Individuals owning homes in regulated areas who acquire another home, becoming temporary two-home owners, must now sell their existing home within two years of purchasing a new one to qualify for the one-home capital gains tax exemption. The temporary two-home exemption period for the comprehensive real estate tax has also been reduced from three years to two years.
The government approved these changes during a cabinet meeting on September 29, as part of amendments to the Income Tax Act, Corporate Tax Act, Comprehensive Real Estate Tax Act, and Inheritance and Gift Tax Act. The amendments are set to be announced and take effect on October 1.
The revisions shorten the exemption period for capital gains and comprehensive real estate taxes for temporary two-home owners in regulated areas. If conditions are met, homeowners can receive tax exemptions on the transfer price up to 1.2 billion won and a long-term holding special deduction of up to 80%.
The new capital gains tax regulations will apply to those who acquire a new home after August 4, 2026, and sell their existing home after the effective date of October 1. The comprehensive real estate tax will apply to those who acquire a new home after August 4, 2026, starting from the tax obligation established on June 1, 2027.
However, those who purchased a home or signed a sales contract with a deposit before August 3, 2026, will be subject to the previous regulations.
There will also be a deadline for the exclusion of capital gains tax on rental apartments in regulated areas. Currently, the exemption applies indefinitely after the registration of the rental property is canceled, but in the future, it will only apply if the property is sold within a specified period.
Generally, the existing exemptions will remain in effect until December 31, 2027. If the mandatory rental period has not ended by January 1, 2028, the exemption will apply for one year from the date of registration cancellation.
If a redevelopment management plan or reconstruction association establishment approval is obtained within the deadline, the exemption will apply until one year from the date of the previous announcement. If both conditions are met, the later date will be used as the reference.
This deadline applies only to long-term and short-term rental apartments in regulated areas. Existing exemptions will remain for non-apartments in regulated areas and apartments outside regulated areas, as well as for construction and public support rental housing.
The one-home capital gains tax exemption for homes owned by rental business operators will remain unchanged. The government has decided to apply the exemption for five years from the date of registration cancellation, reflecting opinions received during the legislative notice process.
The exemption for residency requirements for cohabitation rental housing will be adjusted. The cohabitation rental exemption, which limits rent increases to within 5%, will end as scheduled at the end of this year. After the end of the cohabitation rental period, the exemption will apply only to homes sold within one year, with a final deadline of the end of 2029. If the rental period under the cohabitation rental contract ends before the end of this year, the exemption will apply until the end of 2027.
Tax support for unsold homes in non-capital areas will be extended. The deadline for the exemption from the number of homes counted in capital gains and comprehensive real estate tax calculations will be extended by one year until the end of 2027. The exclusion of comprehensive real estate tax and additional corporate tax for homes acquired by corporate restructuring REITs will also be extended.
Meanwhile, the Korea-U.S. Strategic Investment Fund established at the Korea-U.S. Strategic Investment Corporation will be added to the list of organizations exempt from gift tax, meaning that contributions to this fund will not be subject to gift tax.
* This article has been translated by AI.
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