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You're not wrong—South Korea’s property tax system can feel pretty heavy-handed, especially for investors holding multiple residential properties or aiming for short-term gains. Here's a breakdown of why it's often seen as punitive:
  • Acquisition Tax: Ranges from 0.6% to 4.6% of the purchase price. Higher rates apply if you're buying multiple homes or luxury properties.
  • Annual Property Tax: Levied by local governments, typically 0.5% to 4% of the assessed value. Again, the rate increases with the number of properties owned.
  • Comprehensive Real Estate Holding Tax: This is where it gets steep. For owners of high-value or multiple residential properties, this additional annual tax can push the total burden significantly higher.
  • Capital Gains Tax: If you sell a property, expect a progressive tax based on how long you held it. Short-term sales (under 2 years) can be taxed at up to 70%, while long-term holdings get deductions up to 30% after 10 years.
  • Rental Income Tax: Ranges from 6% to 42%, depending on income level. There are two methods for calculating taxable rental income, but both can be complex and offer limited deductions.

🇰🇷 Why the System Feels Tough on Investors

  • The government has used tax policy as a tool to cool speculative demand and stabilize housing prices, especially in Seoul.
  • Multiple-home owners are targeted with higher rates to discourage hoarding and flipping.
  • Foreign investors face the same tax rates but must also navigate additional reporting requirements under the Foreign Exchange Transactions Act.
If you're considering investing there, it’s wise to consult a local tax advisor or real estate attorney—especially since the rules shift frequently with political winds. Want to compare this with how California handles property taxes for investors?