A bunyanggwon — the right to buy a not-yet-built apartment, sold on before completion — is taxed at 60% on the gain no matter how long it is held past two years. Under one year the rate is 70%, and after that it never falls below 60%. Houses and cheongyak redevelopment rights (johabwon ipjugwon) drop to the ordinary progressive rates of 6–45% once past two years; a bunyanggwon does not.
The basis is article 104(1) of the Income Tax Act. Subparagraph 1 sets the ordinary rates but adds, in brackets, that for a bunyanggwon the rate is 60% of the tax base. Subparagraph 2 (one to two years) is 60% and subparagraph 3 (under one year) is 70%. However long the holding period runs, there is only one place for it to land.
The rate table has only two rows
Set side by side with housing, the difference is stark. Korea Tax Times likewise summarises the bunyanggwon schedule as 70% under one year, 60% from one to two years and 60% beyond two years — meaning it never reaches the ordinary rates.
| Holding period | Bunyanggwon rate (%) | House or redevelopment right (%) |
|---|---|---|
| Under 1 year | 70 | 70 |
| 1 to 2 years | 60 | 60 |
| 2 years or more | 60 | Ordinary rates, 6–45 |
On top of that, local income tax is charged separately at 10% of the capital gains tax. The effective burden is therefore 77% under one year and 66% after. The second digit matters as much as the first.
On a 100 million won premium, what is left?
Take a bunyanggwon acquired for 500 million won including paid options and sold for 600 million. The gain is 100 million won; brokerage and similar necessary expenses come to 5 million; and the 2.5 million won basic deduction under the National Tax Service's capital gains calculation flow applies. That leaves a tax base of 92.5 million won. No long-term holding deduction is available on a bunyanggwon.
| Case | Rate (%) | Tax (10k won) | Local income tax (10k won) | Total burden (10k won) | Left after tax (10k won) |
|---|---|---|---|---|---|
| Sold under 1 year | 70 | 6,475 | 648 | 7,123 | 2,377 |
| Sold at 1 to 2 years | 60 | 5,550 | 555 | 6,105 | 3,395 |
| Sold after 2 years | 60 | 5,550 | 555 | 6,105 | 3,395 |
| (For comparison) ordinary rates | 6–45 | 1,694 | 169 | 1,863 | 7,637 |
The final column is the 100 million won gain less 5 million in expenses less the total tax. The fourth row applies the bracket in article 55 of the Income Tax Act — 15.36 million won plus 35% of the excess over 88 million — as a hypothetical. It does not apply to a bunyanggwon, but it shows a gap of 42.42 million won against the same gain realised on a house.
The point of the table is that rows two and three are identical. Past the one-year mark, waiting longer saves nothing. Whatever the case for holding on, the tax rate is not part of it.
When does the clock start?
Get the start date wrong and the gap between 70% and 60% runs into tens of millions of won. The acquisition date depends on how the right was obtained. For an original allocation won through the cheongyak subscription lottery, the reference point is the winning date, when the right became fixed — not the contract date. For a right bought from someone else, it is the date the balance is settled, and transferring the name before that does not move the date.
Holding the right through to completion and then selling the finished apartment is a different calculation again. A National Tax Service ruling treats the acquisition date of an apartment obtained this way as the date the balance was paid, regardless of move-in, or the registration date if title was registered first. The years spent holding the right do not count toward the house's holding period.
In a case reported by Korea Tax Times, a taxpayer who acquired a bunyanggwon in August 2021 sold the completed house eleven months after completion in March 2023, drew the 70% short-term rate, and faced a difference of 115 million won against the ordinary rates. Counted from the acquisition of the right, well over two years had passed — but the house's own clock had restarted at completion.
Holding a bunyanggwon longer does not lower the rate, and the moment it becomes a house the holding-period clock restarts from zero.
What counts as a necessary expense
Only the acquisition cost and necessary expenses reduce the tax base. Under the NTS flow, the gain is the sale price less acquisition cost less necessary expenses. For a bunyanggwon the acquisition cost covers the contract price and paid options, plus the premium paid if the right was bought from a previous holder. Necessary expenses cover brokerage fees, judicial scrivener fees and stamp duties incurred on acquisition and sale.
None of it counts without documentation. Contracts, receipts and transfer records have to survive. The NTS ruling states that the actual transaction price must be one verifiable through supporting documents such as the sales contract and receipts. That is why a premium handed over in cash is hard to claim later as part of the acquisition cost.
Things to check
- How the right was acquired — a lottery win starts the clock at the winning date, a purchase at the balance settlement date
- Whether the planned sale date sits near the one-year line — a few days decides between 70% and 60%
- Whether to sell as a right or after conversion to a house — the latter restarts the holding period at completion
- Documentation of acquisition cost — keep the original contract, option agreement and premium transfer records
- Whether it counts toward the household's house count — the rules differ, as in the acquisition tax and house-count treatment of redevelopment rights versus bunyanggwon
- Interaction with other homes owned — check alongside the period requirements for the temporary two-home exemption
- The preliminary return deadline — within two months from the end of the month in which the transfer occurs
References
- Income Tax Act art. 104 (capital gains tax rates)
- Income Tax Act art. 55 (rates)
- Capital gains tax calculation flow — National Tax Service
- Hold a newly built house from a bunyanggwon at least two years — Korea Tax Times
- Acquisition date and acquisition cost of an apartment bought off-plan — National Tax Service
- Acquisition date of a bunyanggwon — Taxly