A revision to the Enforcement Decree of the Income Tax Act, including Article 167-3, took effect on Oct. 1, 2026, introducing a disposal deadline for tax benefits on registered rental apartments located in areas designated for tighter housing rules. The change follows the tax reform package the government announced on Aug. 3. Under the previous rules, owners of apartments registered as rental properties under the Special Act on Private Rental Housing and tax law could claim the benefits with no limit on when they sold, as long as they had met the mandatory rental period. The law was rewritten to encourage more of these units in designated areas to come onto the market.
A higher capital gains tax rate for multiple-homeowners took effect after Aug. 3, 2017, with a suspension from May 10, 2022, to May 9, 2025. In practice, however, it had no effect on registered rental operators. Owners of these registered rental apartments, often described as sitting in a blind spot of the higher tax rate, had paid little attention to repeated tax changes over the years. The latest revision serves as a wake-up call, setting a disposal deadline intended to close that gap.
As a result, registered rental operators will have to watch market conditions and set a strategy for selling these apartments. The main points of the revision are as follows.
First, the core of the revision is that owners must sell their registered rental apartment within a set period to keep the existing exemption from the higher tax rate. There are two main standards. In principle, the apartment must be sold by Dec. 31 next year to retain the benefit. In particular, if the rental registration has already been canceled, or if the mandatory rental period ends by Dec. 31 this year and the registration is canceled, the unit must be transferred by Dec. 31 next year to qualify for the exemption.
There are exceptions in which the deadline is extended. These apply when the mandatory rental period has not ended as of Jan. 1 next year, or when the location of the rental property has been newly designated as an area subject to tighter housing rules. An exception is also allowed for properties undergoing rebuilding or redevelopment, in recognition that selling by Dec. 31 next year may not be realistic in such cases. Owners are given one year to sell, counted from the latest of the following: the end date of the mandatory rental period, the date of the designation notice, or the date of the transfer notice.
Second, because the rules apply only to registered rental apartments in designated areas, properties that are not apartments, or apartments located outside designated areas, continue to receive the benefit with no disposal deadline, as before. If an owner bought an apartment, rented it out immediately, completed the mandatory rental period and then sold it with a capital gain of 100 million won, the tax burden varies widely by timing, as shown in the table above.
Finally, as the above shows, the revision phases out the benefits for registered rental apartments in designated areas. Its purpose is to apply the same tax rules that cover ordinary multiple-homeowners from Jan. 1, 2029, apart from exceptional cases.
Not addressed here, but registered rental apartments often come bundled with other benefits, such as preferential treatment under the special long-term holding deduction. Because selling past the deadline set in the revision could sharply increase the tax burden compared with the current treatment, owners should draw up a sale plan in advance, weighing future market conditions and further tax changes.
