Background: 2026 Revision Bill Highlights
The Ministry of Finance and Economy’s 2026 Tax Revision Bill unveiled in early August includes several reforms targeting capital gains, comprehensive real estate holding tax (CRET), and enhanced exit-tax obligations for high ownership individuals. (english.mofe.go.kr)
Key initiatives include:
- Expanded preferential treatment for long-term owner-occupied single homes.
- Temporary easing of higher capital gains rates for homes in adjustment areas owned by multi-homeowners during 2027-2028.
- Altering the CRET basic deduction thresholds and fair market value ratios.
- Serious tightening of exit tax for individuals who are major shareholders (대주주) leaving the country. (law.go.kr)
Exit Tax (HNWI Case): What Exists & What's Changing
The exit tax in Korean law (소득세법 제118조의9) treats certain assets as if sold on the date a person departs (국외전출자).
- Applies to residents who are major shareholders holding certain classes of stock as defined by law (articles under §94), and who have lived in Korea for at least 5 of the past 10 years. (law.go.kr)
- Required to calculate deemed gains on shares that meet ownership and valuation thresholds.
Real Estate & Capital Gains Planning
- Capital Gains Tax changes for residential properties: long-term home owners (owner-occupied) selling homes under a threshold (e.g. 가격 3 billion KRW) may benefit from increased deduction limits. (english.mofe.go.kr)
- Higher CRET deductions and value assessments — changes planned for tax years beginning in 2027.
- Temporary relief for multi-home owners in adjustment areas, but only for 2027-2028. Planning sale timing or ownership rearrangement could help. (english.mofe.go.kr)
Case Study: Planner Scenario for Exit Tax & Real Estate
| Scenario | Profile | Strategy |
|---|---|---|
| Exiting HNWI with major-share ownership | Resident for 10 years, owning 10% of a listed company exceeding major-share thresholds | Assess whether shareholding meets major-share definition. If yes, compute deemed gain at exit—maybe sell beforehand if certain reliefs apply. |
| Selling two-property in adjustment area in 2027 | One in capital area, one in regional designated adjustment area | Utilize temporary easing rates in 2027-28; maybe move second home ownership to split taxpayers or use spousal ownership for lower rates. |
| CRET exposure for multiple residential homes | Owns two homes both with high assessed property values | Consider consolidating ownership under joint titles, or evaluating property value vs assessed value to reduce fair market value ratio exposure. |
Recommended Action Steps
- Get property valuations early, especially for homeowner-occupied residence and any second homes in adjustment areas.
- Check your major shareholder status, share percentages and whether stock holdings fall under §94 definition.
- If planning expatriation or long-term stay abroad, analyze deemed sale dates, exit tax exposure, and whether relief is possible before movement.
- Track the passage of the Tax Revision Bill: many changes proposed will only be law after enaction by National Assembly—likely to take effect January 2027 unless stated otherwise.
Takeaway
South Korea’s 2026 proposed tax revisions put real estate and exit-related rules under sharper tax scope. For major shareholders, homeowners, or those considering leaving, timing, documentation, and stock/home ownership structure will determine how much gets taxed and when. Effective planning now can ease future burdens.