Selling Your Seoul Home and Moving to the Regions Opens Up Tax Savings of Up to 600 Million Won... Ruling Party Encourages 'Leaving Seoul'

Current IRP Limit: 18 Million Won Per Year
Tax Savings on Sales Proceeds Up to 600 Million Won

A bill has been proposed that would allow individuals to contribute up to 600 million won to their Individual Retirement Pension (IRP) accounts if they sell their homes in the Seoul metropolitan area and purchase property in a non-metropolitan region. This measure enables those relocating from the metropolitan area to deposit up to 600 million won of their sales proceeds into their IRP, thereby maximizing tax benefits.

According to political sources on January 18, Park Minkyu, a lawmaker from the Democratic Party of Korea, sponsored the amendment to the Income Tax Act containing these provisions. To enhance the effectiveness of the system, the bill also includes a clause that revokes the benefit if, within ten years of the contribution, the individual acquires another home in the metropolitan area or moves their resident registration back to the metropolitan area for permanent residence.

A significant number of baby boomers living in the metropolitan area originally hail from non-metropolitan regions. Although many are willing to relocate, their metropolitan homes often serve as key retirement assets, making it difficult to move without alternatives. Assemblyman Park expects this bill to assist baby boomers contemplating "leaving Seoul and returning home." He also anticipates various positive effects, including: the transfer of real estate-concentrated assets to productive capital markets; stable retirement income for those relocating to regional areas; an increase in housing supply in Seoul and the metropolitan area; and balanced regional development.

Assemblyman Park explained, "The rise in housing prices and supply shortages in Seoul cannot be resolved by simple regulations alone. This bill not only provides a systematic mechanism for those selling metropolitan homes to secure their retirement as they relocate to regional areas, but also shifts asset structures centered on real estate into the capital market, thereby contributing to the growth engine of the Korean economy."

Individuals can contribute up to 18 million won per year to their IRP, and when combined with pension savings, can receive a tax deduction of up to 9 million won per year. Taxation on investment returns is deferred until the pension is received, and even after pension payments begin, a preferential tax rate of up to 3.3% is applied.

According to the "2026 Housing Market Outlook and Policy Direction" report published by the Housing Industry Research Institute, housing sale prices are expected to rise by 4.2% in Seoul and by an average of 1.3% nationwide this year. In particular, due to a cumulative shortage of around 600,000 housing starts over the past four years, the upward trend in real estate prices centered on Seoul and the polarization between Seoul and regional real estate markets are expected to persist.