies to actual residents and KRW 900 million to non-residents, the following matters must be specifically defined by law or enforcement decree.\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eWhether residence will be verified only as of the tax assessment date or whether residence for at least a specified period will be required\u003c/li\u003e\n\u003cli\u003eWhat standard will be used when registered residence and actual place of living differ\u003c/li\u003e\n\u003cli\u003eWhether temporary non-residence due to work, illness, education, or overseas assignment will be recognized\u003c/li\u003e\n\u003cli\u003eHow homes jointly owned by spouses or divided among household members will be treated\u003c/li\u003e\n\u003cli\u003eWhether exceptions will be provided for inherited homes, temporary ownership of two homes, and low-priced homes in non-metropolitan areas\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eUntil these criteria are finalized, an individual’s comprehensive real estate holding tax cannot be accurately calculated based solely on the “KRW 1.4 billion deduction for actual residents.”\u003c/p\u003e\n\u003ch2\u003e\n\u003ca href=\"#capital-gains-tax-reform-proposal-shift-from-ownership-to-residence\" class=\"anchor\" id=\"capital-gains-tax-reform-proposal-shift-from-ownership-to-residence\"\u003e\u003c/a\u003eCapital Gains Tax Reform Proposal: Shift from Ownership to Residence\u003c/h2\u003e\n\u003cp\u003eUnder the current special deduction for long-term ownership of a single home by a single-home household, those who meet specified requirements receive a deduction of 4% per year for the ownership period and another 4% per year for the residence period, up to a combined maximum deduction rate of 80%.\u003c/p\u003e\n\u003cp\u003eThe reform proposal would replace this with a \u003cstrong\u003elong-term residence income deduction\u003c/strong\u003e and gradually reduce the deduction for ownership itself. According to the schedule provided, beginning in 2029, the ownership deduction would be 0%, while the residence deduction would be 8% per year, up to a maximum of 80%.\u003c/p\u003e\n\u003cdiv class=\"overflow-x-auto\"\u003e\u003ctable\u003e\n\u003cthead\u003e\n\u003ctr\u003e\n\u003cth\u003eItem\u003c/th\u003e\n\u003cth\u003eCurrent System\u003c/th\u003e\n\u003cth\u003eDirection of Reform Proposal for 2029\u003c/th\u003e\n\u003c/tr\u003e\n\u003c/thead\u003e\n\u003ctbody\u003e\n\u003ctr\u003e\n\u003ctd data-label=\"Item\"\u003eOwnership-period deduction\u003c/td\u003e\n\u003ctd data-label=\"Current System\"\u003e4% per year, up to 40%\u003c/td\u003e\n\u003ctd data-label=\"Direction of Reform Proposal for 2029\"\u003e0%\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd data-label=\"Item\"\u003eResidence-period deduction\u003c/td\u003e\n\u003ctd data-label=\"Current System\"\u003e4% per year, up to 40%\u003c/td\u003e\n\u003ctd data-label=\"Direction of Reform Proposal for 2029\"\u003e8% per year, up to 80%\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd data-label=\"Item\"\u003eMaximum combined deduction rate\u003c/td\u003e\n\u003ctd data-label=\"Current System\"\u003e80%\u003c/td\u003e\n\u003ctd data-label=\"Direction of Reform Proposal for 2029\"\u003e80%\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd data-label=\"Item\"\u003eMain basis of deduction\u003c/td\u003e\n\u003ctd data-label=\"Current System\"\u003eLong-term ownership and residence\u003c/td\u003e\n\u003ctd data-label=\"Direction of Reform Proposal for 2029\"\u003eActual residence\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd data-label=\"Item\"\u003eDeduction cap\u003c/td\u003e\n\u003ctd data-label=\"Current System\"\u003eCalculation under current laws and regulations\u003c/td\u003e\n\u003ctd data-label=\"Direction of Reform Proposal for 2029\"\u003eProposed at KRW 2 billion in 2028 and KRW 1 billion in 2029\u003c/td\u003e\n\u003c/tr\u003e\n\u003c/tbody\u003e\n\u003c/table\u003e\u003c/div\u003e\n\u003cp\u003eAlthough the maximum deduction rate itself would remain 80%, periods during which a home was owned but not occupied would no longer contribute to the deduction. Owners who did not actually live in the home due to long-term rental, residence abroad, or residence in another area may face a higher capital gains tax burden.\u003c/p\u003e\n\u003ch3\u003e\n\u003ca href=\"#an-80-deduction-rate-is-not-the-same-as-an-80-capital-gains-tax-reduction\" class=\"anchor\" id=\"an-80-deduction-rate-is-not-the-same-as-an-80-capital-gains-tax-reduction\"\u003e\u003c/a\u003eAn 80% Deduction Rate Is Not the Same as an 80% Capital Gains Tax Reduction\u003c/h3\u003e\n\u003cp\u003eA long-term ownership or long-term residence deduction is generally not a tax credit that directly subtracts 80% from the calculated tax. Because it deducts a specified amount from taxable capital gains, the actual tax savings rate varies depending on the acquisition price, necessary expenses, taxable capital gains on high-priced homes, basic deduction, and tax bracket.\u003c/p\u003e\n\u003cp\u003eThe official legislative bill must also clarify what the proposed “deduction cap of KRW 2 billion or KRW 1 billion” limits. The outcome could differ significantly depending on whether it is a cap on capital gains eligible for the deduction or a cap on the deduction amount itself.\u003c/p\u003e\n\u003ch3\u003e\n\u003ca href=\"#expected-impact-by-type-of-taxpayer\" class=\"anchor\" id=\"expected-impact-by-type-of-taxpayer\"\u003e\u003c/a\u003eExpected Impact by Type of Taxpayer\u003c/h3\u003e\n\u003cdiv class=\"overflow-x-auto\"\u003e\u003ctable\u003e\n\u003cthead\u003e\n\u003ctr\u003e\n\u003cth\u003eTaxpayer Type\u003c/th\u003e\n\u003cth\u003eExpected Direction\u003c/th\u003e\n\u003cth\u003eKey Variables\u003c/th\u003e\n\u003c/tr\u003e\n\u003c/thead\u003e\n\u003ctbody\u003e\n\u003ctr\u003e\n\u003ctd data-label=\"Taxpayer Type\"\u003eSingle-home owner who has owned and continuously occupied the home for a long period\u003c/td\u003e\n\u003ctd data-label=\"Expected Direction\"\u003eLikely to retain the maximum deduction rate\u003c/td\u003e\n\u003ctd data-label=\"Key Variables\"\u003eActual residence period and deduction cap\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd data-label=\"Taxpayer Type\"\u003eSingle-home owner who has owned the home for a long time but has not occupied it\u003c/td\u003e\n\u003ctd data-label=\"Expected Direction\"\u003ePotential increase in capital gains tax\u003c/td\u003e\n\u003ctd data-label=\"Key Variables\"\u003eSchedule for reducing the ownership deduction\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd data-label=\"Taxpayer Type\"\u003eOwner of an ultra-high-priced home with substantial capital gains\u003c/td\u003e\n\u003ctd data-label=\"Expected Direction\"\u003ePotential increase in burden due to reduced deduction cap\u003c/td\u003e\n\u003ctd data-label=\"Key Variables\"\u003eAcquisition price, sale price, and residence period\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd data-label=\"Taxpayer Type\"\u003eHigh-priced home owner with a short residence period\u003c/td\u003e\n\u003ctd data-label=\"Expected Direction\"\u003ePotential decrease in deduction rate\u003c/td\u003e\n\u003ctd data-label=\"Key Variables\"\u003eRecognized residence period and transitional measures\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd data-label=\"Taxpayer Type\"\u003eOwner of a home acquired before the reform\u003c/td\u003e\n\u003ctd data-label=\"Expected Direction\"\u003eOutcome depends on transitional measures\u003c/td\u003e\n\u003ctd data-label=\"Key Variables\"\u003eAcquisition date, residence history, and transfer date\u003c/td\u003e\n\u003c/tr\u003e\n\u003c/tbody\u003e\n\u003c/table\u003e\u003c/div\u003e\n\u003ch2\u003e\n\u003ca href=\"#additional-capital-gains-tax-on-multiple-home-owners-phased-relief-for-two-years\" class=\"anchor\" id=\"additional-capital-gains-tax-on-multiple-home-owners-phased-relief-for-two-years\"\u003e\u003c/a\u003eAdditional Capital Gains Tax on Multiple-Home Owners: Phased Relief for Two Years\u003c/h2\u003e\n\u003cp\u003eOwners of multiple homes in regulated areas may be subject to an additional rate on top of the basic capital gains tax rate. The reform proposal provided would reduce this additional rate in 2027 and 2028 before returning to the standard additional tax rate from 2029.\u003c/p\u003e\n\u003cdiv class=\"overflow-x-auto\"\u003e\u003ctable\u003e\n\u003cthead\u003e\n\u003ctr\u003e\n\u003cth\u003eNumber of Homes\u003c/th\u003e\n\u003cth\u003eStandard Additional Rate\u003c/th\u003e\n\u003cth\u003eTransfers in 2027\u003c/th\u003e\n\u003cth\u003eTransfers in 2028\u003c/th\u003e\n\u003cth\u003eProposed Direction from 2029\u003c/th\u003e\n\u003c/tr\u003e\n\u003c/thead\u003e\n\u003ctbody\u003e\n\u003ctr\u003e\n\u003ctd data-label=\"Number of Homes\"\u003eOwners of 2 homes\u003c/td\u003e\n\u003ctd data-label=\"Standard Additional Rate\"\u003e20 percentage points\u003c/td\u003e\n\u003ctd data-label=\"Transfers in 2027\"\u003e5 percentage points\u003c/td\u003e\n\u003ctd data-label=\"Transfers in 2028\"\u003e10 percentage points\u003c/td\u003e\n\u003ctd data-label=\"Proposed Direction from 2029\"\u003e20 percentage points\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd data-label=\"Number of Homes\"\u003eOwners of at least 3 homes\u003c/td\u003e\n\u003ctd data-label=\"Standard Additional Rate\"\u003e30 percentage points\u003c/td\u003e\n\u003ctd data-label=\"Transfers in 2027\"\u003e10 percentage points\u003c/td\u003e\n\u003ctd data-label=\"Transfers in 2028\"\u003e15 percentage points\u003c/td\u003e\n\u003ctd data-label=\"Proposed Direction from 2029\"\u003e30 percentage points\u003c/td\u003e\n\u003c/tr\u003e\n\u003c/tbody\u003e\n\u003c/table\u003e\u003c/div\u003e\n\u003cp\u003eHere, 20% or 30% does not mean a tax rate applied directly to the sale proceeds, but rather \u003cstrong\u003epercentage points added to the basic tax rate\u003c/strong\u003e. The reform proposal is also closer to phased relief in which the additional rate increases over time, rather than a complete two-year exemption from the additional tax.\u003c/p\u003e\n\u003cp\u003eActual applicability may vary depending on whether the area is designated as a regulated area at the time of transfer, whether any homes are excluded from the home count, and whether the contract date or balance payment date is used as the applicable date.\u003c/p\u003e\n\u003ch2\u003e\n\u003ca href=\"#potential-changes-if-implemented\" class=\"anchor\" id=\"potential-changes-if-implemented\"\u003e\u003c/a\u003ePotential Changes If Implemented\u003c/h2\u003e\n\u003ch3\u003e\n\u003ca href=\"#1-fewer-owner-occupied-single-homes-in-the-mid-price-range-subject-to-the-comprehensive-real-estate-holding-tax\" class=\"anchor\" id=\"1-fewer-owner-occupied-single-homes-in-the-mid-price-range-subject-to-the-comprehensive-real-estate-holding-tax\"\u003e\u003c/a\u003e1. Fewer Owner-Occupied Single Homes in the Mid-Price Range Subject to the Comprehensive Real Estate Holding Tax\u003c/h3\u003e\n\u003cp\u003eIf the basic deduction for single-home households rises to KRW 1.4 billion, some owner-occupied homes in the officially assessed value range of KRW 1.2–1.4 billion may be excluded from the comprehensive real estate holding tax. However, the outcome will vary depending on the choice of joint ownership, ownership of other homes, and household classification.\u003c/p\u003e\n\u003ch3\u003e\n\u003ca href=\"#2-tax-burden-concentrated-on-owners-of-ultra-high-priced-homes\" class=\"anchor\" id=\"2-tax-burden-concentrated-on-owners-of-ultra-high-priced-homes\"\u003e\u003c/a\u003e2. Tax Burden Concentrated on Owners of Ultra-High-Priced Homes\u003c/h3\u003e\n\u003cp\u003eIf the rates for the top tax base brackets and the fair market value ratio are raised together, the increase in tax liability may be greater for homes with higher officially assessed values. A decrease in the total number of taxpayers does not necessarily mean a decrease in total tax revenue.\u003c/p\u003e\n\u003ch3\u003e\n\u003ca href=\"#3-reduced-tax-benefits-for-long-term-ownership-without-residence\" class=\"anchor\" id=\"3-reduced-tax-benefits-for-long-term-ownership-without-residence\"\u003e\u003c/a\u003e3. Reduced Tax Benefits for Long-Term Ownership Without Residence\u003c/h3\u003e\n\u003cp\u003eIf capital gains tax deductions are concentrated on the residence period, deduction benefits will decline for homes held for a long period in anticipation of redevelopment or for asset ownership purposes without actual residence.\u003c/p\u003e\n\u003ch3\u003e\n\u003ca href=\"#4-potential-increase-in-listings-from-multiple-home-owners-in-20272028\" class=\"anchor\" id=\"4-potential-increase-in-listings-from-multiple-home-owners-in-20272028\"\u003e\u003c/a\u003e4. Potential Increase in Listings from Multiple-Home Owners in 2027–2028\u003c/h3\u003e\n\u003cp\u003eThe period of relief from the additional tax may incentivize multiple-home owners to sell their homes. However, the number of listings and the effect on prices will also depend on interest rates, the rental market, transaction volume, and future policy expectations, making it difficult to draw conclusions based solely on changes in tax rates.\u003c/p\u003e\n\u003ch2\u003e\n\u003ca href=\"#matters-that-must-be-confirmed-before-the-law-takes-effect\" class=\"anchor\" id=\"matters-that-must-be-confirmed-before-the-law-takes-effect\"\u003e\u003c/a\u003eMatters That Must Be Confirmed Before the Law Takes Effect\u003c/h2\u003e\n\u003cp\u003eBefore a tax reform proposal can apply to actual tax obligations, it must pass through announcement, submission of a government legislative bill, review and passage by the National Assembly, promulgation, and amendment of enforcement decrees. Before selling a home or deciding to separate a household or change registered residence, the following matters must be confirmed.\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eWhether the amended law has passed the National Assembly and been promulgated\u003c/li\u003e\n\u003cli\u003eThe effective dates of the comprehensive real estate holding tax and capital gains tax, respectively\u003c/li\u003e\n\u003cli\u003eWhether the applicable date is the contract date, balance payment date, or registration date\u003c/li\u003e\n\u003cli\u003eTransitional measures recognizing existing ownership and residence periods\u003c/li\u003e\n\u003cli\u003eDocuments proving actual residence and the minimum residence period\u003c/li\u003e\n\u003cli\u003eThe precise legal meaning of the deduction cap\u003c/li\u003e\n\u003cli\u003eSpecial provisions for joint ownership, inherited homes, temporary ownership of two homes, and similar cases\u003c/li\u003e\n\u003cli\u003eCurrent regulated-area designations and determination of the number of homes\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eEstimated tax amounts in press releases or reform proposals are examples based on typical cases. Individual tax amounts must be calculated according to the final laws and regulations, actual acquisition price, necessary expenses, ownership and residence history, and household composition.\u003c/p\u003e\n","tags":["Capital gains tax","Real estate taxation","Comprehensive Real Estate Tax","One household one home","Multiple property owners"],"faqs":[{"question":"Will the new tax rates take effect immediately once the real estate tax reform proposal is announced?","answer":"No. To change the tax rates and deduction structures for the comprehensive real estate holding tax and capital gains tax, the relevant legislation generally must be passed by the National Assembly and promulgated. The effective date and transitional measures must also be confirmed in the final legislation and its enforcement decree."},{"question":"Are one-home households automatically exempt from the comprehensive real estate holding tax if the publicly assessed value is up to KRW 1.4 billion?","answer":"The reform proposal is intended to apply a basic deduction of KRW 1.4 billion to owner-occupied one-home households, but its actual application requires determinations regarding the household, number of homes, ownership shares, owner-occupancy requirements, and other factors. It is necessary to confirm how the basic deduction threshold and the method for determining owner occupancy are stipulated in the final laws and regulations."},{"question":"If the publicly assessed value exceeds KRW 1.4 billion, is only the excess subject to the comprehensive real estate holding tax?","answer":"Under the basic structure, the tax base is calculated by subtracting the basic deduction from the total publicly assessed value and then applying the fair market value ratio. Tax rates for each bracket and various tax credits are then applied, so it is not a simple calculation of multiplying the amount exceeding KRW 1.4 billion by a single tax rate."},{"question":"Does the maximum 80% long-term residence income deduction mean that capital gains tax is reduced by 80%?","answer":"No. The deduction rate is generally used to calculate the amount deducted from taxable capital gains. It does not mean that 80% is deducted directly from the calculated tax, and the actual tax amount varies depending on the acquisition price, necessary expenses, period of residence, and tax bracket."},{"question":"What happens if I owned the home for 10 years but did not actually live in it?","answer":"If, as provided in the reform proposal, the holding-period deduction is eliminated beginning in 2029 and 8% per year is applied only to the period of residence, periods of ownership without residence may not contribute to the deduction rate. However, the final legislation must be checked to determine whether transitional measures for existing holdings and exceptions will be provided."},{"question":"Will the additional capital gains tax on owners of multiple homes be completely eliminated in 2027 and 2028?","answer":"The provided reform proposal does not grant a complete exemption but instead reduces the additional tax rates. It proposes an additional 5 percentage points in 2027 and 10 percentage points in 2028 for owners of two homes, and an additional 10 percentage points and 15 percentage points, respectively, for owners of at least three homes."},{"question":"What do 20% and 30% mean in relation to the additional tax on owners of multiple homes?","answer":"They do not mean that 20% or 30% is immediately imposed on the entire sale price, but that 20 percentage points or 30 percentage points are added to the basic capital gains tax rate. The actual tax is calculated by taking into account the capital gain, necessary expenses, deductions, holding period, local income tax, and other factors."},{"question":"Will the new residence-period deduction apply to homes purchased before the reform?","answer":"It depends on the effective date and transitional measures. The final amended legislation and enforcement decree must be checked to determine how the existing holding period will be treated, whether the entire period of residence before the effective date will be recognized, and whether the relevant date will be the contract date or the transfer date."}],"sources":[{"url":"https://www.law.go.kr/법령/종합부동산세법","title":"National Law Information Center Comprehensive Real Estate Holding Tax Act","type":"source"},{"url":"https://www.law.go.kr/법령/종합부동산세법시행령","title":"National Law Information Center Enforcement Decree of the Comprehensive Real Estate Holding Tax Act","type":"source"},{"url":"https://www.law.go.kr/법령/소득세법","title":"National Law Information Center Income Tax Act","type":"source"},{"url":"https://www.law.go.kr/법령/소득세법시행령","title":"National Law Information Center Enforcement Decree of the Income Tax Act","type":"source"}],"images":[{"id":587,"url":"https://injoys.com/rails/active_storage/blobs/proxy/eyJfcmFpbHMiOnsiZGF0YSI6Njk4OSwicHVyIjoiYmxvYl9pZCJ9fQ==--f4f4c27d9cb6ee8f65b80fff4cfc1fb79811f2f2/ai-ea66b5f7.webp","is_representative":true,"generation_method":"ai_image","license":"ai_generated","mime_type":"image/webp","translations":{"ko":{"alt":"저층 주택과 고층 아파트·동전 더미를 저울에 올리고 법봉과 봉인 문서를 배치한 일러스트","caption":"주택 유형과 자산 가치, 법적 기준의 균형을 통해 부동산 세제 개편을 상징한다.","description":null},"en":{"alt":"Scales balancing a low-rise home against high-rise apartments and coin stacks, with a gavel and sealed document","caption":"The illustration symbolizes how real estate tax reform weighs property types, values, and legal rules.","description":null},"ja":{"alt":"低層住宅と高層マンション・硬貨の山を載せた天秤、木槌、封印された文書のイラスト","caption":"住宅の種類や資産価値、法的基準を比較する不動産税制改正を表している。","description":null},"es":{"alt":"Balanza con una vivienda frente a torres y pilas de monedas, junto a un mazo y un documento sellado","caption":"La ilustración representa el equilibrio entre tipos de vivienda, valores y normas en la reforma fiscal inmobiliaria.","description":null},"id":{"alt":"Neraca berisi rumah di satu sisi serta apartemen tinggi dan tumpukan koin di sisi lain, dengan palu dan dokumen","caption":"Ilustrasi ini melambangkan penimbangan jenis properti, nilai aset, dan aturan dalam reformasi pajak real estat.","description":null},"pt":{"alt":"Balança com uma casa de um lado e prédios altos e pilhas de moedas do outro, além de martelo e documento selado","caption":"A ilustração simboliza o equilíbrio entre tipos de imóveis, valores e regras na reforma tributária imobiliária.","description":null},"zh-hant":{"alt":"天平兩側放著低層住宅、高樓住宅與成疊硬幣，後方有法槌和封印文件","caption":"插圖以房屋類型、資產價值與法律規範的權衡，象徵房地產稅制改革。","description":null},"de":{"alt":"Waage mit Wohnhaus auf der einen und Hochhäusern samt Münzstapeln auf der anderen Seite, dazu Hammer und Urkunde","caption":"Die Illustration steht für die Abwägung von Immobilienarten, Werten und Regeln bei der Steuerreform.","description":null}}},{"id":588,"url":"https://injoys.com/rails/active_storage/blobs/proxy/eyJfcmFpbHMiOnsiZGF0YSI6Njk5NSwicHVyIjoiYmxvYl9pZCJ9fQ==--09608a3e742b87c8503f680ef27898bef10a242f/ai-e8e2f78b.webp","is_representative":false,"generation_method":"ai_image","license":"ai_generated","mime_type":"image/webp","translations":{"ko":{"alt":"주택과 아파트, 보호 방패, 계단 위 동전, 세금 문서와 달력이 배치된 일러스트","caption":"주택 보유와 거래에 따른 세금 변화를 상징적으로 보여준다.","description":null},"en":{"alt":"Homes and apartment building with a shield, coins on steps, tax document, and calendar","caption":"The illustration symbolizes changes to taxes on owning and selling property.","description":null},"ja":{"alt":"住宅とマンション、盾、階段上の硬貨、税務書類、カレンダーを描いたイラスト","caption":"不動産の保有や売却に伴う税制の変化を象徴している。","description":null},"es":{"alt":"Casas y edificio de apartamentos con escudo, monedas, documento fiscal y calendario","caption":"La ilustración simboliza cambios en los impuestos por poseer y vender inmuebles.","description":null},"id":{"alt":"Rumah dan apartemen dengan perisai, koin di tangga, dokumen pajak, dan kalender","caption":"Ilustrasi ini melambangkan perubahan pajak atas kepemilikan dan penjualan properti.","description":null},"pt":{"alt":"Casas e prédio de apartamentos com escudo, moedas, documento fiscal e calendário","caption":"A ilustração simboliza mudanças nos impostos sobre a posse e a venda de imóveis.","description":null},"zh-hant":{"alt":"住宅與公寓大樓、盾牌、階梯上的硬幣、稅務文件和日曆插圖","caption":"此插圖象徵持有及出售房地產相關稅制的變化。","description":null},"de":{"alt":"Häuser und Wohnblock mit Schutzschild, Münzen auf Stufen, Steuerdokument und Kalender","caption":"Die Illustration steht für Änderungen bei Steuern auf Immobilienbesitz und -verkauf.","description":null}}}],"published_at":"2026-08-11T15:32:03+09:00","updated_at":"2026-08-11T15:32:03+09:00","license":"cc_by","translation_status":"reviewed","available_locales":["ko","en","ja","es"],"data_locales":["ko","en","ja","es","id","pt","zh-hant","de"],"url":"https://injoys.com/en/articles/korea-real-estate-tax-reform-property-capital-gains-tax"}