Korean Real Estate Tax Guide for Foreigners 2025: Acquisition, Capital Gains & Property Tax

Foreigners’ Guide to Buying & Selling Real Estate in Korea: Acquisition, Capital Gains & Taxes

South Korea has become an increasingly attractive market for foreign investors seeking residential or commercial real estate. While foreigners can buy and sell property in Korea, the process involves a detailed legal framework, acquisition taxes, capital gains obligations, and compliance steps that differ from other markets. This guide provides an updated (2025) overview of acquisition rules, transaction taxes, capital gains tax, and filing obligations for foreigners in Korea.

1. Can Foreigners Buy Property in Korea?

Yes. Foreigners can legally acquire property in Korea, but must comply with reporting or permit requirements under the Act on Report of Real Estate Transactions, Foreign Investment Promotion Act, and the Foreign Exchange Transactions Act. In restricted zones (e.g. military, cultural heritage, or ecological areas), permission must be obtained before signing contracts. In most urban areas, foreigners simply need to file a transaction report within 60 days at the local city/county office.

2. Acquisition Taxes & Transaction Costs

When purchasing property in Korea, foreigners pay several taxes and fees at the time of acquisition:

Tax / Fee	Rate	Notes
Acquisition Tax (취득세)	2% – 4% of property value	Rate varies by region and property type
Registration / Transfer Tax	~1% – 3%	Applied when registering ownership
Stamp Duty	0.2%	On legal documentation
VAT	10%	Only for new buildings or commercial property (not land)
Local Surcharges	~20% of acquisition tax	Education or rural development taxes

3. Holding Taxes (Annual Obligations)

Foreigners owning property in Korea must also pay annual property-related taxes:

• Property Tax (재산세): 0.07% – 0.5% of assessed value
• Comprehensive Real Estate Holding Tax (종합부동산세): 0.5% – 5% for high-value holdings
• Education & Rural Taxes: ~20% surcharge on above taxes

4. Capital Gains Tax (양도소득세)

When selling Korean property, foreigners are taxed on capital gains (selling price minus purchase + improvement costs). Filing and payment rules apply:

• Non-residents must file a capital gains tax return with the National Tax Service (NTS).
• Corporate buyers may be required to withhold part of the tax at settlement.
• Withholding tax is credited against the seller’s final tax liability.

4.1 Capital Gains Tax Rates

• Non-resident corporations: taxed at 11% of sales price or 22% of net gain (whichever is lower).
• Short-term residential gains: may reach effective rates of up to 77% depending on holding period and property type.
• Treaty benefits: Some double-tax treaties reduce or credit Korean-source capital gains tax.

5. Example Calculation

Item	Amount (KRW)	Notes
Purchase Price	₩800,000,000	Apartment in Seoul
Acquisition Tax (3%)	₩24,000,000	Paid at registration
Sale Price (after 5 years)	₩1,200,000,000	Market appreciation
Capital Gain	₩400,000,000	Net of purchase costs
Capital Gains Tax (~15%)	₩60,000,000	Approximate, varies by case

6. Tips for Foreign Investors

• Always report acquisitions within 60 days to avoid penalties.
• Maintain documentation (contracts, improvement receipts, tax filings).
• Check if your country has a tax treaty with Korea to reduce double taxation.
• Consult local experts for district-specific acquisition tax rates and rules.
• For long-term investors, extended holding reduces effective capital gains tax.

7. Conclusion

Foreigners are welcome to invest in Korean real estate, but must navigate complex acquisition, holding, and capital gains taxes. With proper planning, accurate reporting, and use of double tax treaties, investors can minimize risks and optimize returns. This guide provides a solid foundation — but professional tax advice is strongly recommended for each individual case.

References & Sources:

• Multilaw – Real Estate Guide: South Korea
• InvestKOREA – Foreign Investment & Property Tax Incentives
• Korea National Tax Service – Non-Resident Tax Rules
• PWC Tax Summaries – Korea Other Taxes
• Global Property Guide – Korea Property Taxes & Costs
• Deloitte – Korea Highlights 2025