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. It goes to the Assembly before 3 September, 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.
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 |
| 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 / ₩900m not |
| 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.
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 if you live there, down if you don't
| Current | Under the bill | |
|---|---|---|
| Single home, occupied | ₩1.2bn | ₩1.4bn |
| Single home, not occupied | ₩1.2bn | ₩900m |
| Others | ₩900m | ₩400m + (₩500m × occupied value ÷ total value) |
Same single home, opposite directions — up ₩200m if you live there, down ₩300m if you don't. A ₩500 million spread in the allowance alone (our calculation).
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 — 150% to 200%
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. That multiple goes 150% → 200%.
This one runs the other way and is easy to miss. The other items raise tax directly; the ceiling is the brake that stopped a spike. Loosening it means that in a year when assessed values jump, the bill can now reach twice last year's.
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%.
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.
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?
After the 3 September submission, and again when the budget session votes 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.
Sources
- 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 is submitted before 3 September and then deliberated 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.
