Write a different price on the sale contract from what was really paid — a “down contract” or an inflated one — and even a home that qualifies for the one-household one-home exemption loses some or all of it. Income Tax Act Article 91(2) takes off the smaller of “the tax without the exemption” and “the gap between the contract price and the actual price” from the exempted tax; reductions work the same way. Sell a ₩1 billion home on a ₩900 million contract, with tax of ₩40 million absent the exemption, and since ₩40 million is less than the ₩100 million gap you pay the full ₩40 million (our example). Inflate it by ₩10 million instead and it is ₩10 million. The calculator is below.
1. Covers: parties selling land, buildings or real estate rights such as presale rights (Art. 94(1)1, 2).
2. Exemption: take off the smaller of the tax without exemption and the gap (Art. 91(2)1).
3. Reduction: the smaller of the reduction and the gap (item 2). A home sold unregistered gets no exemption at all (para. 1).
Calculator
Updates as you type. The amount taken off is the smaller of the tax (or reduction) and the price gap (Art. 91(2)). We cap it at the exemption you would actually get (tax without minus tax with); that cap is our reading. Local income tax is not included.
Article 91 — as written
| Type | What the source says | Worth noting (ours) |
|---|---|---|
| Para. 1 | Capital gains tax exemptions do not apply to an unregistered transferred asset under Art. 104(3) | All of it, gap or not |
| Para. 2 | Where parties selling Art. 94(1)1 or 2 assets write a contract price different from the actual price, the amount below is taken off the tax exempted or reduced | Down or up, either way |
| Para. 2, item 1 | For an exemption: the smaller of the Art. 104(1) tax computed without the exemption and the gap between contract and actual price | If the tax is below the gap, the exemption vanishes |
| Para. 2, item 2 | For a reduction: the smaller of the reduction and the gap | — |
Assets covered — Art. 94(1) (as written)
| Type | What the source says | Worth noting (ours) |
|---|---|---|
| Item 1 | Land or buildings (including attached fixtures and structures) | Homes, shops, land |
| Item 2(a) | Rights to acquire real estate, including the right to a building and its land when completed | We read presale rights as covered |
| Item 2(b), (c) | Surface rights; jeonse rights and registered leases | — |
Three sums — our examples
| Case (ours) | Extra tax | Worth noting (ours) |
|---|---|---|
| Actual ₩1bn, contract ₩900M (down); ₩40M tax without exemption | Gap ₩100M > ₩40M → ₩40 million | The whole exemption goes |
| Actual ₩1bn, contract ₩1.01bn (up); same ₩40M | Gap ₩10M < ₩40M → ₩10 million | Comes off the seller even if the buyer asked |
| Reduction ₩20M, gap ₩5M | ₩5 million | Reductions use item 2 |
The tax and reduction figures are ours, chosen to show the arithmetic. Work out the real tax in the capital gains tax calculator.
The calculator’s cap — our reading
The Article takes the amount off “the tax exempted or to be exempted”, so we read it as never exceeding the exemption you would actually get. For a partly exempt home, such as one over ₩1.2 billion, that exemption is “tax without exemption − tax with exemption”. With ₩40M without, ₩35M with and a ₩100M gap, the Article’s figure is ₩40M but the exemption is only ₩5M, so the calculator shows ₩5 million. That cap is our reading; we did not read the decree or NTS rulings. The exempt share of high-value homes is in the ₩1.2 billion apportionment.
“Parties” — does it reach the buyer?
Para. 2 speaks of the parties to the sale, not just the seller. So a buyer holding a down contract appears to lose the exemption too when they later sell (our reading). We did not check how the buyer’s sum is worked.
Unregistered sales are separate — as written
An asset sold without registering its acquisition is an “unregistered transferred asset” (Art. 104(3)); Art. 91(1) bars every exemption and Art. 104(1)10 applies 70% of the capital gains tax base. Unlike para. 2, the gap doesn’t matter. The fine for registering late is in the registration delay fine calculator.
The Real Estate Transaction Reporting Act also requires the actual price to be reported and fines false reports. The page we opened on 4 November 2026 mixed in amendments due to take effect (17 December 2026 and later) in Arts. 3 and 28, so we have not reproduced its amounts.
Checklist
- ☐ Contract price = actual price
- ☐ Work out the tax without the exemption first
- ☐ Inflated contracts are caught too
- ☐ Register your acquisition before selling
- ☐ Local income tax is separate
Questions that remain
Is a gap of a few million won safe?
Para. 2 has no minimum gap. A small gap only means a small deduction; the rule still applies.
Does local income tax go up too?
The calculator covers national capital gains tax only; we did not cover local income tax.
Any other penalty?
There is a separate fine under the Transaction Reporting Act; for the reason above we have not reproduced it.
Sources
- Korea Law Information Center — Income Tax Act Arts. 91, 94, 104 — source (current text, effective 1 July 2026, Act No. 21221; checked 4 November 2026). Art. 91(1) (no exemption for unregistered assets), (2) items (exemption: smaller of tax and gap; reduction: smaller of reduction and gap), Art. 94(1)1, 2 assets, Art. 104(1)10 70% and (3) definition.
- Not read. The Income Tax Act decree and NTS rulings (high-value homes, buyers), local income tax, the Transaction Reporting Act fines (because of pending amendments).
- What we added. The “worth noting” column and the Korean everyday gloss.
Where to check further
- Your tax office — filing and the exemption.
- National Tax Service website — capital gains tax guidance.
Written on 4 November 2026. The content is from the source; the glosses are ours.
