Acquisition Tax Exemption for First-Time Homebuyers Under 40 Raised to 3 Million Won... Officetels Now Included

Local Tax Reform Plan Announced by the Ministry of the Interior and Safety on August 26
First-Time Homebuyer Tax Exemption Expanded for Those Under 40

The maximum acquisition tax exemption for young people purchasing a home for the first time in their lives will be increased from 2 million won to 3 million won. Residential officetels will also be included in the acquisition tax exemption for first-time homebuyers.

Yonhap News

On August 26, the Ministry of the Interior and Safety held the Local Tax Development Committee and announced the '2026 Local Tax Reform Plan,' which includes these details. The reform focuses on improvements aimed at stabilizing housing and livelihoods, promoting region-led balanced growth, and establishing a rational taxation system.

First, for individuals under the age of 40 purchasing a home for the first time in their lives, the acquisition tax exemption limit will be expanded from the current 2 million won to 3 million won. Previously, this exemption applied only to apartments, multi-family housing, and row houses, but it will now also apply to the acquisition of residential officetels. To prevent a situation in which someone receives the first-time buyer exemption for purchasing an officetel and is then ineligible for any exemption when buying an apartment later, additional measures have been implemented. If an individual disposes of a small officetel or small housing unit and then acquires another home, they will be eligible to apply the first-time buyer exemption again. This is intended to broaden the pathway for gradual homeownership. The additional acquisition tax exemption is limited to homes and officetels with a floor area of 40 square meters or less and a standard market price of 200 million won or less (or 400 million won or less in the Seoul metropolitan area). Apartments are excluded from these additional benefits.

The local education tax imposed on tobacco will be converted into a 'Local Residential Welfare Tax.' Amounting to around 1.5 trillion won annually, the change in the tax item will not result in any additional tax burden. The Local Residential Welfare Tax will be used to support residential welfare policies aimed at expanding regionally led public housing supply.

Support for areas outside the Seoul metropolitan area and regions experiencing population decline will also be strengthened. The acquisition and property tax reduction rates for venture business complexes and new technology startup clusters have been structured into three stages: 'Population Decline Areas > Non-metropolitan Areas > Metropolitan Area,' applying differently to each stage.

Requirements for tax reduction will also be eased for companies returning to Korea after overseas expansion. Previously, liquidation of overseas operations was required to qualify for tax reduction, but now 'partial returning companies' will also be eligible. In addition, the requirement that the businesses be in the same industry has been relaxed to further encourage the reshoring of overseas ventures.

The criteria for higher acquisition tax rates on luxury homes will also be revised. The threshold will be raised from the current publicly announced price of 900 million won to 1.2 billion won. This adjustment reflects the rise in housing prices and brings the standard in line with market realities. On the other hand, the property tax burden on luxury assets, such as membership-based golf clubs, will be strengthened. The fair market value ratio, which is currently 70%, will be increased to 100%, intensifying taxation on such assets.

The increase in local tax revenues as a result of these reforms is estimated at 5.47 billion won.

The government plans to publish a notice of legislation for the related legal revisions from August 27 through September 23 and submit the bills to the National Assembly in October.

This content was produced with the assistance of AI translation services.