Government Finalizes 2026 Tax Reform: 900 Million Won Deduction for Non-Resident Single-Homeowners, Comprehensive Real Estate Tax Overhaul

The government has finalized the 2026 tax reform plan, which reduces capital gains tax benefits primarily for actual residents while increasing the tax burden for owners of multiple or expensive homes. The Ministry of Economy and Finance (MOEF) passed these measures during a meeting of the Tax Development Deliberation Committee on the 3rd. The reform plan is scheduled to be submitted to the National Assembly as a bill following a legislative notice and a Cabinet meeting.

The comprehensive real estate tax (Jongbusae) rate structure will be gradually unified from a standard based on the number of homes owned to one based on property value. Starting in 2028, tax rates of 0.5% to 5.0% will be applied regardless of the number of homes owned. In 2026, tax rates for owners of one or two homes will rise to a range of 0.5% to 3.5%. The fair market value ratio will increase from 60% to 70% for single homeowners in 2027, and for those owning three or more homes, it will rise to 80% in 2028. The tax burden cap will be raised from 150% of the previous year's property tax to 200% starting in 2026.

The basic deduction for comprehensive real estate tax for single-homeowner households will be expanded from 1.2 billion won to 1.4 billion won in official appraised value. Conversely, the basic deduction for non-resident single homeowners will be reduced from 1.2 billion won to 900 million won. For resident single homeowners, the tax rate for homes valued at over 3.2 billion won will increase from the current 1.0%–2.7% to 1.3%–5.0%.

The capital gains tax Long-term Holding Special Deduction will be reorganized into a Long-term Residence Special Deduction. This eliminates the deduction based on the holding period and applies a maximum deduction of 80% exclusively to actual residents. A new deduction cap will be introduced, set at 2 billion won in 2028 and 1 billion won from 2029 onwards. However, the basic deduction for single-homeowner households who have resided in the property for over 10 years and have a transfer value of 3 billion won or less will be expanded from 2.5 million won to 25 million won.

The heavy taxation rates for capital gains tax on multiple homeowners will be temporarily relaxed from 2027 to 2028. The heavy tax rate for second-homeowners will be lowered stepwise from the current 20 percentage points to 5 percentage points in 2027 and 10 percentage points in 2028, and will be applied retroactively to transfers made after May 10, 2025.