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 acquire a new home in a regulated area and temporarily become owners of two homes, the deadline to dispose of their previous residence will be reduced from three years to two years. Registered rental business operators must sell their rental apartments located in regulated areas by the end of next year to be exempt from additional capital gains taxation. The special exemption for mutual benefit 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 deliberated and passed 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 a Cabinet meeting. These amendments are a follow-up to the "2026 Tax Reform Plan" announced last month and will be officially promulgated and put into effect on October 1.

Under the revised rules, the special provisions for capital gains tax and comprehensive real estate holding tax for temporary owners of two homes in regulated areas will be shortened from the current three years to two years. This means the period to dispose of the previous residence in order to receive the one-household, one-home tax benefits will be shortened. For capital gains tax, this new rule applies if a new home was purchased after August 4 this year and the previous home is sold after October 1. For comprehensive real estate holding tax, the two-year exemption period will apply to homes taxable as of June 1 next year. However, if the property was acquired before August 3 or if a purchase contract was signed and a deposit was paid before that date, the previous three-year rule will continue to apply.

For registered rental apartments in regulated areas, the previously established exemptions from additional capital gains taxation and corporate tax surcharges for owners of multiple homes will remain in effect only until December 31 next year. After that date, these benefits will no longer be available for transferred properties. However, if the mandatory rental period has not ended as of January 1, 2027, the special exemption will apply until one year after the end date (deletion date). In addition, if procedures such as reconstruction or redevelopment begin before the exemption deadline, the special exemption may be applied until one year after the previous public notice date.

The mutual benefit rental housing special exemption is scheduled to end on December 31 this year as planned. Currently, if landlords adhere to a rental fee increase rate of under 5%, the two-year occupancy requirement for capital gains tax exemption and additional long-term holding deduction for one-household, one-home cases is waived. However, starting next year, this exemption will be eliminated. Nevertheless, for homes sold within one year after the end of a mutual benefit rental contract (no later than December 31, 2029), the exemption from the occupancy requirement for capital gains tax will still apply. Furthermore, if the rental period ends before December 31, 2026, landlords will be eligible for exemption from the occupancy requirement until December 31, 2027.

Additionally, the application period for various tax benefits—such as exclusion from comprehensive real estate holding tax and capital gains tax home count calculations for unsold new-build homes outside the Seoul metropolitan area—will be extended for one more year, until December 31 next year. Furthermore, the Korea-US Strategic Investment Fund, established under Korea-US Strategic Investment Corporation, will newly be included on the list of organizations receiving gift tax exemptions.

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