Two people sell the same home after the same ten years of ownership. One pays KRW 2.62m, the other 14.23m. What separates them is not the holding period but the residence period — because the long-term holding deduction is two items.
A one-home household counts holding and residence separately. Up to 40% each, 80% together. Everything else counts holding alone, to a maximum of 30%.
The residence column has its own row at two years to under three: 8%. Holding starts at three years; residence starts at two — but that band carries “only where the holding period is 3 years or more”, so under three years of holding it is zero however long you lived there.
A heavy rate or a short holding wipes the deduction out entirely. That often matters more than the rate increase.
The two tables side by side
| Period | General | Home, held | Home, lived |
|---|---|---|---|
| 2 years | — | — | 8% |
| 3 years | 6% | 12% | 12% |
| 5 years | 10% | 20% | 20% |
| 7 years | 14% | 28% | 28% |
| 10 years or more | 20% | 40% | 40% |
| 15 years or more | 30% | 40% | 40% |
Table 1 keeps climbing to fifteen years; table 2 stops at ten. So for a one-home household there is nothing to gain by waiting past ten, while for other property fifteen still matters. Same phrase, different length of “long”.
Residence alone is worth KRW 11.6m
A home sold at KRW 1.5bn (bought at 800m, 30m of expenses, held ten years, one-home household), varying only the residence period.
| Lived in | Relief | Tax |
|---|---|---|
| 0 years | 40% | 14,229,600 |
| 2 years | 48% | 11,399,520 |
| 3 years | 52% | 9,984,480 |
| 5 years | 60% | 7,154,400 |
| 10 years | 80% | 2,623,500 |
The amount deducted, row by row: KRW 53.6m, 64.32m, 69.68m, 80.4m and 107.2m. Tax figures include the 10% local surtax.
Zero against ten years is KRW 11.6m. And two years alone saves 2.83m, because the first two years arrive as 8 points at once. From the third year it is 4 points a year, so the steepest stretch is from zero to two.
“I let it out and lived elsewhere” sets this column to zero. Holding satisfied, residence empty, and half the deduction is unavailable.
Exclusion moves more than the rate does
Under a heavy rate or a short holding the deduction disappears entirely. Which of the two effects is larger?
Where it disappears is written into the bracket in art. 95(2) itself — the deduction applies to assets under art. 94(1)1 “(excluding unregistered transfers under art. 104(3) and the assets listed in art. 104(7))” that have been held for three years or more. The exclusion sits inside the relief provision; the heavy-rate article does not reach across to remove it.
Read the four cases in art. 104(7) and every one of them opens with “a home in an adjustment target area” — (1) two homes there, (2) one home there plus a membership or sale right, (3) three or more there, (4) homes and rights there totalling three or more. The first two add 20 points, the last two 30.
Outside an adjustment target area, no number of homes reaches this paragraph. “More than one home means the heavy rate” is not wholly true — the provision looks at the area first.
| Case | Base | Tax |
|---|---|---|
| As is (table 1, 20%) | KRW 533.5m | 206,943,000 |
| Heavy +20 pts | KRW 667.5m | 415,701,000 |
A home sold at KRW 1.5bn, bought at 800m, held ten years, not exempt. The deduction is KRW 134m under table 1 and nothing under the heavy rate.
The tax doubles. The rate going from 42% to 62% is part of it, but so is the base rising from 533.5m to 667.5m. Reading “heavy rate, +20 points” suggests a 20-point effect; in practice the exclusion comes with it.
Questions that remain
Ten years held, two years resident — what is the deduction?
48% — 40% holding plus 8% residence. The two tables are added, not compared. Residence is counted within the holding period, so it can never exceed it; but even though those two years sit inside the ten, they still earn their own 8 points.
Doesn’t two years of residence also give the exemption?
Different question. The two years of residence in the exemption test applies only where the area was regulated at acquisition (Enforcement Decree art. 154(1)); the 8% here is a deduction applied after the exemption is established. The same “two years” appears twice doing different work — the conditions side is in the one-home exemption.
Does fifteen years give a one-home household more?
No. Table 2 stops at ten — 40% holding and 40% residence are each ceilings. Table 1, for other property, climbs to fifteen and 30%. So ten years is where waiting stops paying for a one-home household, and fifteen for everything else.
Is the deduction percentage the same as the tax reduction?
No. The deduction shrinks the taxable base, and the progressive rate then sits on top. So doubling the deduction from 40% to 80% cut the tax from 14.23m to 2.62m — a factor of 5.4 — because the smaller base also fell into a lower band. The deduction works twice.
Is this table changing in 2026?
A bill to rework the long-term holding deduction appeared in August 2026 — renaming it a long-term residence income deduction, shifting the basis from holding to residence, and introducing a cap where none exists today. It is a bill, and we could not establish whether or when it takes effect — this article and the calculator use the current rules. The bill is summarised in the capital gains calculation guide.
📌 2026 tax reform bill — for a single home it replaces the holding-plus-residence deduction with a residence-based “long-term residence deduction” (8% a year of residence, up to 80%, from 2029) and adds a cap the law does not have now — 2 billion won in 2028, 1 billion from 2029; nothing changes through 2027. On the Table 1 side it would also deny the deduction (up to 30%) on individuals’ non-business land and lift its surcharge from +10 to +20 points (p.25). The bill was finalised on 1 September and sent to the National Assembly on 3 September, so nothing changes until it passes; this article uses the law in force now. Details are in our guide to the 2026 tax reform bill (checked 28 September 2026, including the 1 September revisions).
Sources and where to check
Income Tax Act art. 95(2) — the long-term holding deduction. Table 1 (land and buildings): 6% from three years, 2 points a year, 30% at fifteen. Table 2 (one home): holding 12% from three years, 4 points a year, 40% at ten; residence 8% from two years to under three, then 12% from three and 4 points a year to 40% at ten.
The bracket in art. 95(2) — the exclusions are art. 104(3) (unregistered transfers) and the cases in art. 104(7), and the relief itself is confined to assets held three years or more. Art. 104(7) — all four cases are homes in an adjustment target area (items 1 and 2 at 20 points, items 3 and 4 at 30). Art. 104 (short-holding rates), art. 103 (KRW 2.5m basic deduction).
Art. 95(4) — the holding period runs from acquisition to transfer, except under art. 97-2(1) (carry-over taxation), where it runs from the day the gifting spouse or ascendant acquired it. Decree art. 154(6) — the residence period is “from the move-in date to the move-out date on the resident registration record”.
⚠ One outside source had table 1 shifted by a year throughout — showing 4% at three years and inventing rows for one and two years, where the statute starts at 6% from three years. It was checked against the figures in this site’s capital gains calculation and one further source before 6% was confirmed and used. The two tables in article 95(2) were opened and read band by band on the national statute portal on 26 August 2026. Table 1 (6% at three years rising to 30% at fifteen) and table 2 (holding 12% at three rising to 40% at ten; residence 8% at two, 12% at three, 40% at ten) matched this piece exactly. What the check added was the qualifier on the 8% residence band — “only where the holding period is 3 years or more” — which is now stated here, and which also fixed a bug in the calculator.
Where to check further
The residence registration abstract. Residence is counted from move-in and move-out records, not memory.
Whether the area was regulated at acquisition. The exemption’s two-year residence condition turns on it.
Progress of the 2026 bill. If it passes, this table changes.
To see it in money, change only the residence field in the capital gains tax calculator. Above KRW 1.2bn, read how the 1.2bn apportionment works alongside it.
