Korean Capital Gains Tax on Homes: One-House Exemption and the ₩1.2B Rule

What capital gains tax is charged on

When you sell a home in Korea, national capital gains tax (양도소득세) is charged on the profit. The calculation runs in this order:

1. Gain = sale price − purchase price − allowable expenses
2. For a high-value home that qualifies for the one-home exemption, only the share above ₩1.2B is taxed
3. Subtract the long-term holding deduction
4. Subtract the ₩2.5M basic deduction to get the tax base
5. Tax base × rate − progressive deduction = capital gains tax
6. Add local income tax of 10% of that amount

Allowable expenses include the acquisition tax you paid, brokerage fees, scrivener fees and capital improvements such as balcony extensions or new window frames. Routine repairs like wallpaper, flooring or boiler fixes are usually not accepted, so keep renovation contracts and bank transfer records until the day you sell.

The one-household, one-home exemption

If all of the following are true, there is no capital gains tax on a sale price up to ₩1.2B:

• On the sale date, your household owns only one home in Korea
• You have held it for at least 2 years from acquisition to sale
• If the home was in an adjustment-target (regulated) area (조정대상지역, a zone designated to cool an overheated market) when you bought it, you also lived in it for at least 2 years
• The actual sale price is ₩1.2B or less

"Household" follows the resident registration, and a spouse counts as part of your household even when living apart. The holding period is measured between balance payment dates. Missing two years by even a day can mean losing the exemption and facing the short-term rates below, so choose your closing date carefully.

If you buy a new home before selling the old one when moving, it may count as a temporary second home: the old home can still be exempt if you sell it within the allowed period. There are further conditions, such as how long you held the old home before buying the new one, so check them before signing.

Above ₩1.2B, only the excess share is taxed

If you meet the exemption conditions but sell for more than ₩1.2B, tax applies only to the proportion of the gain above the threshold:

Taxable gain = gain × (sale price − ₩1.2B) ÷ sale price

Sell for ₩1.6B, for example, and only (1.6 − 1.2) ÷ 1.6 = 25% of the gain is taxed.

Long-term holding deduction: residence matters

Homes held for three years or more get a percentage taken off the taxable gain.

Even a one-home owner gets only the general 2% per year if they lived there for less than two years. After 10 years of ownership, 10 years of residence gives 80%, two years of residence gives 48% (40% + 8%), and no residence gives 20%. The example below shows how big that difference is.

Tax rates and short-term rates

Homes held two years or more use the progressive income tax brackets:

Short holding periods are taxed heavily: 70% under one year and 60% from one to two years for homes.

Owners of several homes in regulated areas can also face a surcharge of 20 percentage points (two homes) or 30 points (three or more), and in principle lose the long-term holding deduction. This surcharge has been suspended and reinstated several times, so check whether it applies on your sale date.

Worked example: a ₩1.6B sale after 10 years

Assume a one-home household bought an apartment for ₩800M outside a regulated area, held it 10 years and sold it for ₩1.6B, with ₩30M of allowable expenses. The gain is ₩770M, and 25% of it (₩192.5M) is taxable.

Same home, same profit, and roughly a ninefold difference depending on how long the owner actually lived there.

A few other cases calculated the same way:

• Bought for ₩700M, sold for ₩1.1B after 3 years, one home: under ₩1.2B, so fully exempt
• Bought for ₩400M, sold for ₩600M after 5 years, owner of two homes (no surcharge): 10% deduction, tax base ₩177.5M, total ₩52,261,000
• Bought for ₩400M, sold for ₩600M after 18 months, one home: under two years, so no exemption and a 60% rate, total ₩130,350,000

You can enter your own numbers in the capital gains tax calculator.

Filing and documents

File and pay a preliminary return within two months from the end of the month that contains the sale date (the balance date). A fully exempt sale up to ₩1.2B has no filing duty, but a high-value home above ₩1.2B must be reported for the taxable excess even when the exemption applies.

• Sale and original purchase contracts
• Acquisition tax receipt, brokerage and scrivener fee receipts
• Proof of capital improvements (contracts, tax invoices, transfer records)
• Resident registration abstract showing your periods of residence

You can file on Hometax, and read the statutes on the National Law Information Center. To see recent sale prices before setting your asking price, use our market data page.

Common mistakes

• Confusing the contract date with the balance date and falling a day or two short of two years
• Forgetting a spouse's home or a residential officetel when counting homes
• Throwing away renovation receipts and losing deductible expenses
• Ignoring the residence requirement for homes bought in a regulated area
• Leaving out the 10% local income tax in your cash plan

For the tax you paid when buying, see the acquisition tax guide; for annual taxes, see the property tax and comprehensive real estate tax guide. For a large sale, a review through tax professional matching or our expert directory is a sensible precaution.