When you buy, hold, or sell a house, taxes always follow. Acquisition tax, property tax, and capital gains tax each have different calculation criteria and tax-saving strategies. If you overlook them, you could incur millions of won in losses. Understanding the tax structure throughout the lifecycle of owning a home can save costs and provide strategy.
Be cautious about household combinations when buying a house.
Acquisition tax varies according to the number of houses owned. For a single homeowner, the rate is 1% for properties valued at 600 million won or less and 3% for those exceeding 900 million won. For two homeowners in areas regulated, the rate is 8%, and for three or more homeowners, it ranges from 8% to 12%. The criterion here is the household. If parents and children are registered together at one address, the total number of houses may be summed up, leading to higher taxation. Therefore, it’s crucial to check household separation when buying a house.
Offices are exceptions for multi-homeowners, as a 4% rate applies regardless of house count. However, this is disadvantageous for those without homes or first-time homeowners buying an officetel, as apartments have a 1-3% acquisition tax during the first purchase while officetels have 4%.
It’s risky to act solely based on government policy announcements. In 2022, there was an announcement to ease the acquisition tax, but since the National Assembly delayed legislation, the increased tax rates remained in effect.
Property tax is based on June 1.
Property ownership incurs property tax and comprehensive real estate tax. Property tax is about 0.2% of the declared price, and most must pay it. Comprehensive real estate tax is imposed when the declared price is over 1.2 billion won for a single-home family and over 900 million won for multi-homeowners.
The ownership date is June 1 each year. If you own a house on this date, the tax for that year is imposed. Therefore, when selling a house, transferring the registration by May 31 is advantageous, and when buying, receiving it after June 2 is preferable.
Capital gains from selling houses up to 1.2 billion won are tax-exempt.
A single-home family isn’t taxed on capital gains up to 1.2 billion won. Non-regulated area homes must be owned for at least two years, while regulated area homes require two years of ownership and two years of residence. The policy at the time of purchase dictates whether an area is considered regulated.
The special long-term ownership deduction varies depending on residency. The longer the residence period, the higher the deduction rate, up to 80% tax relief. Without actual residence, only up to 30% deduction is possible.
Tax exemption is also possible for temporary dual homeowners. After purchasing a new house one year after the old one and selling the old house within three years, the exemption conditions at the point of sale must be met.
High taxation on capital gains for multi-homeowners is temporarily deferred.
The additional capital gains tax rate for multi-homeowners, which added 30 percentage points to the basic tax rate, is currently deferred until May 2026 by regulation. Nevertheless, since the law itself remains, there is the possibility of its reactivation post-deferment.
If owning multiple homes in regulated areas, evaluating the sale options before the deferment ends is crucial. The National Tax Service is intensifying scrutiny on tax exemption conditions, so failing to meet the requirements may result in being subject to back taxes.
Knowing and preparing for housing taxes can lead to reductions. A lifecycle strategy is the most efficient method to minimize the tax burden.