"I thought it was exempt — and got a KRW 100M tax bill"
Korea's one-home capital-gains tax (CGT) exemption is the most-used residential tax break in the country, and also the most-broken-by-accident. The National Tax Service (NTS) processes more than 10,000 amended filings every year where one-home owners had to pay back-tax plus penalties after their original "exempt" filing was overturned. The reason the same accidents repeat is structural: the framework ("hold 2 years + reside 2 years + sell under KRW 1.2B") is easy to memorize, but five separate traps — household aggregation, temporary two-home rules, pre-construction rights, inheritance, and regulated-zone residency — fire simultaneously in real cases.
This guide is for anyone preparing to sell their one home, sitting on a temporary two-home situation after buying a new place, holding both an inherited home and their own, or just wanting a pre-filing self-check. It reflects the May 2026 Income Tax Act and enforcement decree, breaking down the five exemption conditions and the five mistake patterns I see most. This is general guidance — for specific filings, please consult a tax accountant or request a Hometax pre-ruling.
TL;DR — The 2026 baseline
The one-home CGT exemption in 2026 still rests on four pillars.
- Held for 2 years or more
- Resided for 2 years or more (only required in regulated zones)
- Sale price ≤ KRW 1.2B (the excess is progressively taxed)
- One home across the entire household
Five exception patterns crack this baseline, and we'll walk through each below.
Condition 1 — One household, one home (aggregation rule)
Exemption is judged at the household level, not the individual. A household is defined by shared resident registration, with key exceptions.
- Unmarried children under 30: counted in the parents' household by default. To register as a separate household, the child needs income at least 40% of median (or marriage / divorce as a triggering event).
- Pre-construction rights (분양권 / 입주권): counted as homes if acquired on or after Jan 1, 2021. Pre-2021 rights don't count.
- Officetel: even if officially classified as commercial, it counts if actually used as residence (resident registration + actual living).
- Co-owned homes: count by share. Spouses co-owning one home count as one home for the couple's household.
Faking separated households is now routinely caught by NTS via address history and financial flow cross-checks, and triggers 10–40% penalty surcharges.
Condition 2 — Held for 2 years or more (avoiding flat short-term rates)
Exemption requires at least two years of holding. The clock starts on the earlier of:
- Closing-date balance payment
- Registry filing date for ownership transfer
Sales under 1 year are taxed at a flat 70%, and sales between 1 and 2 years at 60% — neither benefits from exemption. Pre-construction-right holding periods don't roll forward; the clock restarts at closing or registry filing.
Watch these edge cases:
- Reconstruction / redevelopment: the new building's registry date is the new baseline. Holding-period aggregation depends on whether the transaction is treated as transfer or exchange.
- Inherited homes: the decedent's holding period is aggregated, but only for same-household inheritance.
- Divorce settlements: the registry date of property division starts a new holding period in general, but alimony-style transfers may be treated as a separate sale.
Condition 3 — 2+ years of actual residency (regulated zones only)
Homes acquired in regulated zones after Aug 3, 2017 must satisfy two additional years of actual residency for the exemption to apply. NTS evaluates residency on two fronts.
- Resident registration at the home's address.
- Living traces: utility bills (electricity / gas / water), card and delivery addresses, daycare or school locations.
Cases where the owner registered but lived elsewhere get overturned during NTS verification. Penalties on top of the original tax make this an expensive mistake.
Regulated zones have moved over time. As of May 2026, the regulated list is narrow (parts of Gangnam, Seocho, Songpa, and Yongsan in Seoul), but a home retains its regulated-zone status as of the acquisition date. Always cross-reference your registry pull date with the zone designation status at that time.
Condition 4 — Temporary two-home exception
For the brief overlap between buying a new home and selling the old one, the rules treat both as one home if the old one is sold within a deadline.
| Scenario | Deadline to sell old home | Notes |
|---|---|---|
| Non-regulated → Non-regulated | 3 years after new acquisition | Old home must meet exemption requirements |
| Regulated → Regulated (post-2022.5) | 2 years | Residency required at both |
| Pre-construction right → New build | 3 years after move-in (final payment) | Counted from right's acquisition |
| Inherited home + regular home | 5 years post-inheritance (sell regular first) | Inheritance must be documented |
The single most common accident is missing the deadline by days. Balance dates falling on holidays, registry filing delays, and last-minute closings push deals past the line. Always plan the sale a month ahead of the deadline.
Condition 5 — Inheritance, rural, and long-term lease exceptions
Homes in these categories are excluded from the household count.
- Inherited home + 1 regular home: selling the regular home can qualify for exemption. The inherited home itself follows a separate exemption track at 5 or 10 years of holding.
- Rural homes: located in a myeon-level area, lot ≤ 660 m², house ≤ 150 m², and official price ≤ KRW 200M. Metro and dong-level areas don't qualify.
- Registered long-term rentals: tax-exempt track contingent on 5- or 10-year mandatory rental. New registrations are essentially restricted from 2025 onward.
The most common inheritance mistake is treating a parent's rural house as a "rural home" without checking the area or price thresholds. If either is exceeded, the rural exception doesn't apply.
The progressive tax on the >KRW 1.2B portion
When sale price exceeds KRW 1.2B, exemption status is preserved but the excess is taxed progressively. The calculation isn't a simple "(sale price − 1.2B) × rate" — instead, you convert the over-threshold ratio and apply it to the gain.
Worked example: sale price KRW 1.5B, cost basis KRW 800M, gain KRW 700M. Over-threshold ratio = (15 − 12) / 15 = 20%. Taxable gain = KRW 700M × 20% = KRW 140M. Apply the long-term holding deduction (up to 40% at 10+ years, up to 80% including residency) and then the progressive 6–45% rate.
Run the scenario in Capital-Gains Tax Calculator, and for the more detailed long-term and basic deductions use Detailed CGT Calculator.
The five mistake patterns I see most
1. Forgetting a child's pre-construction right
A parent files one-home exemption while an under-30 child holds a pre-construction right. Unless the child is married or meets the 40%-of-median income test, the right is aggregated into the parent's household.
2. Failing residency in regulated zones
Registered but actually lived elsewhere. NTS verifies via card transactions, school address, and utility usage.
3. Missing the temporary two-home deadline by a week
A 3-year deadline misses by 3 days due to a public holiday and registry backlog. Exemption converts to standard taxation, costing roughly KRW 70M.
4. Mistaking an inherited rural house for a "rural home"
A 1980s house inherited from parents exceeds 200 m² floor area, failing the rural exception. One-home exemption denied.
5. Ignoring progressive tax on the >KRW 1.2B portion
Filed a KRW 1.4B sale as fully exempt. After ratio conversion, roughly KRW 50M assessed back-tax.
Self-diagnostic workflow
- Household home count: registry + pre-construction rights + occupancy rights for you, spouse, and children under 30.
- Holding period: confirm 2+ years from balance / registry date.
- Residency: for regulated-zone acquisitions, document 2 years of registration + living traces.
- Temporary two-home deadline: confirm the old home can sell within 3 (or 2) years of the new acquisition.
- Simulate: Capital-Gains Tax Calculator + Detailed CGT Calculator.
- Pre-ruling: file a free "one-home exemption pre-ruling" through NTS Hometax.
Frequently asked questions
Q1. When is the filing deadline?
Two months from the end of the month in which the transfer occurred (preliminary filing). Missing it triggers a 20% non-filing penalty.
Q2. Do I have to file if I'm exempt?
Simple exempt sales under KRW 1.2B don't require filing, but anything over KRW 1.2B or any temporary two-home case must be filed.
Q3. Is spousal co-ownership better for the exemption?
For simple exempt sales under KRW 1.2B, no difference. Over KRW 1.2B, per-person basic and long-term deductions can make co-ownership advantageous.
Q4. Why is the property registry useful for the CGT self-check?
It confirms household home count, holding-period baseline (registry filing date), and any encumbrances that affect price. The Property Registry Self-Check tool auto-interprets the key fields.
Q5. What if I can't possibly meet the temporary two-home deadline?
If you have a pre-existing extension reason (disputes, litigation, natural disaster), file a pre-ruling at NTS in advance. Otherwise, post-deadline sales lose the one-home exemption but may still benefit from the long-term holding deduction.
Related tools
- Capital-Gains Tax Calculator — model the >KRW 1.2B progressive portion
- Detailed CGT Calculator — precise long-term and basic deductions
- Property Registry Self-Check — auto-validate ownership / inheritance history
- Jeonse Risk Score — verify rights status before selling
Bottom line
Finalize the exemption self-check before closing day. Given how frequently post-sale amendments incur penalties, when any of the five conditions feels ambiguous, use a tax office consultation or NTS Hometax pre-ruling — they're free. This article reflects the May 2026 Income Tax Act and enforcement decree; tax law is revised annually, so right before a specific filing, defer to NTS official guidance or a licensed tax accountant.