Capital gains tax is the biggest variable when you sell a home in Korea. One home per household is usually exempt — and people really do pay tens of millions of won extra by missing a requirement by a hair. What almost no guide says clearly: “how many years do I have?” is 3 under one provision and 10 under another.
1. What is at stake. One home per household is usually exempt, but the statute writes it as “excludes an expensive house whose price exceeds KRW 1.2bn” (Art. 89(1)3). People really do pay tens of millions extra by missing a requirement by a hair.
2. What are the requirements. Two years of holding as a baseline, plus two years of residence if the area was regulated at the time of purchase (Decree art. 154(1)). And “one household” reaches sons- and daughters-in-law and siblings — a legal divorce still counts as a spouse if you share a household (Art. 88(6)).
3. If you end up with two. The clock differs by provision — trading up gives 3 years (2 between regulated areas), caring for a parent or marriage gives 10 (art. 155). “How long do I have?” has no single answer. You must file even at a loss (Art. 105(3)).
On 3 August 2026 a bill was published that reworks the long-term deduction. For a single home the basis would move from holding to occupancy (reaching 8% a year lived in 2029), and a cap on the deduction would be introduced (₩2bn in 2028, ₩1bn from 2029). 2027 is unchanged, and it has not passed the National Assembly — everything below is current law. The bill is covered in our guide to the 2026 tax reform bill.
Who counts as “one household”
Article 88(6) “One household” means the family unit formed by a resident and their spouse (including a person who is legally divorced but whose relationship is difficult to regard as an actual divorce, such as where they share a livelihood) together with those who share a livelihood at the same address or residence [meaning the lineal ascendants and descendants of the resident and spouse (including their spouses) and siblings, and including a person temporarily absent from the original address for schooling, medical treatment, work or business]. Provided, that in cases prescribed by Presidential Decree, a household may exist without a spouse.
| Counted in the household? | The statutory wording | Note |
|---|---|---|
| Spouse | “a resident and their spouse” | Included even after a paper divorce if you share a livelihood |
| Parents, children, grandparents, grandchildren | “lineal ascendants and descendants (including their spouses)” | Sons- and daughters-in-law are in |
| Siblings | “and siblings” | Where they share a livelihood at the same address |
| Family away at school, hospital or a posting | “including a person temporarily absent” | Moving the registration alone does not remove them |
Two parentheses carry the practical weight. One is “legally divorced but difficult to regard as an actual divorce” — splitting a household by paper divorce is blocked in the text itself. The other is “including a person temporarily absent” — schooling, treatment, work or business does not take someone out of the household.
The test is “sharing a livelihood at the same address or residence.” Splitting the title deeds does not automatically create a separate household.
And the definition of “housing” is broad too (Art. 88(7)) — “regardless of permits or the use classification on the public register … a building actually used for residence.” Registered as a retail unit but lived in? It counts toward your house number.
What happens above KRW 1.2bn
Article 89(1)3 Income from the transfer of housing falling under any of the following items (excluding an expensive house where the combined actual transaction price of the housing and its land exceeds KRW 1.2bn) and its land within the area obtained by multiplying the building’s footprint by a ratio prescribed by Presidential Decree for each region …
(a) housing where one household holds one house and meets the requirements prescribed by Presidential Decree
(b) housing prescribed by Presidential Decree where a household holds two or more houses due to replacement purchase, inheritance, caring for parents, marriage and so on before transferring its one house
- Article 89 itself only says the over-1.2bn house is excluded from the exemption. The “only the excess is taxed” calculation comes not from here but from Decree Article 160, which apportions the gain and the long-term holding deduction against the 1.2bn line. That formula is an image inside the provision, and on 18 September 2026 we transcribed it from the image's alt text — set out below.
- The measure is the “combined actual transaction price” — the price you actually sold for, not a published valuation, and housing plus its land together.
- The attached land has a ceiling too — the footprint times a regional ratio prescribed by Presidential Decree. The ratios are in Decree art. 154(7) (am. 28 Nov 2025) — inside an urban area, 3× for residential, commercial and industrial zones in the capital region, 5× for green-belt zones there and for everywhere outside the capital region, and 10× outside urban areas. The same yard splits three ways by zoning.
- A parenthesis in Decree Article 160(1) — where a building mixes residential and non-residential parts, “the non-residential part shall not be regarded as housing.” A shop-house is split for the calculation.
What exactly gets cut above 1.2bn — Decree art. 160
“Only the excess is taxed” is not what the provision says. What it does is cut the gain and the long-term holding deduction by the same ratio. The formula sits in the provision as an image, invisible to text scraping; we transcribed it from the alt text.
Decree art. 160(1) (amended 15 February 2022)
1. Gain attributed to the expensive house = gain under Act art. 95(1) × (transfer price − KRW 1.2bn) ÷ transfer price
2. Long-term holding deduction attributed to it = deduction under Act art. 95(2) × (transfer price − KRW 1.2bn) ÷ transfer price
Both lines carry the same fraction. Sell at 2bn and (2−1.2)÷2 = 40% crosses into the taxable side — and only 40% of the long-term holding deduction comes with it. The deduction is not applied whole; it is cut in proportion to the gain (our arithmetic).
Sell at 1.3bn and it is (1.3−1.2)÷1.3 = 7.7%. Crossing the line by 100m brings in 7.7% of the gain, not the lot — which is why “over 1.2bn means fully taxed” is the most expensive misreading here.
The second sentence of the same paragraph adds one more rule: where the house and its land have different holding periods, where the asset is unregistered, or where only part is transferred, the 1.2bn itself is apportioned by each part's share of the transfer price — following Act art. 100(2) (para. 2).
Is two years enough — holding and residence
Decree Article 154(1) The “requirements prescribed by Presidential Decree” in Article 89(1)3(a) mean that the household holds one house in Korea as of the transfer date and has held it for two years (three years for certain residents) or more [where the housing was in a regulated area at the time of acquisition, that it has been held for two years or more and resided in for two years or more during that holding period].
- The test is “at the time of acquisition.” Even if the area has since been deregulated, buying while it was regulated brings the residence requirement with it. The provision fixes the point in time.
- Residence must fall “during that holding period.” Living there outside the holding period is not within the wording.
- This provision carries more than twenty-five lines of amendment history — from 1995 through 30 December 2025. It is the textbook case of a rule where a guide from a few years ago cannot be trusted.
- The proviso creates exceptions — subparagraphs 1 to 3 are free of both holding and residence limits, and subparagraph 5 is free of the residence limit. The subparagraphs (checked 27 September 2026): 1, a public or private construction-rental or purchase-rental home in which the whole household lived five years or more from the lease date; 2, expropriation (a), emigration (b), or the whole household leaving for study or work abroad of a year or more (c) — (b) and (c) only if sold within two years of departure; 3, a home lived in for a year or more sold for study, work, medical care or similar unavoidable reasons; 5, a contract signed and deposit paid before the regulated-area announcement by a household owning no home. Item 4 was deleted in 2020.
| Requirement | What the statute demands | Basis |
|---|---|---|
| Holding | 2 years or more (3 for certain residents) | Decree art. 154(1) |
| Residence | If regulated at acquisition: 2 years within the holding period | |
| House count | One house in Korea as of the transfer date | |
| Price | Combined actual price KRW 1.2bn or less (excess is apportioned) | Act art. 89(1)3 / Decree art. 160 |
Holding and residence are not added together — one sits inside the other.
I now have two — how long do I have
What counts as the “housing prescribed by Presidential Decree” in item (b) is handed off by Decree Article 154(11) to “housing to which this Article applies as a special case of one house per household under Article 155.” So the actual deadlines live in Article 155.
Decree Article 155(1) Where a household owning one house in Korea acquires another house before transferring it and thus temporarily holds two, and acquires the new house one year or more after acquiring the former house and transfers the former house within the period below, counted from acquiring the new house, it shall be treated as one house per household. … <amended 28 Feb 2023, 30 Sep 2026>
1. Where, on the date the new house is acquired, the former house is in a regulated area and the new house acquired is also in a regulated area [excluding a new house acquired, or contracted for with a deposit paid, on or before the day the area was designated]: 2 years
2. Any other case: 3 years
(4) Where a person holding one house merges households to care for a lineal ascendant aged 60 or over who also holds one house … the house transferred first within 10 years of merging shall be treated as one house per household. <amended … 30 Dec 2025>
(5) Where a person holding one house marries another person holding one house … the house transferred first within 10 years of the marriage shall be treated as one house per household. <amended … 12 Nov 2024>
| Situation | Deadline | Basis |
|---|---|---|
| Trading up (temporary two homes) | New purchase 1+ year after the former purchase and sale within 3 years of the new purchase (2 years if both homes are in regulated areas) | Art. 155(1) |
| Caring for a parent 60+ | First sale within 10 years of merging | Art. 155(4) |
| Marriage | First sale within 10 years of the marriage | Art. 155(5) |
Trading up has two requirements and the first one is what people miss — “acquires the new house one year or more after acquiring the former house.” Buy a second home while the first is under a year old and the relief does not arise, however fast you sell.
Parent care and marriage are 10 years, not the widely quoted 5 — the amendment dates are 30 December 2025 and 12 November 2024 respectively.
The “60 or over” test has three carve-outs: a spouse’s ascendant, cases where only one of the ascendants is 60+, and an ascendant under 60 receiving certain long-term care benefits.
The inheritance case is Article 155(2), which is long enough that we could not summarise it in full this time.
Put both conditions on a time axis and it is clear which one gets missed.
🟢 In force from 1 October 2026 — two years inside regulated areas. Temporary two homes inside a regulated area: the single-home grace period has shrunk from three years to two. For capital gains it applies where the new home is acquired on or after 4 August 2026 and the old home is sold on or after the effective date (1 October); for the real estate tax, acquisitions from 4 August and tax years from 1 June 2027. Purchases (or contracts with a deposit paid) by 3 August keep the three years. Being a decree change, it did not go through the National Assembly: it was promulgated on 30 September 2026 in the Income Tax Decree (Presidential Decree No. 36737) and the Real Estate Tax Decree (No. 36739) and took effect on 1 October (article 2 of each addenda; checked 1 October 2026). Outside regulated areas it stays three years; the changes are collected in our guide to the 2026 tax reform bill (Ministry release of 3 August, p.21).
Do I file even at a loss
Article 105(1)1 … two months from the last day of the month in which the transfer falls
(3) Paragraph (1) applies even where there is no gain or where a loss arises.
- The deadline runs “from the last day of the month in which the transfer falls” — not two months from the transfer date.
- Paragraph (3) — “applies even where there is no gain or where a loss arises.” Selling at a loss does not remove the filing obligation. The statute states it as its own sentence.
- The portion of a gift with assumed debt treated as a transfer gets three months (same paragraph, subparagraph 3). The gift side is in our gift tax deduction guide.
The sell-by date for a temporary two-home exemption (3 years, or 2 in adjusted areas) is worked out in the temporary two-home exemption calculator.
When 2 years' holding and residence are met is in the one-home holding and residence checker.
What to write down before you sell
- Every household member’s house count — using Article 88(6)’s range (ascendants and descendants and their spouses, siblings, temporarily absent members)
- Acquisition and transfer dates — whether two years of holding is met
- Whether the area was regulated at acquisition — if so, two years of residence too
- If you hold two, which relief applies — 3 years for trading up (2 between regulated areas), 10 years for parent care or marriage
- Whether the price exceeds KRW 1.2bn — if so you move to the apportionment calculation
The full calculation with necessary expenses and the long-term holding deduction is in our capital gains tax guide, the tax you pay on buying is in the acquisition tax guide, and the transaction itself in the apartment purchase guide.
Whether selling your own home counts as one home after inheriting another is in inherited house exemption checker.
Questions that keep splitting opinion
Is the acquisition date the contract date or the closing date?
Articles 154 and 155 say only “the date of acquisition” and “transfer date” without defining them. The definition sits in Act art. 98, opened on 18 September 2026: acquisition and transfer occur on the day the price is paid in full. The rule is the closing date.
The exceptions are listed in Decree art. 162(1).
| Case | Date used |
|---|---|
| The settlement date is unclear | Date of registration (item 1) |
| Title was transferred before settlement | Date of registration (item 2) |
| Acquired by inheritance or gift | Date the succession opened, or the gift date (item 5) |
| A building you built yourself | Date the approval for use is issued, or actual use or temporary approval if earlier (item 4) |
| Expropriation | The earliest of settlement, the date possession passes, and registration (item 7) |
“Contract date” appears on no line. There is no case in which it governs — so the question “contract or closing” does not arise on the text at all.
One more clause in art. 98: where the buyer agrees to bear the seller's capital gains tax, that tax is excluded from “the price.” The amount whose settlement fixes the date can differ from the figure on the contract.
A single day can decide the outcome — check with the National Tax Service (126) first.
I rented it out and never lived there
If the area was not regulated at acquisition, the main text of Decree Article 154(1) requires only the holding period. If it was regulated at acquisition, two years of residence is also required.
What about the “win-win landlord” relief? — a separate article, not a subparagraph of the proviso
Opened on 21 September 2026. This article had long been looking for it among the subparagraphs of the Article 154(1) proviso. It was never one of them. That proviso waives both the holding and the residence period for subparagraphs 1 to 3, and the residence period only for subparagraph 5 (a purchase contract signed and the deposit paid before the regulated-area announcement, by a household owning no house on the day the deposit was paid). The relief lives in Decree Article 155-3 (special case of one house per household for a win-win rental house), an article of its own.
Decree Article 155-3(1) Where a household owning one house in Korea (…) transfers a house meeting all of the following requirements (a “win-win rental house”) by the earlier of the day one year after the lease period under subparagraph 3 ends and 31 December 2029 (or by 31 December 2027 where that lease period ends on or before 31 December 2026), the residence-period requirement under Article 154(1), Article 155(20)1 and Article 159-4 shall not apply. (am. 12 Nov 2024, 30 Sep 2026)
All three requirements must be met. (1) A lease whose deposit or rent rises by no more than 5% against the immediately preceding lease, signed between 20 December 2021 and 31 December 2026 (only where receipt of the deposit is evidenced in documents) and actually commenced; (2) the preceding lease ran for at least 18 months; (3) the win-win lease runs for at least two years. A lease taken over by buying the house with the tenant in place is excluded from “the preceding lease” (parenthesis in subparagraph 1). Only the residence requirement is waived — the two-year holding period still applies.
🟢 In force 1 October 2026 — the win-win relief now has a sale deadline. Re-opening the article on 28 October 2026, we found that the 30 September amendment (Presidential Decree No. 36737, in force 1 October) wrote a deadline into the main text of paragraph 1 (quoted above). The house must be sold by the earlier of one year after the win-win lease period (subparagraph 3) ends and 31 December 2029, and by 31 December 2027 if that lease period ends on or before 31 December 2026. Our examples: a lease ending 31 March 2027 gives 31 March 2028; one ending 30 November 2026 gives 31 December 2027; one ending 30 June 2029 gives 31 December 2029. The addenda to Decree No. 36737 contain no application or transitional rule for this change (article 2 there covers temporary two-home ownership), so we read it as applying to sales from the effective date (our reading). The dates are worked out in the sangsaeng rental home calculator.
How is this different from property tax?
Different taxes entirely. What you pay while holding is property tax and the comprehensive real estate tax; capital gains tax applies to the gain when you sell. Three different statutes.
Do I file even if I am exempt?
Because Article 105(3) applies the filing rule even with no gain, whether an exempt sale removes the obligation cannot be settled from the text alone. We do not assert it and suggest asking the tax office.
With this exemption, close enough is not good enough. And “how many years do I have” has no single answer — three for trading up, ten for parent care and marriage.
What the tax actually comes to above KRW 1.2bn can be worked out in the capital gains tax calculator, apportionment and long-term holding deduction included.
Other home-buying topics, from subscription points to capital gains tax, are gathered in order in Buying a Home in Korea.
Sources
- Ministry of Government Legislation, National Law Information Center — statutory text — Income Tax Act Enforcement Decree, Article 155 (Special Cases of One House per Household). Source of paragraph (1)’s two requirements (including the 2-year rule in subparagraph 1 for regulated areas), paragraph (4)’s 10 years for parent care, and paragraph (5)’s 10 years for marriage.
- Ministry of Government Legislation, National Law Information Center — statutory text — Same Decree, Article 154 (Scope of One House per Household). Source of the two-year holding and two-year residence rules, the “at the time of acquisition” test, and paragraph (11).
- Ministry of Government Legislation, National Law Information Center — statutory text — Same Decree, Article 155-3 (Win-Win Rental House). Source of “the residence-period requirement shall not apply” and the three requirements (5% cap · 18 months preceding · two years win-win), plus the exclusion of a lease taken over with the house. Opened 21 September 2026. Re-opened 28 October 2026 to confirm the sale deadline in the main text of paragraph 1 of the current version (Presidential Decree No. 36737, in force 1 October 2026; am. 30 Sep 2026) and that the addenda to Decree No. 36737 hold no application rule for the win-win relief.
- Ministry of Government Legislation, National Law Information Center — statutory text — Income Tax Act, Article 88 (Definitions). Source of subparagraph 6, “one household” and subparagraph 7, “housing.”
- Ministry of Government Legislation, National Law Information Center — statutory text — Same Act, Article 89 (Non-Taxable Transfer Income). Source of the KRW 1.2bn exclusion, items (a) and (b), and the regional land ratio.
- Ministry of Government Legislation, National Law Information Center — statutory text — Same Act, Article 105 (Preliminary Return). Source of the two-month deadline and paragraph (3) on filing at a loss. The apportionment for expensive houses is Decree Article 160 ( formula is an image).
The sangsaeng rental home rule (5% cap, sell by end-2029) is worked out in the sangsaeng rental home calculator.
The 10-year rule for two homes after marriage or moving in with a parent is in marriage and parent-care merger calculator.
Where to check further
- Whether your own lease meets the win-win requirements. The article fixes only the 5% cap and the two lease periods — whether the preceding lease is one you took over with the house, and how the increase is computed when deposit and monthly rent are swapped (paragraph 2 — the standard in article 44(4) of the Special Act on Private Rental Housing), turn on your contract. Take it to the NTS helpline (126) or a tax professional.
- Whether your area was regulated at the time of purchase. The two-year residence requirement turns on this — designation and de-designation history sits in Ministry of Land notices and with the Korea Real Estate Board, read against your acquisition date.
- The long-term holding deduction rate that applies to you. The tables split by years held and years resided, and expensive houses use a separate formula — Hometax's capital gains tax pre-calculation runs it on your acquisition and disposal dates.
- Which costs count as necessary expenses. The provisions set the categories but nothing counts without a receipt — gather acquisition tax receipts, brokerage fees and capital expenditure records and check them with the National Tax Service (126) or a tax professional.
Written as of August 2026. All quotations are the statutory text as published by the National Law Information Center, and what we could not confirm is listed separately above. This area is amended constantly — Decree Article 154(1) alone carries over twenty-five lines of amendment history — and a single day can flip the result. Check with the National Tax Service (126) or a certified tax accountant before selling. This article is general information, not tax advice.
