"For areas newly designated as adjustment target zones, such as Dongtan and Giheung-gu in Yongin, you must look at both the contract date and the balance payment date. Even if you signed the contract before the designation, a two-year residency requirement may apply if the balance payment date falls after the designation."
Kim Ho-yong, CEO of Mirejin Tax, delivered a lecture titled "Tax-Saving Strategies for Single-Home Upgrades and Responses to Tax Law Revisions" at "Sedaily Money Trend 2026" held Monday. Citing the recent cases of Dongtan-gu in Hwaseong, Giheung-gu in Yongin and Guri, all in Gyeonggi Province and recently designated as adjustment target zones, he stressed that homeowners must carefully review capital gains tax exemption requirements when upgrading to a higher-tier property. "Even if you signed the contract before the adjustment target zone designation, if the balance payment date falls after the designation, it can be viewed as buying a home in an adjustment target zone based on the acquisition date," Kim said. "In this case, to later receive the one-household, one-home tax exemption, a residency requirement of two years or more may apply."
However, not all buyers who signed contracts before the designation are subject to the same criteria. Even if a buyer signed a sales contract and paid a deposit before the adjustment target zone designation, what matters is whether the buyer was a non-homeowner on a household basis at the time of the contract. If the buyer was a non-homeowner at the time of the contract, the two-year residency requirement may be waived even if the balance payment date extends beyond the adjustment target zone designation. But if the buyer already owned another home when signing the contract, the exception is difficult to apply, he explained. "You should not feel safe simply because the contract date precedes the designation of a regulated zone," Kim said. "You must check both whether you owned a home at the time of the contract and the balance payment date, which is the actual acquisition date."
Kim also outlined the basic requirements for the temporary one-household, two-home tax exemption. To qualify for the exemption, a buyer must purchase the new home at least one year after acquiring the previous home, and sell the previous home within three years of acquiring the new home. The previous home being sold must be held for two years or more, and if it was in an adjustment target zone at the time of acquisition, it must also meet the residency requirement of two years or more. In the past, the disposal deadline for the previous home varied depending on the location and timing of acquisition of the new home, but it has now been unified to disposal within three years regardless of region.
For upgrades using redevelopment rights, the redevelopment project period is a key variable in addition to the three-year disposal deadline. A single-home owner who acquires association member redevelopment rights and then sells the previous home within three years can receive the tax exemption exception. However, redevelopment and reconstruction projects often take five to six years, and as long as seven to 10 years or more, from the approval of the management disposal plan to completion, making it difficult in reality for the new home to be completed within three years of acquiring the redevelopment rights. In this case, a buyer can receive the exception for genuine-demand purposes by selling the previous home before the completion of the new home or within three years after completion, and having all household members move in within three years of completion and continuously reside for one year or more.
Kim viewed association member redevelopment rights or pre-sale rights as an alternative for upgrading to a higher-tier property amid the growing burden of new apartment prices. While preference for properties near subway stations, new buildings and large complexes is strong, already-completed new apartments are expensive and difficult to access, so demand for using rights that will later convert into new homes may continue, he explained. However, since redevelopment rights and pre-sale rights are subject to different exception requirements than buying a general home, buyers must manage both the acquisition timing and the disposal schedule of the previous home.
Pre-sale rights should be viewed as having a structure similar to redevelopment rights. Pre-sale rights acquired after 2021 are included in the home count when determining capital gains tax exemption and heavy taxation on multi-home owners. Accordingly, if a single-home owner acquires pre-sale rights while holding an existing home, the basic rule is to sell the previous home within three years. Even after three years have passed, a buyer can expect the tax exemption exception only by disposing of the previous home before the home acquired through the pre-sale rights is completed or within three years after completion, and by moving in within three years of the new home's completion and residing for one year or more.
Replacement homes bought for residential purposes during redevelopment and reconstruction construction periods also require caution. "If you acquire a replacement home after the project implementation approval, reside there for one year or more, and sell it before the completion of the new home or within three years after completion, the tax exemption exception is possible," Kim explained. Even if the replacement home is in an adjustment target zone, the replacement home tax exemption exception itself can meet the requirement with one year or more of residency. However, to receive a higher deduction rate under the special long-term holding deduction as a high-value home, the two-year residency requirement must be examined separately.
The number of homes held at the time of buying a replacement home must be verified. Kim explained that if a buyer was in a state of holding two or more homes, meaning holding another home besides the redevelopment or reconstruction home at the time of acquiring the replacement home, the exception is difficult to apply even if the other home is disposed of first afterward. When the Ministry of Economy and Finance changed its interpretation on Oct. 23, 2023, whether the buyer was a single-home owner at the time of acquiring the replacement home became the key criterion, he said.
The possibility of changes to holding taxes and the special long-term holding deduction was also cited as a variable. Noting that the reference date for holding taxes is June 1 each year, Kim explained that the comprehensive real estate tax burden can vary depending on whether the property tax is levied on a residential basis. High-value home owners must also consider the possibility of a reduction in the special long-term holding deduction. Using the example of a home with a transfer value of 3 billion won and necessary expenses of 1 billion won, he said, "Under the current maximum 80% deduction, the calculated tax is 70.31 million won, but assuming no special long-term holding deduction, it could rise to 472.935 million won."
