Multiple-home owners face up to 82.5% capital gains tax

South Korea reinstated a heavier capital gains tax on multiple-home owners Sunday, raising the potential tax burden on property sales in regulated areas as the government moves to cool housing prices.

The four-year suspension expired Saturday as planned, reviving the additional levy for owners of two or more homes who sell properties in areas subject to real estate regulations.

The measure adds a surtax to the basic capital gains tax rate of 6 percent to 45 percent. Owners of two homes face an additional 20 percentage points, while those with three or more homes face an extra 30 percentage points.

Including the 10 percent local income tax, the top effective rate for owners of three or more homes can reach about 82.5 percent. Estimates show such owners could see their tax burden more than double, depending on the size of their capital gains.

The government temporarily suspended the heavier tax in May 2022 to revive property transactions and ease a shortage of listings. The waiver was extended several times before expiring this month.

To smooth the transition, the government introduced exceptions for homeowners with firm plans to sell. Sellers who completed transfers by Saturday are exempt from the surtax. Those who applied for land transaction approval can avoid the additional levy if they close within a specified period.

Under last year's Oct. 15 housing measures, transactions in 21 Seoul districts and 12 areas of Gyeonggi Province newly designated as regulated areas must be completed within six months of the contract date, while deals in Seoul's pricier Gangnam, Seocho, Songpa and Yongsan districts face a tighter four-month deadline.