Long-Term Holding Deduction: How to Maximize Your Tax Savings

Of all the deductions available when selling property in Korea, the 장기보유특별공제 (janggi boyuteukbyeol gongjae) — the long-term holding special deduction — is the most financially significant. It can reduce your taxable gain by up to 80% after fifteen or more years of ownership and residency, effectively transforming what would be a multi-million-won tax bill into a fraction of that amount. Understanding how this deduction is structured, and how to maximize it through strategic holding and residency, is fundamental to long-term property planning in Korea.

Two Separate Rate Tables: Single-Home vs General

The deduction operates on two entirely different rate tables depending on whether you qualify as a single-home primary residence holder (1세대 1주택) or a general property holder (일반):

Table 1: Single-Home Primary Residence (최대 80%)

For single-home owners who have both owned and lived in the property for at least two years, the deduction is calculated by combining a holding-period component and a residency-period component:

Years Held	Holding Rate	Years Resident	Residency Rate	Combined (if equal)
3 years	12%	2 years	8%	20%
4 years	16%	3 years	12%	28%
5 years	20%	4 years	16%	36%
6 years	24%	5 years	20%	44%
7 years	28%	6 years	24%	52%
8 years	32%	7 years	28%	60%
9 years	36%	8 years	32%	68%
10 years	40%	9 years	36%	76%
10+ years	40% (max)	10 years	40%	80% (maximum)

The holding rate and residency rate are calculated separately and added together. The maximum combined deduction is 80% — meaning only 20% of the gain is taxable after ten or more years of ownership and ten or more years of actual residency.

Kr Long Term Deduction

Table 2: General Property (최대 30%)

For all other properties — second homes, investment properties, land, or primary residences held by multi-home households — the deduction is based solely on holding period with no residency component:

Years Held	Deduction Rate
3–4 years	6%
4–5 years	8%
5–6 years	10%
6–7 years	12%
7–8 years	14%
8–9 years	16%
9–10 years	18%
10–11 years	20%
11–12 years	22%
12–13 years	24%
13–14 years	26%
14–15 years	28%
15 years+	30% (maximum)

The maximum general deduction of 30% (reached after 15 years) is far less generous than the 80% maximum for single-home primary residences — illustrating how strongly the tax system rewards primary homeownership.

Interaction with Multi-Home Status

Multi-home holders in regulated areas (조정대상지역) are not entitled to claim the long-term holding deduction when selling a regulated-area property. This rule applies even if they have owned the property for 20 years. The intent is to prevent investors who have accumulated multiple properties from benefiting from the same deductions as owner-occupiers.

Capital Gains Tax Kr

Practical Example: The Power of Long-Term Holding

Consider a single-home owner who purchased an apartment for 300 million KRW in 2010 and sold it for 700 million KRW in 2025 — a gain of 400 million KRW. They lived in the property throughout. With 15 years of holding and 15 years of residency:

• Holding deduction: 40% (maximum, capped at 10 years)
• Residency deduction: 40% (maximum, capped at 10 years)
• Combined deduction: 80%

Taxable gain = 400M × (1 − 0.80) = 80 million KRW

After the 2.5 million KRW basic deduction: 77.5 million KRW taxable.

Applying tax brackets: approximately 15.75 million KRW in income tax + 10% local surtax = ~17.3 million KRW total

Without the deduction (if the general rate applied), the tax would be approximately 107–130 million KRW. The holding deduction saved approximately 90–115 million KRW in this scenario.

When the Sale Price Exceeds 1.2 Billion KRW

Even when you qualify for the 1세대 1주택 full exemption (sale price under 1.2B KRW), if the sale exceeds 1.2 billion KRW, only the portion above 1.2 billion is taxable — and the long-term holding deduction applies to that taxable portion at the favorable primary-residence rate. The effective tax is still greatly reduced compared to an investment property.

Maintaining Deduction Eligibility

• Avoid temporary multi-home status: Acquiring a second property — even briefly — can destroy your primary-residence classification for this sale. The National Tax Service (국세청) scrutinizes household ownership records carefully.
• Document residency: Utility bills, 주민등록 records, and school enrollment records serve as evidence of actual residency. The tax office may request these if the residency period claimed is borderline.
• Track the purchase date precisely: The holding period is calculated from the date of transfer registration (소유권이전등기 접수일), not the date the sale contract was signed. For newly constructed apartments, the holding period may start from the date of completion (사용승인일) if registration occurred before that.