Many overseas Koreans assume that selling their only home in Korea will be tax-free, as it often is for people living in Korea. For non-residents, that is usually not the case. Korean law withholds the one-house exemption from most non-residents, applies Korea’s general capital gains rates, and adds procedural steps before the sale can be registered and the proceeds sent abroad. Your country of residence may also tax the same gain. This article explains how the Korean tax works and how it interacts with taxes abroad.

Table of Contents
📌 목차 (Table of Contents)

1. Are You a Non-Resident for Korean Tax Purposes?

Korean tax residence does not depend on nationality or immigration status. A person is a Korean tax resident if they have a domicile in Korea, or have stayed in Korea for 183 days or more. Domicile is decided on the facts, considering:

  • where your family (spouse and dependents) lives
  • where you work or run a business
  • where your main assets are

Most Koreans who emigrated with their families and live and work abroad are non-residents. But a person who keeps a home in Korea where their spouse lives, or who spends long periods in Korea, may still be treated as a resident even with a foreign passport or green card. If both countries consider you a resident, the tie-breaker rules of the relevant tax treaty apply.

Key takeaway: Residence status decides almost everything that follows. Confirm it, based on the facts on the date of sale, before you sign.

2. How Korea Taxes a Non-Resident’s Property Sale

Korea taxes non-residents on gains from real estate located in Korea. The calculation generally follows the same method as for residents:

Sale price − Acquisition cost − Necessary expenses = Gain
Gain − Long-term holding deduction − Basic deduction = Taxable gain

Tax rates

  • Held two years or more: progressive rates of 6% to 45%
  • Housing held less than two years: higher flat rates (70% for under one year, 60% for one to two years). Land and other property held for a short time is also subject to higher rates.
  • Local income tax of 10% of the income tax is added, so the top combined rate on long-held property is about 49.5%.
  • Heavier rates for owners of multiple homes in regulated areas have been suspended for several years. Check whether the suspension still applies on your sale date.

Long-term holding deduction

Non-residents can generally use the standard long-term holding deduction, which reaches up to 30% for property held 15 years or more. They cannot use the enhanced deduction of up to 80% that is available to residents with one house who have both owned and lived in it for a long time.

Key takeaway: On a long-held apartment in Seoul, losing the enhanced deduction can by itself make the non-resident’s tax several times higher than a resident’s tax on the same sale.

3. The One-House Exemption and the Emigration Exception

The general rule: no exemption for non-residents

For residents, Korea exempts the gain on a household’s only house if the holding (and, in some areas, residence) requirements are met, up to a sale price of KRW 1.2 billion. This exemption is available only to residents. A non-resident selling their only Korean home is generally taxed in full.

The emigration exception

There is an important exception. The one-house exemption can still apply, without the usual holding or residence requirements, where:

  • the whole household left Korea, either by emigration under Korea’s Overseas Emigration Act or for work or study abroad of one year or more, and
  • the household owned one house at the time of departure, and
  • the house is sold within two years of the departure date.

The usual KRW 1.2 billion limit still applies: the part of the gain attributable to a price above that amount remains taxable.

Key takeaway: For families planning to emigrate, selling the Korean home within two years of departure can save a large amount of tax. After two years, the exemption is generally lost.

4. Filing, Registration, and Remitting the Proceeds

Filing the return

  • A preliminary return is due by the end of the second month after the month of transfer. The transfer date is generally the earlier of the final payment date or the title registration date.
  • Non-residents should appoint a tax agent in Korea to receive notices and handle filings.

Withholding when the buyer is a company

If the buyer is a company, it generally must withhold tax from the price paid to a non-resident: the lesser of 10% of the price or 20% of the gain. Withholding does not replace the return. You still file, and settle the difference.

Registration requires a tax certificate

When an overseas Korean or a foreign national sells Korean real estate, the title registry requires a Real Estate Transfer Report Confirmation (부동산등양도신고확인서) issued by the tax office. In practice, this means the tax filing has to be dealt with before the buyer’s title can be registered, so build it into the closing schedule.

Sending the proceeds abroad

Remitting sale proceeds overseas goes through Korean foreign exchange rules. Overseas Koreans generally:

  • designate a foreign exchange bank for the remittance
  • submit documents showing the source of funds, including tax payment evidence and, for larger amounts, a confirmation of sale proceeds issued by the tax office

Sale contract → Tax filing (through a tax agent) → Transfer report confirmation → Title registration → Remittance through the designated bank

(Selling without traveling to Korea is generally possible through a power of attorney. See our earlier article on that procedure.)

5. Double Taxation: Coordinating with Your Country of Residence

Korea taxes the gain because the property is in Korea. Your country of residence will often tax the same gain because you live there. Tax treaties generally give Korea the first right to tax gains on Korean real estate, and your country of residence relieves double taxation, usually through a foreign tax credit. Several mismatches are common.

United States

  • U.S. citizens and residents are taxed on worldwide gains, and Korean tax paid can generally be claimed as a foreign tax credit, subject to limits.
  • The U.S. home-sale exclusion (USD 250,000, or USD 500,000 for married couples) can apply to a Korean home that was your principal residence for two of the last five years. Korea, however, may still tax the gain in full.
  • The U.S. calculates gain in U.S. dollars, using exchange rates at purchase and sale. Currency movements can create a U.S. gain where Korea shows a loss, or the reverse.

Canada

  • Canadian residents are taxed on worldwide gains, with half of the gain included in income, and a foreign tax credit is generally available.
  • People who immigrated to Canada are generally treated as having acquired their property at its fair market value on the date of immigration. Canada may therefore tax only the gain arising after immigration, while Korea taxes the gain from the original purchase.

Australia

  • Australian residents are taxed on worldwide capital gains, and a foreign income tax offset is generally available.
  • Similar to Canada, assets held when becoming an Australian resident may be treated as acquired at market value on that date.

Timing and credit limits

The Korean tax is often paid in a different tax year from when the gain is reported abroad. Foreign tax credits are also usually capped at the domestic tax on that income. When Korean tax is higher than the foreign tax, which is common because non-residents lose the Korean exemption and the enhanced deduction, the excess Korean tax may not be fully credited.

Key takeaway: The Korean return and the foreign return should be prepared together, using consistent figures, before the sale closes.

6. Planning Checklist

  • Confirm your residence status on the expected sale date.
  • Check the two-year emigration window if your household recently left Korea.
  • Assemble acquisition evidence: the purchase contract, acquisition tax receipts, and major improvement costs. For inherited property, the acquisition cost is generally the value reported for inheritance tax.
  • Appoint a tax agent in Korea and agree on the filing schedule before closing.
  • Plan the remittance: designate a foreign exchange bank and prepare source-of-funds documents.
  • Consult a tax adviser in your country of residence about foreign tax credits, currency gains, and any exclusion.

7. Conclusion

For non-residents, selling Korean real estate is rarely tax-free. The one-house exemption and the enhanced long-term holding deduction are generally reserved for residents, apart from the important two-year emigration exception. Registration and remittance depend on resolving the tax first. And your country of residence may tax the same gain on a different basis.

With planning in both Korea and abroad, much of the cost and delay can be reduced. The time to plan is before the sale contract is signed.