Heavy Capital Gains Tax on Multiple Homeowners Returns After 4 Years

The capital gains tax surcharge, which imposes higher tax rates on individuals owning multiple homes, will be reinstated starting May 10, 2026, after a four-year absence. The government officially ended the capital gains tax deferral measure, in place for over a year, as of May 9. Consequently, property owners with two or more homes selling properties in designated speculative zones after May 10 will face significantly increased tax burdens.

Owners of two homes will face an additional 20 percentage points on top of the base tax rate, while those with three or more homes will see an additional 30 percentage points. When combined with local income tax, owners of three or more properties could face capital gains taxes as high as 82.5%. For a capital gain of approximately 600 million KRW, a single homeowner would pay about 333 million KRW in capital gains tax. In contrast, a second-home owner would pay 574 million KRW, and an owner of three or more homes would pay 687 million KRW. This is more than double the amount paid by a single homeowner.

This measure aims to curb speculative demand from multiple property owners. The government had temporarily suspended the capital gains tax surcharge starting in May 2022 to alleviate a sluggish property market and reduce the number of properties on the market. The reinstatement signifies a policy shift towards a more regulatory approach to managing the real estate market. Specifically, it will be applied to designated speculative zones where price increases are a major concern or speculative activity is deemed likely, thereby preventing market overheating.

Exceptions to this rule exist, beyond those who completed their sale procedures by May 9. Those who apply for land transaction permits and complete the transaction within the specified deadline will be exempt from the surcharge. Regions newly designated as speculative zones under the October 15, 2025, measures must complete the sale within six months of the sales contract date. For existing speculative zones, including Gangnam 3-gu and Yongsan-gu in Seoul, sales must be completed within four months. On May 8, Deputy Prime Minister and Minister of Economy and Finance Gu Yoon-cheol stated at a meeting of economic and real estate ministers that while there are concerns about properties being withheld from the market, speculative purchases are being blocked by loan regulations and the land transaction permit system.