When you sell a home or land bought long ago and can’t find the purchase contract, you may be unable to prove what you paid. Korea’s Income Tax Act Art. 97 says that only then are the comparable sale price, the appraised value or the converted acquisition price applied in that order. For land and buildings, Enforcement Decree Art. 176-2(2) sets the converted price as sale price × standard price at purchase ÷ standard price at sale. Sold for ₩1 billion with the standard price rising from ₩300 million to ₩600 million, the acquisition cost is ₩500 million. Add the deemed expenses of 3% of the standard price at purchase (Decree Art. 163(6)), ₩9,000,000, and the expenses are ₩509,000,000, leaving a gain of ₩491,000,000. If that total is smaller than actual capital spending plus selling costs, those may be deducted instead (Act Art. 97(2)2 proviso), and selling a new-built or extended building within 5 years on a converted price adds a 5% penalty on the building part (Art. 114-2). The calculator shows all three.
1. Converted price = sale price × standard price at purchase ÷ standard price at sale (Decree Art. 176-2(2)2).
2. Expenses = converted price + standard price at purchase × 3/100, or capital spending + selling costs if larger (Act Art. 97(2)2).
3. New build or an extension over 85 m² sold within 5 years: 5% of the building’s converted price, even with no tax computed (Art. 114-2).
Calculator
Land and buildings only. Converted price = sale price × standard price at purchase ÷ standard price at sale, rounded down to the won (our rounding). Deemed expenses use 3/100 (3/1000 for unregistered assets is not handled). The penalty field takes the building’s own converted price, which you enter yourself.
The provisions — as written
| Type | What the source says | Worth noting (ours) |
|---|---|---|
| Income Tax Act Art. 97(1)1 | Acquisition price; only where the actual transaction price can’t be confirmed is item (b) used: (b) the comparable sale price, appraised value or converted acquisition price applied in order as set by Presidential Decree | With a contract, no conversion |
| Art. 97(2)2 | In other cases, expenses are that amount plus an amount set by Presidential Decree for each asset. But where the converted price is used and (a) is less than (b), (b) may be the expenses. (a) converted price plus the decree amount; (b) capital spending and selling costs under (1)2 and 3 | (b) has no acquisition price in it |
| Decree Art. 163(6) | Land: individual land price at purchase ×3/100. Buildings: standard price at purchase ×3/100. (3/1000 for unregistered assets) | The “deemed expenses” |
| Decree Art. 176-2(2)2 | Land, buildings and rights to acquire real estate: actual sale price (or comparable or appraised value) × standard price at purchase ÷ standard price at sale | Shown as a formula image; homes bought before prices were first published use Art. 164(7) |
| Decree Art. 176-2(3) | Applied in order: comparable sale within 3 months either side → appraisal → converted price → standard price (estimated assessment) | Average of two appraisals, or one if the standard price is ₩1 billion or less |
| Income Tax Act Art. 114-2 | Where a building is newly built or extended (over 85 m² of floor area) and sold within 5 years using an appraised value or converted price, 5/100 of that building’s (or the extension’s) value is added to the tax; (2) applies even with no tax computed | Not on the land part |
The formula appears as an image on the law site; we read its alt text. Income Tax Act as in force from 1 July 2026 (Act No. 21221); Enforcement Decree from 1 October 2026 (Presidential Decree No. 36737).
Three worked cases — our examples
| Case (our example) | Converted price · expenses | Gain · worth noting |
|---|---|---|
| Sold for ₩1B, standard price ₩300M → ₩600M, actual spending ₩30M | ₩1B × 300 ÷ 600 = ₩500,000,000 + ₩9,000,000 = ₩509,000,000 | ₩491,000,000 · (a) is larger |
| Sold for ₩500M, standard price ₩100M → ₩500M, major works ₩120M | ₩100,000,000 + ₩3,000,000 = ₩103,000,000 < (b) ₩120,000,000 | ₩380,000,000 · (b) may be used |
| New build sold after 4 years for ₩800M, ₩200M → ₩400M, building part ₩150M | ₩400,000,000 + ₩6,000,000 = ₩406,000,000 | ₩394,000,000 · penalty ₩150,000,000 × 5% = ₩7,500,000 |
The ₩150 million building part in the third row is our example value. In practice the building and its land are converted separately; the calculator doesn’t split them and takes the building amount directly. Where the standard price rose a lot (₩100M → ₩500M), the converted price comes out small, and receipted major works plus selling costs such as brokerage fees may be better. The key is that (b) leaves out the acquisition price (our note).
When it applies — our summary
| If | What to do | Worth noting (ours) |
|---|---|---|
| You have the purchase contract | Use the actual price; no conversion | Art. 97(1)1 proviso |
| No contract, bought long ago | Converted price if no comparable sale or appraisal | Order in Decree Art. 176-2(3) |
| Lots of receipts for works | Enter the total as capital spending + selling costs and compare (a) and (b) | What counts: our necessary expense calculator |
| Selling a house you built within 5 years | Building’s converted price × 5% added to the tax | Same penalty with an appraised value |
Checklist
- ☐ Are the purchase contract and receipts really gone?
- ☐ Standard prices at purchase and sale (individual land price; published home price)
- ☐ Deemed expenses = standard price at purchase × 3/100
- ☐ Compare with capital spending + selling costs
- ☐ New build or 85 m²+ extension within 5 years: 5% penalty
Questions that remain
Isn’t using both the converted price and actual costs a double deduction?
The law splits them into (a) converted price + deemed expenses and (b) capital spending + selling costs, and you take only the larger. Actual spending isn’t added to (a).
What if the standard price didn’t rise?
If both standard prices are the same, the converted price equals the sale price and there seems to be almost no gain. That is why Decree Art. 176-2(3) puts comparable sales and appraisals first. How the tax office applies it is its call; we didn’t read rulings or court cases.
Does the 5% penalty apply to land?
Art. 114-2 adds 5% only on the appraised or converted value of the building newly built or extended (the extension only).
Sources
- Income Tax Act (Korea) — Arts. 97 and 114-2 — source (in force 1 July 2026, Act No. 21221; checked 4 November 2026). Art. 97(1)1 (comparable, appraisal and converted price in order only where the actual price can’t be confirmed), (2)2 main text and proviso ((a) vs (b)), Art. 114-2(1)(2) (5% for new builds or 85 m²+ extensions within 5 years, even with no tax computed).
- Enforcement Decree of the Income Tax Act — Arts. 163(6), 176-2 — source (in force 1 October 2026, Presidential Decree No. 36737; checked 4 November 2026). Deemed expenses 3/100 (3/1000 unregistered), the conversion formula (alt text of the image), and the comparable → appraisal → conversion → standard price order.
- Not read. Decree Art. 164(7)(8) (standard price for homes bought before publication), Act Art. 99 (standard prices), deemed-acquisition-date details, NTS rulings and cases on conversion, local income tax.
- What we added. The “worth noting” column and the Korean everyday gloss.
Where to check further
- NTS Hometax — standard price lookups and capital gains returns.
- Your tax office or a tax accountant — whether conversion applies.
Written on 4 November 2026. The content is from the source; the glosses are ours.
