Background
As land prices soared in the 1960s development boom, Korea created a Real Estate Speculation Control Tax in 1967 and folded it into the Income Tax Act as a capital gains tax in 1975. Since then the tax has been a favorite lever for managing the housing market. Surcharges on multi-home owners get imposed when prices overheat and suspended when the market cools. Examples include the 2003 multi-home surcharge, the 2017–2021 hikes in regulated areas, and the temporary suspension from 2022.
Calculation and housing
The gain is the sale price minus the purchase price and costs. Subtract the long-term holding deduction and a ₩2.5 million basic deduction to get taxable income. Homes held under two years face steep flat rates: 70% under one year, 60% under two. Longer holdings use the same 6–45% brackets as comprehensive income tax. A household that owns one home for two years or more (and lives there two years if it was bought in a regulated area) pays no tax on sales up to ₩1.2 billion. The portion above that can get up to an 80% long-term holding deduction.
Stocks and filing
Gains on Korean listed shares traded on the exchange are tax-free unless you're a major shareholder (generally ₩5 billion or more in one stock). Foreign stocks are taxed at 22%, including local tax, on net annual gains above ₩2.5 million. That's why investors often sell losers in December to offset gains, a strategy known as tax-loss harvesting. Property sales require a preliminary return within two months of the end of the month of sale. Foreign stock gains are reported the following May.
FAQ
- Does a one-home owner pay capital gains tax?
- Not on sales up to ₩1.2 billion if holding requirements are met; the excess is taxed with deductions.
- Are foreign stock losses counted?
- Yes—gains and losses within the same year are netted.
Sources reviewed: 2026-10-26
References
- 소득세법 제88조~제118조(양도소득에 대한 납세의무).
- 국세청. (2025). 「양도소득세 신고 안내」 및 「1세대 1주택 비과세 해설」.
- Burman, L. E. (1999). The Labyrinth of Capital Gains Tax Policy. Brookings Institution Press.