Temporary Two-Homeowners: Special Benefits Shortened from 3 Years to 2, Registered Rental Properties Must Be Sold by Next Year for Tax Breaks

The period for applying temporary two-home ownership special provisions in regulated areas will be reduced from three years to two years. Registered rental business owners must sell their rental apartments in regulated areas by the end of next year to be exempt from increased capital gains tax. The special provision for mutually beneficial rental housing will expire at the end of this year.

View of apartments in the Gangnam area as seen from the Lotte World Tower Sky Observatory in Songpa-gu, Seoul. Photo by Dongju Yoon doso7@

On September 29, the government deliberated and approved amendments to the Enforcement Decrees of the Income Tax Act, Corporate Tax Act, Comprehensive Real Estate Holding Tax Act, and Inheritance and Gift Tax Act at the cabinet meeting. This revision is a follow-up measure to the “2026 Tax Reform Plan” announced last month. The revisions will be promulgated and take effect on October 1.

Under the revisions, the period during which special provisions for capital gains tax and comprehensive real estate holding tax apply to temporary two-homeowners in regulated areas will be shortened from three years to two years.

For rental apartments in regulated areas, the existing special provision that exempts owners from both the increased capital gains tax for multiple homeowners and the additional corporate tax will remain in effect only until December 31 of next year. After this date, these benefits will no longer apply to any sales. However, if the required rental period has not ended as of January 1, 2027, the special provision will apply for up to one year from the end (or cancellation) date. Additionally, if urban redevelopment or reconstruction procedures begin before the benefit deadline, the special provision will apply until one year from the date of public announcement of such procedures.

The special provision for mutually beneficial rental housing is scheduled to end as planned on December 31 of this year. Currently, if landlords keep rent increases within 5% under a “mutually beneficial rental” arrangement, the two-year occupancy requirement for single-homeownership capital gains tax exemption and long-term ownership special deduction can be waived. From next year, this special provision will no longer be available. However, for properties sold within one year after the end of the special provision (by December 31, 2029 at the latest), the capital gains tax occupancy requirement will still be waived. Moreover, if the rental period ended before December 31, 2026, the occupancy exemption will apply until December 31, 2027.

In addition, the period for various tax benefits—such as excluding non-metropolitan, unsold apartments (after completion) from the number of properties subject to comprehensive real estate holding tax and capital gains tax—will be extended by one year, until December 31 of next year. Furthermore, the Korea-U.S. Strategic Investment Fund established at the Korea-U.S. Strategic Investment Corporation will be newly designated as a gift tax exempt entity.

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