The rate does not decide your capital gains tax — how the same ten years came to ₩0 and ₩100M

You held a home for ten years. How much did those ten years cut your tax? ₩0. Not one won.

Hold longer and the tax comes down. You have heard that, and it is broadly true. But there are cases where the whole of that relief disappears.

Capital gains tax is not settled by a rate. There are four steps. Work out the gain, take the deduction, apply the rate, add it up. The order is the same for everyone. Whoever runs the numbers goes through it in the same order.

First, the gain. ₩1.5B less ₩1B is ₩500M. That ₩500M is where today starts. Necessary expenses come off here too: the acquisition tax and agent commission you paid on the way in, and construction work that raised the value of the home. New wallpaper or a replacement sink does not count. It has to have raised the value or extended the life. Which is why you keep the receipts from the day the work is done.

Second, the deduction for how long you held. It is called the long-term holding deduction. Hold for more than three years and a little is deducted each year. Hold for ten and 20% of the gain is deducted. 20% of ₩500M is ₩100M.

That ₩100M can look small. But it is not tax. It is money taken off the base the tax is charged on. Cut the base by ₩100M and the tax multiplied on top of it falls by more than ₩40M. That is how the fact that you held it a long time turns into money.

Third is today's point. The surcharge. Own several homes in a regulated area and an extra rate is added on. But it is not only the rate that rises. The deduction you were getting disappears. The fact that you held for ten years does nothing to your tax. The full ₩500M gain becomes the base the tax is charged on.

This surcharge was suspended for four years from 10 May 2022. It applies again to homes sold on or after 10 May 2026. There are cases where it does not attach, such as a low-priced home outside the capital region or a home let out long term, among the grounds set by statute. Each ground carries its own conditions. Do not assume in advance that your home falls within one.

Fourth is the rate. The basic rate rises with the tax base, in eight bands from 6% to 45%. Crossing into a band does not put the higher rate on the whole amount; only the part above the line takes the higher rate. Today's case is three homes, so 30 is added to 40 and it becomes 70%.

There is something easy to get wrong here. Before the rate went up, the ₩100M deduction went away. That is the order it runs in. And 10% is added on top of the tax computed, as local income tax.

The base grows by ₩100M and the rate rises by 30 percentage points. Because the two move together, the gap opens to more than double.

The filing window is short too. A preliminary return is due within two months from the end of the month in which you sold. Miss it and penalty tax attaches.

That is the four steps: the gain, the deduction, the surcharge, the rate. Look only at the rate and none of this picture is visible. In today's case ₩208.18M turned on it, and that is money you could still have checked the day before you sold.

This video covers the standard case only. Homes received by inheritance or gift, and homes taken by expropriation, have their own rules. Have a professional confirm your position before you actually file.