Korea's KRW 1.2bn Apportionment — A Slope, Not a Cliff

“A one-home household is exempt up to KRW 1.2bn” is correct. The sentence that usually follows is not — crossing 1.2bn does not put the whole gain into tax. Only the excess is taxed, and what sets that share is apportionment.

There is a zero-tax stretch above 1.2bn

Take a home bought at KRW 800m with 30m of necessary expenses, held and lived in for ten years.

The taxable gain behind those figures, row by row: nothing at 1.2bn; absorbed by the deductions at 1,237.9m; 16.8m at 1.25bn; 36,153,846 at 1.3bn; 134m at 1.5bn; 468m at 2bn.

Selling at 1.5bn on a gain of nearly KRW 670m produces 2.62m of tax — 0.4% of the gain. The impression and the arithmetic are that far apart.

Why it has to be applied twice

Apportionment appears in two places — once on the gain, once on the long-term holding deduction. Doing it once badly distorts the result.

Apportion the gain but not the deduction and it is 134m − 536m — negative, so zero tax. Apportion the deduction but not the gain and the base is 670m − 107.2m − 2.5m = 560.3m, giving 219,324,600 won of tax. Same home, and only one of the three is right.

📌 The earlier version put this at 562.8m — the basic deduction of 2.5m had not been taken. This recalculation caught it; all three cases now take the deduction.

So when two calculators disagree, check how many times each applied the ratio.

Three inputs, three documents

Three values feed the apportionment, and each comes from somewhere different.

① Sale price. The actual transaction price — not an assessed value. The 1.2bn test uses this figure.

② Acquisition price. The actual price paid at acquisition. Where it is unknown the statute sets an order — Decree art. 176-2(3), “apply the following methods in order”: (1) a comparable sale, (2) an appraisal, (3) the converted acquisition value, (4) the published value. Conversion is the third seat, not the first.

The formula is in para. 2 of the same article — the actual sale price × (the published value at acquisition ÷ the published value at sale). And the surcharge is a narrower door than it sounds. Act art. 114-2 — where a building was newly built or extended (extensions only above 85 square metres of floor area) and sold within 5 years, using this figure as the acquisition price adds 5% of it to the assessed tax. Para. 2 of the same article — it applies even where there is no tax to pay. Drawn out in the calculator piece.

③ Necessary expenses. Acquisition tax, agent fees, capital works such as a balcony extension or new windows. Recognised only as far as the receipts go. Leave this empty and the gain grows by that much, before and after apportionment alike.

Joint ownership divides once more

Where a property is held in shares — a married couple jointly, for instance — the 1.2bn test uses the whole value of the home while the tax is computed on each owner’s share.

That gives one KRW 2.5m basic deduction per person — 2.5m for a sole owner, 5m for a couple. And because each taxable base is halved, the progressive band drops too.

How the statute treats joint ownership — what is there, and what «isn’t»

We looked for three things. Two are in the statute; one is not.

Income Tax Act Enforcement Decree, Article 159-4 … In such cases, where the home is a jointly inherited home …, the residence period shall be determined as the period of residence of whichever co-heir who lived in the home lived there «longest».

Mixed-use — two provisions read it oppositely

Sell a building with a shop below and a home above, and how much of it is “a home”? The statute answers in two places, and they point opposite ways.

The exemption test is Decree art. 154(3) — where one building combines a home and a non-home part, “the whole shall be treated as a home. Provided that, where the floor area of the home is less than or equal to that of the non-home part, the non-home part shall not be treated as a home.”

Read “less than or equal to”. The home must be larger, not merely as large. Exactly half and half, and the shop drops out — one square metre decides it. In that case art. 154(4) gives the attached land as total land area × (home floor area ÷ building floor area).

Move to the 1.2bn split and the sentence inverts. The bracket in Decree art. 160(1) — “high-value housing (where one building combines a home and a non-home part…, the non-home part shall not be treated as a home)”. There is no “if the home is larger” here. The bracket arrived with the amendment of 15 February 2022.

So the same shop is a home for the exemption and not a home for the 1.2bn split. The exemption still stands; the shop's share is simply taxed outside the apportionment.

The second sentence is worth knowing too. Where the home or its land “has a different holding period, is an unregistered transfer, or only part is transferred”, the ratio is applied to the 1.2bn itself. In other words the 1.2bn can be split — the exemption ceiling is not always the full 1.2bn.

Questions that remain

KRW 1.2bn as at when?

The sale price — what it sold for. What it cost, or what it is assessed at today, does not enter this test. And it is the aggregate actual transaction price, so attached land counts too. Mixed residential and commercial buildings split the test in two, and that is set out with both provisions in the “Mixed-use” section just above.

What about writing the price down to stay under 1.2bn?

Recording a price other than the real one is prohibited by the Act on Report of Real Estate Transactions. And the point of this article is that there is no reason to — 1.2bn is a slope, not a cliff. Sell at 1.25bn and the tax is 56,760 won. Not a line worth straining for.

If the exemption conditions are not met, is apportionment gone too?

Yes. Apportionment carves the excess out of an exemption that has already been established. Fail the conditions and the whole gain is taxable, and the holding deduction falls from table 2 (up to 80%) to table 1 (up to 30%). In the 1.5bn example, KRW 2.62m becomes 206.94m — seventy-nine times.

Which rate applies after apportionment?

The progressive 6–45%. Apportionment shrinks the taxable base; it does not change the rate. But a smaller base falls into a lower band, so the effective rate drops sharply as a result. The 1.5bn example’s base of KRW 24.3m sits in the 15% band.

Different calculators give me different answers.

Check how many times each applied the ratio. It belongs on both the gain and the holding deduction. Applying it once is common online, and as shown above that produces either zero or over KRW 200m. The calculator applies it twice and shows the two lines separately.

Sources and where to check

Income Tax Act Enforcement Decree art. 160 — the gain and the long-term holding deduction on a high-value home are each apportioned by (sale price − 1.2bn) ÷ sale price.

Income Tax Act art. 89(1)3 — the one-home exemption, excluding “high-value housing exceeding KRW 1.2bn.” art. 95(2) (holding deduction), art. 103 (KRW 2.5m basic deduction). Art. 114-2 — the 5% surcharge on a converted acquisition value, which para. 2 applies even where no tax is due.

Enforcement Decree — art. 154(3) and (4) (the exemption test for mixed-use, and the attached land), art. 160(1) (the bracket: the non-home part is not a home for the split; the second sentence: the 1.2bn itself is apportioned), art. 176-2(2) and (3) (the order of estimation, and the conversion formula).

This article fills a gap this site itself flagged. The one-home exemption recorded that “the formula is an image inside the statute, so again we could not read it” — two unrelated sources have now confirmed it. Article 160(1) of the Enforcement Decree was opened on the national statute portal on 26 August 2026. Both formulas sit on the page as images, but each image carries the expression in its alt text, so they could be transcribed exactly — “the gain under art. 95(1) × (sale price − KRW 1.2bn) ÷ sale price” and “the long-term holding deduction under art. 95(2) × (sale price − KRW 1.2bn) ÷ sale price”. “Both, not one” is there in the text. The check also found three wrong cells in the taxable-gain column above, now corrected (the tax column was right throughout).

Where to check further

Both contracts — buying and selling. Two of the three inputs live there.

The receipts. Necessary expenses count only as far as they go.

For joint ownership, the tax office. How differing shares and acquisition dates are handled is not in the statute — checked above. The statute goes as far as each owner counting the home (Decree art. 154-2) and residence from move-in to move-out on the abstract (Decree art. 154(6)).

To run your own numbers, use the capital gains tax calculator; for the deduction side, see what residence is worth.