A single-home household (1-sedae 1-jutaek) is exempt from capital gains tax if it holds the home for at least two years and the sale price is 1.2 billion won or less. For a home bought in a regulated area (jojeong daesang jiyeok), a further requirement of at least two years of actual residence applies. Even above 1.2 billion won, tax is not charged on the whole gain, only on the portion of the gain corresponding to the amount above 1.2 billion. Combined with the apportionment formula and the long-term holding deduction, even a home sold for 1.5 billion can see taxable income fall to tens of millions of won.
The three exemption requirements
Combining a Hankyung report and a Heumtax summary, three tests decide the exemption. First, as of the sale date the household must own only one home in Korea. Second, it must have held that home for at least two years. Third, the sale price must be 1.2 billion won or less for full exemption.
One regional condition is added. A home located in a regulated area at the time of purchase is not exempt on two years of ownership alone; it also requires at least two years of actual residence. Ownership is counted from the registry period, residence from actual living after moving in and registering the address.
The 1.2 billion won mark is not a line where everything becomes taxable, but a threshold where only the excess is taxed. The apportionment formula decides the size of the tax.
How much tax applies above 1.2 billion?
For an expensive home above 1.2 billion won, only part of the total gain is taxed. The taxable gain is apportioned by this formula.
Taxable gain = total gain × (sale price − 1.2B) / sale price
For example, buying at 900 million and selling at 1.5 billion gives a gain of 600 million. The taxable ratio is (1.5B − 1.2B) / 1.5B = 20%, so the taxable gain is 600M × 20% = 120 million. The remaining 480 million is exempt. Applying the long-term holding deduction reduces taxable income further.
| Case | Sale price | Gain | Taxable ratio | Taxable gain | After 80% deduction |
|---|---|---|---|---|---|
| A | 1.5B | 600M | 20% | 120M | 24M won |
| B | 2.0B | 1.0B | 40% | 400M | 80M won |
In Case A, applying an 80% long-term deduction (assuming 2+ years residence and 10 years ownership) to the 120 million taxable gain brings taxable income to 24 million won, from which a basic deduction of 2.5 million is subtracted before the rate applies. At 1.2 billion or less, this whole process is unnecessary and the sale is fully exempt.
Long-term deduction: up to 80% from ownership and residence
The taxable gain of a single-home expensive property uses a separate long-term holding deduction table. As Samjeomsam explains, 4% per year of ownership (up to 40%) plus 4% per year of residence (up to 40%) combine to a maximum 80%.
| Period | Ownership | Residence | Total |
|---|---|---|---|
| 3 years | 12% | 12% | 24% |
| 5 years | 20% | 20% | 40% |
| 10 years | 40% | 40% | 80% |
This 4%-per-year table applies only to a single-home household that has lived there at least two years. Fail the residence requirement and you get only the general deduction (2% per year of ownership, up to 30%), sharply reducing the benefit. So for expensive homes, managing residence period as well as ownership period is what divides the tax bill.
When does the residence requirement apply?
The two-year residence requirement applies not to every home but only to one that was in a regulated area at the time of purchase. If it was outside a regulated area then, two years of ownership alone satisfies the exemption. Even if the area was later designated as regulated, the purchase-time status governs, so check your home's purchase date and its designation then. For the broader order of taxes with acquisition and holding tax, see the order of judging property taxes, and for the acquisition stage, how acquisition tax is calculated.
Check before you sell
- Two years of ownership met, counted from the registry period
- Whether it was in a regulated area at purchase, which adds the two-year residence rule
- Whether the sale price is above 1.2 billion, requiring the apportionment formula
- Whether the 4%-per-year deduction table applies, needing 2+ years of residence for the full 80%
- A full tax simulation including the 2.5 million basic deduction and rate brackets