On 3 August 2026 the Korean government published its 2026 tax reform bill. The property provisions are large enough that coverage was immediate — and almost all of it reads “here is what changes from 2027.”
But this is still a bill. It is a set of statutory amendments the government will put to the National Assembly, and it takes effect only if the Assembly passes it. This article works from the Ministry of Economy and Finance's own release, separating what is settled from what is not.
1. What it means for you. The ministry published its own incidence analysis: a ₩1.23 trillion decrease for ordinary and middle-income households, and a ₩123 billion increase for high earners. Total revenue rises ₩3.44 trillion — and ₩2.18 trillion of that, 63%, is the comprehensive real estate tax (our calculation).
2. What people get wrong. None of it is settled. The government bill was finalised on 1 September and submitted on 3 September (the non-occupied cut and the ceiling rise were dropped then), and the start dates run 2027, 2028 and 2029 depending on the item. Reading it as “changes next year” is wrong for most of the list.
3. What to do now. Not act — read the direction. There is only one: from “how long you held it” to “how long you lived in it.” If you are buying or selling from 2027 onward, revisit it then.
🔴 Corrected 28 September — the 3 August package changed on 1 September. According to the Ministry’s “2026 tax reform: government bill finalised” (1 September) (checked 28 September 2026): the ₩1.4bn allowance for an occupied single home stays, but the non-occupied single home keeps the current ₩1.2bn (the cut to ₩900m is dropped); the burden ceiling stays at 150% (the rise to 200% is dropped); ISA terms and contribution limits stay as they are; and the youth productive-finance ISA may be held alongside the Youth Future Savings account. The eleven bills went to the Assembly on 3 September, with the valuation of listed shares to be worked out during deliberation. The attached table of revisions (five pages) lists seven items: the ISA overhaul, the productive-finance ISA, the real estate tax allowance, the burden ceiling, the reinvestment period for relocation and special-zone relief, the scope of the lower withholding rate for personal services, and the zero-rating transition for urban rail construction. The allowance item also moves joint spouses owning a single home they do not live in (without the joint-ownership election) from the August formula of ₩400m plus an occupancy top-up to ₩600m each (currently ₩900m). An earlier version, following a press report, called the ₩600m “unchanged”; it is the new figure, not the current one. The revenue figures below are from the 3 August release — neither the 1 September release nor its attachment gives revised figures.
First — this is not law yet
The last page of the release carries the legislative schedule. Verbatim:
| Date | Stage |
|---|---|
| 3 Aug 2026 (Mon) | 2026 tax reform bill published |
| 4 Aug (Tue) – 20 Aug (Thu) | Public notice of legislation (16 days) — Customs Act, 4–11 Aug (7 days) |
| 27 Aug (Thu) | Vice-ministerial meeting |
| 1 Sep (Tue) | Cabinet meeting — bill finalised with revisions |
| Before 3 Sep (Thu) | Submission to the regular session of the National Assembly |
Eleven statutes are being amended — ten domestic tax acts (Framework Act on National Taxes, National Tax Collection Act, Income Tax Act, Corporate Tax Act, Inheritance and Gift Tax Act, Value-Added Tax Act, Restriction of Special Taxation Act, Comprehensive Real Estate Holding Tax Act, Adjustment of International Taxes Act, Special Act on Rural Development) plus the Customs Act.
Submission is the start, not the end. 3 September is the deadline for handing it to the Assembly; it becomes law only after deliberation and a vote. Contents changing during the budget session is not unusual. So this article labels every figure as “the bill.”
There is one axis — from holding to living
The list looks long, but the property provisions all move the same way. The opening line of that chapter says so.
“To rationalise property taxation, normalise the comprehensive real estate tax and capital gains tax burden on non-occupied housing and housing above a certain value, while continuing to protect the owner-occupied single home.”
The same sentence shows up in three places.
| Provision | Current basis | Basis under the bill |
|---|---|---|
| CGT long-term deduction | 4%/yr held + 4%/yr lived | 8%/yr lived (single home) |
| Real estate tax allowance | ₩1.2bn flat for one home | ₩1.4bn occupied / ₩1.2bn not ₩900m dropped 1 Sep |
| Real estate tax credit | By period held | By period lived in |
Two people can hold the same home for the same years and land in different places, depending on whether they lived there. Even the name changes — the “long-term holding special deduction” splits into a “long-term occupancy income deduction” for housing and a “long-term holding income deduction” for everything else.
Capital gains tax — the rate holds, the condition changes
For a single home the 80% maximum stays. What changes is what you fill it with.
| 2027 (same as now) | 2028 | 2029 on | |
|---|---|---|---|
| Single-home household | 4%/yr lived + 4%/yr held [10 yrs, max 80%] | 6%/yr lived + 2%/yr held [10 yrs, max 80%] | 8%/yr lived [10 yrs, max 80%] |
| Multiple homes (non-regulated areas) | 2%/yr held [15 yrs, max 30%] | 1%/yr held or 2%/yr lived [15 yrs, max 15%/30%] | 2%/yr lived [15 yrs, max 30%] |
| Deduction cap | (none) | ₩2bn | ₩1bn |
A year's grace, then phased — 2027 matches current law, 2028 moves about halfway, and 2029 completes the switch to occupancy.
The largest change is the new cap. Today the deduction amount is uncapped. The bill sets ₩2 billion in 2028 and ₩1 billion from 2029, per person and per property sold. It is a ceiling on the amount, not the rate, so it bites only on very large gains.
Owners of multiple homes selling in a regulated area are already excluded from the deduction, and the bill excludes them from the occupancy deduction too.
What this article left out on the property side
Rereading pages 20–22 of the Ministry release of 3 August (checked 28 September 2026) turned up more capital-gains items. None is among the seven 1 September revisions.
- Temporary two homes inside a regulated area: the single-home grace period has shrunk from three years to two (in force 1 October). 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).
- Basic deduction for long-term residents: a single home lived in for 10+ years and sold for up to 3 billion won gets 25 million won instead of 2.5 million.
- Temporary relief for older owners: an owner aged 65+ who sells a capital-region home (5+ years’ residence, living there for 2+ years at sale) and moves outside the capital region gets 50% off in 2027 (up to 500 million won) and 30% in 2028 (up to 300 million); moving back within five years claws it back.
- Multi-home surcharge eased for regulated-area homes held 2+ years: +5/+10 points for two homes and +10/+15 for three or more in 2027/2028, back to +20/+30 from 2029 (the footnote says 2026 sales already surcharged are included).
- Purchased rental flats in regulated areas: surcharge exemption and the 50% deduction bonus only through 2027, half surcharge and 30% in 2028, none after (per the Ministry release). What we confirmed in the decree in force from 1 October is the sale deadline for the surcharge exemption: Article 167-3(11) (new, 30 September 2026) sets it at 31 December 2027 for purchased rental homes and similar, pushed back to one year after deregistration and the like where the mandatory rental period ends on or after 1 January 2027. We did not confirm the 2028 half-surcharge and 30% step in the statutes this time.
- “Win-win rental” relief ends 31 December 2026; only sales within a year of the lease ending keep the two-year residence waiver.
- Second homes in the regions: wider areas and price caps, extended to end-2029.
Fiscal conversions, land and other items left out
More items that reach individuals, from pages 25 and 27–30 of the Ministry release of 3 August (checked 28 September 2026). None is among the seven 1 September revisions.
- Birth, adoption and marriage credits abolished — the birth/adoption credit (300,000 / 500,000 / 700,000 won for first, second, third+) and the one-off 500,000 won marriage credit per spouse become direct spending instead.
- Card deduction reshaped — the extra public-transport rate (40%) folds into the basic rates and transit gets direct support; the books-and-culture add-on loses its income test but its extra cap drops by 1 million won.
- EV and hydrogen-car excise relief phased out — EV cap 3 million → 2 million (2027) → 1 million (2028), hydrogen 4 million → 3 million → 1.5 million, ending in 2029 (from 1 January 2027).
- Small-home landlord tax reduction — no more one-home/two-plus split: 50% for public-support and long-term private rentals, 20% otherwise (today 75%/30% for one home, 50%/20% for two or more).
- Individuals’ non-business land — no long-term holding deduction (up to 30%), surcharge raised from +10 to +20 points; the top real estate tax rate on aggregated land goes from 3% to 4% (tax base over 4.5 billion won).
- Foreign workers’ flat rate 19% → 21%, extended to end-2029.
Real estate tax — 63% of the revenue comes from here
This is where most of the money moves. Six separate items.
1. Threshold — over ₩1.4bn assessed value for a single home
A single-home household is taxed above an assessed value of ₩1.4 billion (roughly ₩2bn market). Everyone else stays at ₩900 million assessed (roughly ₩1.3bn) — unchanged.
2. Basic allowance — up only if you live there (revised 1 September)
| Current | Under the bill | |
|---|---|---|
| Single home, occupied | ₩1.2bn | ₩1.4bn |
| Single home, not occupied | ₩1.2bn | ₩1.2bn ₩900m in the August bill, dropped |
| Joint spouses, single home, occupied (each) | ₩900m | ₩900m |
| Joint spouses, single home, not occupied (each) | ₩900m | ₩600m August: ₩400m + (₩500m × occupied value ÷ total value), revised 1 Sep |
Same single home, opposite directions in the August bill — up ₩200m if you lived there, down ₩300m if not, a ₩500m spread. With the cut dropped on 1 September, the spread is ₩200m (our calculation).
An earlier version labelled the third row “Others”; the attached table of revisions of 1 September shows it is the row for joint spouses owning one home without the joint-ownership election. With the election they follow the single-home rows; everyone else stays at ₩900m as in section 1 (checked 28 September 2026).
3. Fair market value ratio — rising from 60%
Single-home households and regional one- or two-home owners go 60% → 70% (2027 on). Three-home owners and others go 60% → 70% (2027) → 80% (2028 on).
4. Rates — set by value, not by how many homes
Today the rate depends on whether you own one or two homes versus three or more. The bill unifies this onto property value in stages and raises the ₩600m–1.2bn tax-base band from 1.0% to 1.3%.
| Tax base | Now: 1–2 homes | Now: 3+ homes | 2028 on: all |
|---|---|---|---|
| Up to ₩300m | 0.5% | 0.5% | 0.5% |
| ₩300–600m | 0.7% | 0.7% | 0.7% |
| ₩600m–1.2bn | 1.0% | 1.0% | 1.3% |
| ₩1.2–2.5bn | 1.3% | 2.0% | 2.0% |
| ₩2.5–5bn | 1.5% | 3.0% | 3.0% |
| ₩5–9.4bn | 2.0% | 4.0% | 4.0% |
| Over ₩9.4bn | 2.7% | 5.0% | 5.0% |
One- and two-home owners converge upward onto the three-home rates. The ₩1.2–2.5bn band goes 1.3% to 2.0%, and above ₩9.4bn goes 2.7% to 5.0% — the discount for owning fewer homes is being removed.
5. Tax credit — holding to occupancy again, plus a new cap
The single-home holding-period credit becomes an occupancy-period credit (in 2027, the higher of half the current holding credit or the occupancy credit applies). The age credit (20% at 60, 30% at 65, 40% at 70) is unchanged, and so is the 80% combined cap.
What is new is a won cap — ₩8 million in 2027, ₩6 million from 2028. There is none today.
6. Burden ceiling — the 200% plan dropped, 150% stays
The burden ceiling limits the real estate tax so that this year's holding taxes (property tax plus real estate tax) do not exceed a multiple of last year's. The August bill would have taken it 150% → 200%; the 1 September bill keeps 150%.
What was dropped. The ceiling is the brake that stops a spike. Under the August bill a year of sharp rises in assessed values could have produced twice last year's bill; it came out after the public notice and inter-ministry consultation (per the release).
In exchange, deferral widens. The income requirement rises by ₩10 million, and it is waived entirely for a single-home owner aged 65+ who has lived there 10+ years and whose holding taxes exceed 10% of income.
What it means if you do not own property
Barely covered in the press, but relevant to far more people.
Earned income tax credit — thresholds and payments both rise
| Household | Income limit: now → bill | Maximum payment: now → bill |
|---|---|---|
| Single | ₩22m → ₩26m | ₩1.65m → ₩1.8m |
| Single-earner | ₩32m → ₩37m | ₩2.85m → ₩3.1m |
| Dual-earner | ₩44m → ₩52m | ₩3.3m → ₩3.6m |
For dual-earner households the plateau — the income range over which you still receive the maximum — widens from ₩8–17m to ₩8–18m.
Monthly rent tax credit — a higher eligible amount
₩10 million a year → ₩12 million. The rate is unchanged — 15% for employees with total pay up to ₩80 million, 17% up to ₩55 million. For someone paying ₩1 million a month, another ₩2 million a year becomes eligible (our calculation).
Dependant allowance — the income test triples
To claim a spouse or dependant in the basic allowance (₩1.5m each), their income must be under a threshold. That threshold rises from ₩1 million of income to ₩3 million, or from ₩5 million to ₩7.5 million of total pay where the only income is employment.
This is where year-end settlement most often goes wrong. A child or parent who did some part-time work crosses ₩5 million and drops out of the allowance. That line moves to ₩7.5 million.
Freelance withholding: 3% to 2%
Withholding on “small-scale personal service providers such as delivery riders” falls from 3% to 2%. Including local income tax (10% of that amount), 3.3% becomes 2.2% (our calculation).
It is not a tax cut. Withholding is money taken in advance; the final liability is settled in the May return — withhold less now and the refund shrinks or the balance due grows. Personal services subject to year-end settlement stay at 3%. The 1 September bill widened that carve-out: the August draft kept 3% only for insurance sales agents, door-to-door salespeople and beverage delivery workers who keep simplified books, while the revision keeps all three trades at 3% whatever their bookkeeping (checked 28 September 2026).
Housing subscription savings deduction becomes permanent
The 40% income deduction on contributions (capped at ₩3 million a year) for non-homeowning household heads with total pay under ₩70 million loses its sunset clause.
Eight items this article first left out
Rereading pages 12–13 and 28 of the Ministry release of 3 August (checked 28 September 2026) turned up more items for people without property. None is among the seven 1 September revisions, so all remain in the bill.
- 17% rent credit for young people (to 31 December 2029). Today 17% applies only up to 55 million won of gross pay, 15% above.
- 15% IRP credit for young people on retirement-pension contributions. Today 15% applies only up to 55 million won, 12% above (9 million won cap including pension savings).
- Rental-loan repayment deduction for each spouse when a non-owning couple lives apart (combined cap 4 million won a year).
- Long-term mortgage interest deduction only if you live there — exceptions for schooling, medical care and the like; loans taken before 2027 keep the current rules until 2029.
- Pre-school academy fees other than arts (music, art, dance) and sports facilities leave the education credit.
- Childbirth support payments: today tax-free if paid within two years after birth; payments from pregnancy to birth would be tax-free too.
- Childcare allowance exemption extended to foster children, up to 200,000 won a month.
- Soldiers’ savings interest exemption extended three years (to 31 December 2029).
An earlier version left these eight out. Some were already in sibling articles (rent, IRP, housing funds, loans, salary calculator); this hub now collects them.
Where the money is collected, and where it goes
The release carries both a revenue effect table and an incidence table. Together they show the character of the package better than any summary.
| Tax | Five-year total | Share |
|---|---|---|
| Comprehensive real estate tax | +₩2.18tn | 63% |
| Other | +₩1.38tn | 40% |
| VAT | +₩601bn | 17% |
| Income tax | −₩558bn | −16% |
| Corporate tax | −₩164bn | −5% |
| Total | +₩3.44tn | 100% |
And the ministry's own incidence analysis:
| Group | Change in burden |
|---|---|
| Ordinary and middle-income (total pay under ₩89m) | −₩1.23tn |
| High earners | +₩123bn |
| Small and medium enterprises | −₩79bn |
| Large enterprises | −₩58bn |
| Other (foreigners, non-residents, heirs, etc.) | +₩4.68tn |
The definition of “ordinary and middle-income” is footnoted — up to 200% of the average wage, meaning total pay of ₩89 million or less. Publishing the threshold is good practice. Worth reading alongside it, though: ₩4.68 trillion of the increase sits in “other,” which the footnote describes as “foreigners, non-residents, heirs, public interest corporations, and items for which incidence analysis is difficult.”
Questions this raises
Should I sell now?
This article does not make that call. The facts: the capital gains deduction is unchanged through 2027 and starts moving in 2028. The caps (₩2bn / ₩1bn) bite only on very large gains. And none of it has passed the Assembly.
How is “occupancy” established?
The release gives no test. How actual residence is evidenced will come with the statute and the enforcement decree — what can be said today stops at the direction: occupancy replaces holding as the basis.
I own one home worth ₩1.2bn. Do I pay?
The threshold runs on assessed value. Under the bill, a single-home household is taxed above ₩1.4 billion assessed. But because the fair market ratio rises from 60% to 70%, the tax base has to be worked out separately — the current-law calculation is set out in the comprehensive real estate tax guide.
When should I look again?
The 3 September submission is done (the 1 September bill). Next is the budget-session vote at year end. The content can change in between.
The whole package turns on one axis — not how long you held the home, but how long you lived in it. It is still a government bill, and the earliest anything starts is 2027.
The marriage credit as it stands in the statute — registration on or before 31 December 2026, 500,000 won once only — is read separately in the marriage tax credit.
Other figures that change in 2027 — settled, proposed or not yet announced — are gathered in What Changes in Korea in 2027.
Sources
- Ministry of Finance and Economy — agency source — “2026 tax reform: government bill finalised” (1 September; one-page release plus the five-page attached table of revisions, checked 28 September 2026). Source for the seven revisions — ₩1.4bn/₩1.2bn allowances, ₩600m each for non-occupying joint spouses, the 150% ceiling, the ISA terms, the productive-finance ISA term, carry-forward and sunset, the withholding carve-out — and for the 3 September submission. Neither document gives revised revenue figures.
- Ministry of Economy and Finance — agency source — “2026 tax reform bill” press release, 3 August 2026. Source for the legislative schedule, the eleven statutes, the long-term occupancy deduction and its year-by-year rates and caps, the real estate tax threshold, allowance, fair market ratio, rate table, credit, burden ceiling and deferral, the earned income tax credit figures, the rent credit cap, the dependant income test, the 3% to 2% withholding change, the permanent housing savings deduction, and the revenue effect and incidence tables.
- Our own calculation. The 63% share, the ₩500 million spread between the occupied and non-occupied allowance, the ₩2 million of newly eligible rent at ₩1m a month, and the 3.3% → 2.2% conversion including local income tax are derived by us from the release's figures, not published by the ministry.
Where to check further
- What the Assembly does with it. Every figure here is the government's proposal. It was submitted on 3 September and is now in the budget session. Confirm the final text through the ministry's press releases and National Tax Service guidance.
- How “occupancy” is tested, and the transitional rules. The release covers direction and figures; it does not say how residence is evidenced, or from when occupancy is counted for a home you already own. Those come with the bill text and the enforcement decree.
- Your own numbers. This article stops at the change itself. Current-law calculations are in the comprehensive real estate tax guide, the single-home capital gains guide and the property tax calculator; for year-end settlement see preparing for year-end settlement and the monthly rent credit.
As of August 2026 (the bill was published on 3 August). Every figure and quotation is taken from the Ministry of Economy and Finance's “2026 tax reform bill” release, with shares and conversions marked as ours. This article summarises a government proposal, not enacted law. Check your own position with a tax professional. General information, not tax advice.
