"Second Home" Tax Exemption for Single-Homeowners Applies to Population-Declining Areas Valued at 900 Million Won or Less

Capital Gains and Comprehensive Real Estate Tax Exemptions for Multi-Homeowners
Second Home Benefit Now Applies Beyond Single-Homeowners
Population-Decline Watch Areas Eligible for Properties up to 400 Million Won
Headquarters Relocation Tax

When multi-homeowners pay capital gains tax and comprehensive real estate tax, homes valued at 900 million won or less located in population-declining areas outside the Seoul metropolitan region are excluded from the housing count. In addition, homes located in population-decline concern areas and similar regions are also excluded from the count if their value is 400 million won or less. For single-homeowners who acquire unsold newly built homes outside the Seoul metropolitan area, the same benefit applies if the purchase price of the home is 700 million won or less.

Apartment complex view from Namsan, Seoul. Photo by Yonhap News Agency

The Ministry of Economy and Finance announced on the 16th the proposed amendments to the enforcement decrees following the 2025 tax reform. This amendment includes a number of tasks to revise enforcement decrees, supporting the tax reform plan announced in July last year and the economic growth strategy released this month.

The government has moved to revitalize the local real estate market as part of its efforts to support regional growth. It first decided to support the acquisition of homes in population-declining areas and population-decline concern areas. A notable feature is that the special second-home exemption, which excludes homes in population-declining areas from the housing count for tax purposes, will also apply to multi-homeowners.

Accordingly, when multi-homeowners pay capital gains or comprehensive real estate tax, homes acquired in population-declining areas, including those outside the Seoul metropolitan region, will not be counted toward the total number of homes. This applies to homes acquired from this year. Specifically, homes in population-declining areas outside the metropolitan region are eligible if valued at 900 million won or less, and homes in other regions such as population-decline concern areas are eligible if valued at 400 million won or less.

Single-homeowners who acquire unsold newly built homes outside the metropolitan region are also eligible for capital gains and comprehensive real estate tax exemptions, provided the purchase price is 700 million won or less. Previously, the threshold was 600 million won, but the amended enforcement decree raises the limit by 100 million won. This applies to homes acquired from this month onward.

The government also included measures in this follow-up enforcement decree revision to increase incentives for companies to relocate to regional areas. If a corporation that has operated for more than three years in an overcrowding control area of the Seoul metropolitan region relocates its headquarters to a non-metropolitan area, it can defer corporate tax for up to 15 years. In this case, the required proportion of headquarters staff working at the relocated headquarters, which serves as the basis for recapturing the tax benefits, will be lowered from 50% to 40%.

This is intended to strengthen the criteria for recapturing tax benefits and enhance the effectiveness of the tax reduction system applied when relocating headquarters. A Ministry of Economy and Finance official explained, "Reducing the headquarters work condition means the requirements have become stricter," adding, "This is a newly added provision." The stricter requirements will apply to those relocating factories or headquarters after the enforcement of the amended Restriction of Special Taxation Act enforcement decree containing these changes.

The government also specified detailed requirements for tax reductions for companies established in employment disaster areas, employment crisis areas, and industrial crisis response special areas. According to the government, companies that invest at least 500 million won and employ at least 10 full-time workers in these regions will be eligible for a 100% reduction in income and corporate taxes for five years, and a 50% reduction for an additional two years.