From October, Deadline to Sell Previous Home for Temporary Two-Home Owners in Regulated Areas Reduced from 3 Years to 2 Years (Comprehensive)

Starting next month, for those who temporarily become owners of two homes by newly acquiring a house in an area designated for real estate regulation, the deadline to sell their previous home will be reduced from three years to two years. Registered rental business owners must sell apartment units acquired for rental in regulated areas by the end of next year to be exempt from additional capital gains tax. The special provision for mutually beneficial rental housing will end this year.

An apartment complex view from Namsan in Seoul on the 13th, as Seoul apartment sale prices approach the longest-ever continuous increase. Photo by Yonhap News

On September 29, the government reviewed and approved amendments to the enforcement decrees of income tax law, corporate tax law, comprehensive real estate holding tax law, and inheritance and gift tax law at a Cabinet meeting. These amendments were prepared as a follow-up to last month's announcement of the ‘2026 Tax Reform Plan’ and will be promulgated and implemented on October 1.

Under the amended rules, the period for which capital gains tax and comprehensive real estate holding tax relief applies to temporary two-home owners in regulated areas will be shortened from the current three years to two years. In other words, the deadline for selling the previous residence in order to benefit from single-home tax concessions is being reduced. For capital gains tax, the new rule applies if the new home was purchased after August 4 of this year and the previous home is sold after October 1. For comprehensive real estate holding tax, the two-year relief applies to homes subject to tax based on June 1, 2025. However, the previous three-year rule will continue to apply to those who bought a home or signed a purchase contract and paid the deposit before August 3.

For apartment units acquired for rental business in regulated areas, the current tax benefits—such as exemption from the additional capital gains tax for multiple property owners or additional corporate tax for companies—will be maintained until December 31, 2027. After this date, these benefits will no longer apply to subsequent sales. However, if the mandatory tenancy period has not expired as of January 1, 2027, the special benefit will remain in effect for one year from the day the contract ends. If reconstruction or redevelopment proceedings started before the end of the exemption period, the benefit will continue until one year after the public notification of those proceedings.

The special provision for mutually beneficial rental housing is scheduled to expire on December 31, 2026, as initially planned. Currently, mutually beneficial rental agreements—which limit annual rent increases to no more than 5%—are exempt from the two-year occupancy requirement needed to qualify for single-home capital gains tax exemption and for favorable long-term ownership deductions. Starting next year, this special provision will disappear. However, the exemption from the capital gains tax occupancy requirement will still apply if the home is sold within one year after the end of the arrangement (no later than December 31, 2029). Additionally, if the rental period ends by December 31, 2026, the occupancy exemption can be claimed until December 31, 2027.

Meanwhile, the period for various tax relief measures with respect to unsold newly constructed homes outside the Seoul metropolitan area—including their exclusion from the comprehensive real estate holding and capital gains tax home count—will be extended by one year to December 31, 2027. In addition, the Korea-US Strategic Investment Fund, established under Korea-US Strategic Investment Corporation, will newly be classified as a tax-exempt entity for gift tax purposes.

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