Guide to Property Taxes in South Korea
Tax Rate on Rental Income (Non-resident company) |
|||
| Monthly Income | $1,500 | $6,000 | $12,000 |
| Tax Rate | 22% | 22% | 22% |
A nonresident foreigner can hold Korean property through a "limited liability company" (YooHan hoesa). This requires no company registration, only tax registration with the tax authority. Rental income can be taken out of the country after taxes have been paid.
Income Tax
Income in Korea is classified into several categories: global income, retirement income, capital gains, and income taxed separately by withholding. Global income includes categories such as real estate rental income, business income, and employment income, which are taxed progressively.
Income Tax Rates for 2024
| Taxable Income (KRW) | Tax Rate |
| Up to 14 million | 6% |
| 14 million - 50 million | 15% |
| 50 million - 88 million | 24% |
| 88 million - 150 million | 35% |
| 150 million - 300 million | 38% |
| 300 million - 500 million | 40% |
| 500 million - 1 billion | 42% |
| Over 1 billion | 45% |
Rental Income Tax
Rental income earned by individuals through personal companies is taxed at progressive rates, with no nil-rate deduction for rental income. Taxable income is based on the total rental income, minus allowable expenses and carried-over losses from the past five years.
South Korea operates a self-assessment tax system where taxpayers are required to file tax returns and include supporting documents for deductions and exemptions.
There are two methods for computing personal taxable income from rental:
- Method 1: Income minus (income * expense rate for real estate rental business between 20% and 66%) for rental income under KRW 24 million.
- Method 2: Income minus major expenses (labor, purchase, rental costs) for rental income over KRW 24 million. Expense rates range between 15% and 48%.
For non-resident landlords who use corporate structures (like a limited liability company, YooHan hoesa), income is taxed differently, and the flat rate of 22% might apply, especially for passive rental income.
Capital Gains Tax
Capital gains earned from selling real estate are subject to a progressive tax system. Taxable gains are computed by deducting acquisition, improvement, and transfer costs from the selling price, as well as certain capital gains deductions for long-term property holding.
Special Deduction for Long-Term Holding:
| Holding Period | Deduction Rate |
| 3-4 years | 10% |
| 4-5 years | 12% |
| 5-6 years | 15% |
| 6-7 years | 18% |
| 7-8 years | 21% |
| 8-9 years | 24% |
| 9-10 years | 27% |
| Over 10 years | 30% |
Additionally, there is a standard capital gains deduction of KRW 2.5 million per year the property was held​(
Corporate Taxation
Korean corporations, including stock companies (JooSik hoesa), pay taxes on their income and capital gains at the following rates:
| Taxable Income (KRW) | Tax Rate |
| Up to 200 million | 9% |
| 200 million – 20 billion | 19% on the band over KRW 200 million |
| Over 20 billion | 21% on the band over KRW 20 billion |
| Over 300 billion | 24% on income over KRW 300 billion |
Expenses related to generating income, such as salaries, taxes, depreciation, and advertising costs, are deductible when calculating taxable income.
Property Taxes
Property taxes are imposed annually, ranging from 0.07% to 5.00% based on property type and location.
General Combined Property Tax:
| Tax Base (KRW) | Tax Rate |
| Up to 50,000 | 0.20% |
| 50,000 - 100,000 | 0.30% |
| Over 100,000 | 0.50% |
Special Combined Property Tax:
| Tax Base (KRW) | Tax Rate |
| Up to 200,000 | 0.20% |
| 200,000 - 1 million | 0.30% |
| Over 1 million | 0.40% |
Buying and Selling Costs
| Transaction Costs | ||
| Who Pays? | ||
| Property Transfer Tax | 1.00% - 12.00% | buyer |
| Legal Fees | 0.50% - 1.00% | buyer |
| Real Estate Agent Fee | 0.40% - 0.60% 0.30% - 0.50% |
buyer seller |
| Costs Paid by Buyer | 1.90% - 13.60% | |
| Costs Paid by Seller | 0.30% - 0.50% | |
| ROUNDTRIP TRANSACTION COSTS | 2.20% - 14.10% | |
| Source: Global Property Guide, PWC, KPMG | ||
Roundtrip Transaction Cost: 1% - 12%​
Property Holding Tax
For most residential properties, the property tax ranges from 0.15% to 0.50%, depending on the value and type of property (such as villas or non-villa houses). Non-residential buildings and land can also fall into this category, with land generally taxed at 0.20% and buildings at 0.25%.
Additionally, properties that exceed a certain value threshold (such as KRW 600 million for residential houses) may also be subject to the Comprehensive Real Estate Holding Tax (CRET), which ranges from 0.5% to 2%, depending on the property’s value and classification​.
Properties considered luxury or high-value (such as houses in speculative areas or properties exceeding certain value thresholds) may attract higher rates, up to 5% in specific cases, particularly if the government has marked the area for anti-speculation measures.