Under the revised system approved during a Cabinet meeting, long-term homeowners and senior citizens encounter stricter caps on comprehensive real estate holding tax deductions and capital gains tax calculations.
Comprehensive Real Estate Tax Revisions and Senior Impact
The revised tax framework alters how senior single-home owners calculate their comprehensive real estate holding tax liabilities. Beginning next year, the ownership-period deduction rates will decrease, dropping to 10% for a holding period of five to 10 years, 20% for 10 to 15 years, and 25% for 15 years or more. Conversely, residency deductions offer higher rates of 20%, 40%, and 50% for the same respective brackets, with the government planning to eliminate ownership-based deductions entirely by 2028.
Furthermore, the government is establishing hard caps on comprehensive real estate tax deductions. According to the Ministry of Economy and Finance proposals, the deduction limit drops to 800만원 next year and will tighten to 6 million won by 2028. Song Joo-young, a tax specialist at Yuanta Securities, notes that taxpayers must evaluate whether their cash flow and existing tax-deferral options can offset these rising obligations before making any decisions to sell their properties.
Capital Gains Tax and Long-Term Holding Deductions
Property owners considering a sale must also factor in concurrent changes to the long-term holding special deduction for capital gains tax. According to government plans, the current system—which allows up to an 80% deduction from capital gains at a rate of 8% per year split evenly between residency and ownership—is transitioning into a long-term residency deduction. By 2028, the deduction will adjust to 6% for residency and 2% for ownership, and by 2029, it will apply exclusively to the residency period.
Compounding this shift, deduction caps are shrinking. The maximum deduction amount will be limited to 20억원 in 2028 and lowered to 10억원의 한도 by 2029. Song Joo-young explains that because these caps and rates change annually, taxpayers owning high-value homes with substantial capital gains need to compare actual tax liabilities across different potential sale timelines rather than relying solely on nominal deduction percentages.
Tax Deferral Options for Cash-Strapped Owners
To assist asset-rich but cash-poor taxpayers, the revised framework expands eligibility for the comprehensive real estate tax payment deferral system. According to the Ministry of Economy and Finance, single-home owners aged 65 or older who have lived in their primary residence for at least 10 years can apply to defer their tax payments regardless of their income level, provided their tax burden exceeds specified thresholds.
Song Joo-young points out that this deferral mechanism does not erase the tax liability. Instead, it postpones payment until the property is sold, gifted, or inherited, serving primarily as a liquidity management tool rather than a permanent tax reduction.
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