Lived 2 Years, Kept 10, Made 2 Billion Won: What Changes for Capital Gains Tax in 3 Years?

[Anchor]

Tax deduction benefits that were previously granted simply for holding a property for a long time are set to disappear. The long-term "holding" special deduction will be replaced by a long-term "residency" income deduction, and a cap will also be placed on the deduction amount.

Next is reporter Hong Yeongjae.

[Reporter]

Currently, when a single-home owner sells a house, they can receive deductions of 4% per year each for the holding period and the residency period, up to a maximum of 80% of the capital gains.

Among these, the government plans to cut the holding deduction in half by 2028, abolish it completely starting in 2029, and provide an 8% annual deduction—up to a maximum of 80%—solely for the residency period.

The 2% annual holding period deduction previously given to multiple-home owners in non-regulated areas will also be abolished in 2029.

If a house purchased for 1.2 billion won is sold for 3.2 billion won after 2 years of residency and 10 years of holding, the capital gains tax will increase from the current 236 million won to 405 million won in 2029.

Because there was no limit on the deduction amount, high-value homes with massive price surges received even greater benefits, prompting the introduction of a cap.

Deductions will be capped at 2 billion won in 2028, and down to 1 billion won starting in 2029.

[Cho Man-hee, Director General for Tax Affairs at the Ministry of Economy and Finance: Even those whose capital gains reached 5 billion or 10 billion won were structured to receive tax benefits of up to 8 billion won. As a result, many pointed out that the benefits were overly excessive, raising concerns about taxation equity.]

The revision package also includes measures to ease the capital gains tax burden.

For single-home owners valued at 3 billion won or less who have actually resided in the home for 10 years or more, the basic deduction will be expanded from 2.5 million won to 25 million won.

Temporary tax reductions have also been arranged for retired elderly individuals who need to dispose of their homes.

If a single-home owner aged 65 or older sells a home in the Seoul metropolitan area and relocates to a non-metropolitan area, 50% of their capital gains tax—up to a maximum of 500 million won—will be exempted next year, and 30%—up to a maximum of 300 million won—will be exempted in 2028.

[Choo Yun-chul, Deputy Prime Minister and Minister of Economy and Finance: For retired elderly citizens and those facing heavy burdens, we are actually reducing taxes further than before in cases where single-home owners sell properties in the capital area and move to regional areas.]

To provide multiple-home owners with an opportunity to sell, heavy capital gains taxation—which has been applied since May 10—will also be temporarily eased until 2028.

(Video Editing: Kim Yoon-sung, Design: Jang Seong-beom, Im Chan-hyuk)
※ Please note: This article was translated by AI and may contain errors.