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Everything you need to know before buying real estate is included in our South Korea Property Pack
Foreigners purchasing real estate in South Korea face a complex tax structure with multiple layers of obligations.
As of September 2025, the South Korean government maintains strict tax policies for foreign property investors, including acquisition taxes ranging from 1% to 12%, annual property holding taxes, comprehensive real estate holding taxes for high-value properties, and capital gains taxes that can reach up to 77% for short-term sales. Understanding these tax implications is crucial before making any property investment decisions in Seoul, Busan, or other South Korean cities.
If you want to go deeper, you can check our pack of documents related to the real estate market in South Korea, based on reliable facts and data, not opinions or rumors.
Foreigners buying property in South Korea face acquisition taxes of 1-4% (up to 12% with surcharges), annual property taxes of 0.1-0.5%, and comprehensive real estate holding taxes for properties above KRW 900 million.
Capital gains taxes range from 10-22% for standard sales but can reach 77% for properties sold within one year, making short-term speculation extremely costly.
| Tax Type | Rate for Foreigners | Key Details |
|---|---|---|
| Acquisition Tax | 1-4% (up to 12%) | Higher rates in Seoul/regulated areas |
| Annual Property Tax | 0.1-0.5% | Plus 20% local education tax |
| Comprehensive Real Estate Tax | 0.5-5.0% | Applies above KRW 900M threshold |
| Local Property Tax | 0.07-5.0% | Varies by city/province |
| Capital Gains Tax | 10-22% (up to 77%) | Much higher for short-term sales |
| Stamp Duty | KRW 20,000-350,000 | Based on property value |
What types of property taxes do foreigners need to pay when buying real estate in South Korea?
Foreigners purchasing real estate in South Korea must pay five main types of property-related taxes that can significantly impact your investment returns.
The **acquisition tax** is paid upfront when you purchase the property, ranging from 1% to 4% of the property value, but can reach up to 12% with surcharges in regulated areas like Seoul. You'll also pay a **stamp duty** ranging from KRW 20,000 to KRW 350,000 depending on the property price.
**Annual property tax** is levied every year on June 1st, with rates typically between 0.1% to 0.5% of the assessed property value, plus an additional 20% local education tax. **Local property taxes** vary by city and province, ranging from 0.07% to 5.0% of the property value.
For high-value properties above KRW 900 million for housing (or KRW 1.2 billion if it's your only property), you'll face the **comprehensive real estate holding tax (CREHT)** with rates from 0.5% to 5.0%, plus an additional 20% rural development tax.
When selling, **capital gains tax** applies at rates of 10-22% for standard sales, but can reach up to 77% if you sell within one year of purchase.
How much is the acquisition tax for foreigners and does the rate change depending on property type or value?
The acquisition tax for foreigners ranges from 1% to 4% of the property's assessed value, but the exact rate depends heavily on the property type, location, and your ownership situation.
For **ordinary residential properties**, you'll typically pay between 1.1% and 3.5% acquisition tax. **Luxury properties** or those in high-demand areas face higher rates, while **commercial properties** may have different rate structures.
The rate increases significantly if you're purchasing **multiple properties**. First-time buyers of a single residential property generally pay the lowest rates, but if you're acquiring a second or third property, especially in regulated areas, the acquisition tax can jump to 8% or even 12%.
**Corporate buyers** face much higher rates than individual foreign buyers, with acquisition taxes often reaching the maximum 12% rate. The South Korean government specifically targets investors and speculators through these progressive tax rates.
Property value also matters - while there isn't a specific threshold that triggers higher acquisition tax rates, more expensive properties often fall into regulated areas where surcharges apply automatically.
Are there extra acquisition tax surcharges if the property is in Seoul or a regulated area?
Yes, properties in Seoul and other regulated areas face substantial acquisition tax surcharges that can triple or quadruple your tax burden.
In the **Seoul metropolitan region**, acquisition tax rates can reach up to 12% for buyers purchasing multiple homes, compared to the standard 1-4% rate in non-regulated areas. **Registration taxes** in Seoul may also be three times the normal rate.
**Regulated areas** include not just Seoul, but also parts of Gyeonggi Province, Busan's premium districts like Haeundae, and other high-demand urban centers. These designations change based on government policy, so areas can be added or removed from the regulated list.
**Luxury properties** and **investment properties** automatically trigger higher rates regardless of location. If your property is valued above certain thresholds or you're clearly buying for investment rather than residence, expect the maximum surcharge rates.
The surcharges are designed to cool speculation and limit foreign investment in South Korea's hottest property markets, making Seoul real estate investments particularly tax-heavy for international buyers.
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What is the annual property holding tax rate for foreigners and how is it calculated?
Annual property holding tax rates for foreigners range from 0.1% to 0.5% of the assessed property value, with an additional 20% local education tax automatically added.
| Property Value Range | Base Tax Rate | Total Rate (with Education Tax) |
|---|---|---|
| Under KRW 60 million | 0.1% | 0.12% |
| KRW 60-150 million | 0.15% | 0.18% |
| KRW 150-300 million | 0.25% | 0.30% |
| Over KRW 300 million | 0.4% | 0.48% |
| Luxury properties | Up to 0.5% | Up to 0.6% |
The tax is calculated based on the **assessed property value** as of June 1st each year, not your purchase price. This assessed value is typically 60-80% of the actual market value, which provides some relief from the full market rate.
**Multiple property owners** may face higher rates, and properties in **Seoul and other metropolitan areas** often have higher brackets than rural or provincial properties.
Payment is typically split into two installments - one in July and another in September. The exact calculation includes the base property tax plus the 20% education tax, so a 0.25% base rate becomes 0.30% total.
Does South Korea apply a comprehensive real estate holding tax for foreigners and at what property value threshold does it start?
Yes, South Korea applies a comprehensive real estate holding tax (CREHT) to foreigners, with specific thresholds that trigger this additional tax burden on top of regular property taxes.
The CREHT threshold is **KRW 900 million for housing properties**, but increases to **KRW 1.2 billion if it's your sole residential property in South Korea**. For **land holdings**, the threshold is lower at **KRW 500 million**.
CREHT rates range from **0.5% to 5.0%** of the property value above the threshold, with an additional **20% rural development tax** applied on top. This means your effective CREHT rate can reach **6.0%** for high-value properties.
**Multiple property owners** face the harshest CREHT rates, with the tax specifically designed to discourage property hoarding and speculation. If you own several properties with a combined value exceeding the thresholds, you'll pay CREHT on the total excess value.
The CREHT is calculated annually and assessed separately from regular property taxes, making high-value property ownership in South Korea extremely expensive for foreign investors.
How does the local property tax differ by city or province, and what are the exact rates?
Local property tax rates vary significantly across South Korean cities and provinces, ranging from 0.07% to 5.0% depending on your location and property type.
**Seoul** imposes some of the highest local property tax rates, often at the upper end of the 0.1-5.0% range, particularly for properties in premium districts like Gangnam, Seocho, and Songpa. **Busan** follows similar patterns with higher rates in desirable coastal areas like Haeundae and Marine City.
**Provincial cities** like Daegu, Gwangju, and Daejeon typically have lower local property tax rates, often in the 0.07-0.3% range for residential properties. **Rural areas** and smaller cities generally offer the most favorable local tax rates.
**Gyeonggi Province** (surrounding Seoul) has variable rates depending on proximity to Seoul, with cities like Bundang and Pangyo facing higher rates due to their desirability and high property values.
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Each local government sets its own specific rates within the national framework, and these can change annually based on local budget needs and housing policies.
When selling property, what capital gains tax rates apply specifically to foreigners?
Capital gains tax for foreign sellers in South Korea is calculated using the lower of two methods: 10% of gross proceeds (11% with local surtax) or 20% of net gain (22% including surtax).
For **standard property sales** by non-residents, you'll pay either 10% of the total sale price or 20% of your actual profit (sale price minus purchase price and expenses), whichever results in lower tax. The local surtax adds approximately 10% to whatever rate applies.
**Corporate sellers** and **non-registered sales** face much higher rates, potentially reaching 70% of gains. **Multiple property owners** also face elevated capital gains tax rates as the government discourages property speculation.
**Properties in regulated areas** like Seoul may trigger additional capital gains tax surcharges, particularly if you've held multiple properties or the sale appears speculative in nature.
The **net gain calculation** includes deductions for purchase costs, improvement expenses, and transaction fees, which can significantly reduce your taxable gain compared to the gross proceeds method.
Are capital gains tax rates higher if a foreigner sells a property within a short period after purchase?
Yes, capital gains tax rates increase dramatically for short-term property sales, with penalties designed to prevent speculation and quick flipping.
Properties sold **within one year** of purchase face capital gains tax rates of **40-50%**, and can reach up to **77%** for non-registered sellers or corporate entities. Properties sold within **1-2 years** typically incur rates around **40%**.
The short-term capital gains tax structure is specifically designed to discourage rapid property speculation. **Properties held less than one year** face the harshest penalties, making quick flips economically unviable for most investors.
**Regulated areas** like Seoul impose even higher short-term capital gains rates, sometimes reaching the maximum 77% rate for properties sold within months of purchase. **Multiple property owners** selling quickly face additional surcharges.
To avoid these punitive rates, foreign investors should plan to hold South Korean properties for at least 2-3 years, as holding periods longer than two years generally qualify for more reasonable capital gains tax rates.
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What exemptions, deductions, or reduced tax rates are available to foreigners, if any?
Foreigners have access to limited exemptions and deductions, significantly fewer than South Korean residents enjoy.
The main deduction available is a basic **KRW 2.5 million annual capital gains deduction** when selling property. **Long-term holding deductions** of 6-30% apply if you hold the property for more than three years, with larger deductions for longer holding periods.
**Foreign-invested companies** operating in designated economic zones or high-tech businesses may qualify for reduced acquisition and property tax rates, but these apply to corporate investors rather than individual buyers.
**Transaction cost deductions** include purchase expenses, improvement costs, real estate agent fees, and legal costs, which can reduce your capital gains tax burden significantly.
Unlike residents, foreigners generally **cannot claim exemptions** for primary residence sales, multiple property discounts, or family-related tax benefits. The South Korean tax system provides minimal preferential treatment for individual foreign property investors.
How do inheritance and gift taxes apply to foreigners who own property in South Korea?
Inheritance and gift taxes apply to foreigners who own South Korean real estate, following the same progressive tax schedule as domestic residents.
**Inheritance tax rates** range from 10% to 50% based on the total value of inherited assets, including real estate located in South Korea. **Gift tax rates** follow similar progressive brackets, with rates increasing as the value of gifted property rises.
**Reporting requirements** are identical to those for residents - inheritance taxes must be filed within 6 months of death, while gift taxes are due within 3 months of the gift transfer. **Assessment dates** follow the same schedule regardless of the recipient's nationality.
**Tax treaties** between South Korea and your home country may provide some relief from double taxation, but you'll still need to comply with South Korean filing and payment requirements for property located within the country.
Foreign beneficiaries may face additional complications in property transfer procedures and may need local legal representation to navigate the inheritance tax process effectively.
What are the reporting and payment deadlines for each type of property tax foreigners owe?
South Korean property tax deadlines follow specific schedules that foreigners must strictly observe to avoid penalties and legal complications.
**Property tax assessment** occurs annually on **June 1st**, with payments typically due in **July and September** in two equal installments. **Annual tax returns** for the calendar tax year must be filed by **May 31st** of the following year.
**Capital gains tax returns** are due after property sales, typically within 2 months of the transaction completion date. **Acquisition tax** must be paid within 30 days of property registration.
**Comprehensive real estate holding tax (CREHT)** follows the same June 1st assessment date as regular property taxes, with payments due later in the year according to local government schedules.
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**Local property taxes** vary by municipality, but most follow similar summer and fall payment schedules. Missing any deadline triggers immediate interest charges and potential penalties.
What penalties or additional charges apply if a foreigner fails to file or pay property taxes on time?
Late filing and payment penalties for foreigners can be substantial, with interest charges and additional fines that compound quickly.
**Late payment interest** typically accrues at rates of 12-25% annually on unpaid taxes, calculated daily from the original due date. **Filing penalties** add 20-40% surcharges to your total tax liability depending on how late you file.
**Repeated non-compliance** can result in legal action, **asset liens** against your property, or additional fines proportionate to the unpaid tax amount. The South Korean tax authority can place holds on property sales or transfers until all taxes are paid.
**Significant non-compliance** may affect your ability to purchase additional properties or could complicate visa or residency applications if you're planning to stay in South Korea long-term.
**Asset seizure** becomes possible for large unpaid tax bills, with the government authorized to sell your property to recover unpaid taxes, interest, and penalties.
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Understanding South Korea's property tax structure is crucial for making informed real estate investment decisions as a foreigner.
The combination of acquisition taxes, annual holding taxes, comprehensive real estate taxes, and potentially severe capital gains taxes can significantly impact your investment returns, particularly for short-term holdings or properties in regulated areas like Seoul.
It's something we develop in our South Korea property pack.