Are All Villas That Look Similar the Same?... The Distinct Differences Between Multi-Family and Multi-Household Housing

The view of a villa neighborhood from a building in Yangcheon-gu, Seoul, where villa transaction volumes are increasing on the 11th. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Ryu Taemin] Multi-family houses and multi-unit houses look similar at first glance, making it hard to tell the difference. However, they are legally distinct types of housing, with significant differences in tax law, insurance, and other areas. Recently, as regulations surrounding housing have become more complex, the taxes owed can vary greatly depending on whether the property is classified as a multi-family house or a multi-unit house.

Under the Building Act, a multi-family house is a type of single-family house with up to three floors used as living space, a total floor area of 660m² or less, and housing no more than 19 households. However, if the first floor is a pilotis structure, the pilotis floor is excluded from the count of floors.

A multi-unit house is a type of apartment building. It has four or more floors used as living space, also with a total floor area of 660m² or less and no more than 19 households, and the pilotis floor is excluded from the floor count as well.

Whether a specific building is classified as a multi-family or multi-unit house has important implications under tax law. A multi-family house is considered a single-family home, so when it is sold, it is counted as one house. Therefore, non-taxable benefits apply to the entire building and the accessory land within a certain range.

On the other hand, a multi-unit house is considered an apartment building, so each household is counted as a separate house. Therefore, if sold all at once, only one unit among all households can receive non-taxable benefits. For example, if one person owns a multi-unit house with 10 households and sells it all at once, only one unit receives the non-taxable benefit, while the other nine units are excluded. Especially in regulated areas, each household is counted as a separate house, which can lead to heavy taxation for multiple home ownership.

The registration separation also differs. Although multi-family houses are physically divided by unit numbers, they are not separated in the official registration. Therefore, it is difficult to apply for the "Jeonse Deposit Return Guarantee Insurance" that helps tenants recover their deposits if at risk of loss. According to the Housing and Urban Guarantee Corporation (HUG) insurance standards, for multi-family houses without separate registration, detailed information such as the deposit and monthly rent for each unit, contract dates and periods, and tenant information must be submitted. Without the landlord's cooperation, it is practically difficult to obtain. In contrast, multi-unit houses, which are "collective buildings," have separate registrations for each unit, making it easier to enroll in insurance.