🚨 Second Home Tax Benefits

Today Korean Social News for Beginners | 2025.08.17

0️⃣ Local Real Estate Investment Support and Population Decline Area Policy

📌 Gangneung and Tongyeong Also Get Second Home Tax Benefits... Lower Barriers for Local High-End Housing Investment

💬 The government greatly expanded second home tax benefits by adding 9 population decline areas including Gangneung, Sokcho, Gyeongju, and Tongyeong. The benefit criteria now apply to properties with acquisition prices up to 1.2 billion won and official prices up to 900 million won, covering most high-end houses and vacation homes in local areas. This is expected to increase investment demand in local real estate markets due to tax savings. At the same time, LH expanded purchases of unsold units, and SOC preliminary feasibility study standards were relaxed to boost local construction economies. The government aims to reduce Seoul metropolitan area concentration and achieve balanced regional development.

💡 Summary

• Second home tax benefits reduce taxes when buying a second house outside the Seoul metropolitan area.
• Benefit criteria expanded to acquisition prices up to 1.2 billion won, covering most local high-end houses.
• Focuses on population decline areas to boost local real estate investment and balanced regional development.

1️⃣ Definition

Second Home Tax Benefits means a government support system that reduces tax burdens like acquisition tax, transfer tax, and property tax when buying a second house in local areas outside the Seoul metropolitan area. 'Second Home' refers to a vacation home or second house owned for rest and leisure outside one's main residence.

This system was introduced to spread population and capital concentrated in the Seoul area to local regions and revitalize real estate markets in areas suffering from population decline. While heavy taxes usually apply to second house ownership, designated areas can receive tax benefits similar to those for single homeowners.

💡 Why is this important?

• Greatly reduces tax burden on local real estate investment, improving investment accessibility.
• Contributes to economic revitalization and prevention of regional extinction in population decline areas.
• Reduces Seoul metropolitan area concentration and promotes balanced regional development.
• Expands opportunities for personal asset portfolio diversification and local residence.

2️⃣ System Expansion Details and Benefit Scope

📕 Second Home Tax Benefit Expansion Status

• Target areas were greatly expanded. Key changes include:

  • 9 areas were added to existing major cities like Sejong, Busan, Daegu, Gwangju, Daejeon, and Ulsan.
  • Gangneung, Sokcho, Gyeongju, Tongyeong, Seocheon, Boryeong, Taean, Gochang, and Wando were newly designated.
  • Most are tourist destinations or coastal areas with high second home demand.
  • Currently, 89 cities and counties are designated as population decline areas receiving benefits.

• Benefit criteria were realistically adjusted. Key details include:

  • Acquisition price criteria expanded 4 times from 300 million won to 1.2 billion won.
  • Official price criteria also apply up to 900 million won, including high-end houses.
  • This brings most local houses into the tax benefit range.
  • Vacation homes and expensive real estate can also receive benefits, increasing investment appeal.

📕 Specific Tax Benefits and Tax Savings

• Acquisition tax reductions greatly reduce initial burden. Key benefits include:

  • Housing acquisition tax is usually 1.1~3.0%, but greatly reduced in second home areas.
  • For a 1.2 billion won house, acquisition tax alone can save 10~20 million won or more.
  • Additional taxes like special rural tax and local education tax are also reduced for large total savings.
  • Applied immediately upon acquisition, greatly reducing initial cash burden for investment.

• Property tax and transfer tax benefits make long-term investment advantageous. Key details include:

  • Excluded from comprehensive real estate tax or greatly reduced tax rates.
  • Single homeowner special treatment applies for transfer tax calculation, allowing long-term holding deductions.
  • Excluded from multiple homeowner heavy taxation, applying general tax rates.
  • Can receive transfer income tax exemption or major reductions when held for 3 years or more.

💡 Key Features of Second Home Tax Benefits

1. Acquisition Tax Reduction: Major acquisition tax reduction applied up to 1.2 billion won
2. Property Tax Exclusion: Excluded from multiple homeowner heavy taxation, reducing holding burden
3. Transfer Tax Benefits: Transfer tax savings through single homeowner special treatment
4. Regional Limits: Benefits only apply in designated population decline areas
5. Residence Requirement: Must actually live there for a certain period annually to maintain benefits

3️⃣ Real Estate Market Impact and Policy Effects

✅ Expected Effects of Local Real Estate Market Activation

• Local real estate investment demand is expected to increase greatly. Key changes include:

  • Expanded tax benefits are expected to boost local house purchases by Seoul area residents.
  • Vacation home and pension investments will increase around tourist areas like Gangneung, Gyeongju, and Tongyeong.
  • Expanded benefit scope to high-end houses will increase high-income participation in local investment.
  • Positive effects expected for local construction industry through unsold unit resolution and new development activation.

• Regional economic activation and population inflow effects can be expected. Key effects include:

  • Regional commercial areas will be activated by regular visits from second home owners.
  • Employment increases expected in related industries like construction, real estate, and tourism.
  • Some may lead to actual population increases through complete relocation after retirement or workations.
  • Local tax revenue increases and improved regional fiscal health are also expected.

✅ Government's Comprehensive Local Support Policy

• Aiming for synergy effects through expanded unsold unit purchases and SOC investment. Key policies include:

  • LH expanded purchases of local unsold housing units for market stabilization.
  • SOC preliminary feasibility study standards were relaxed for the first time in 26 years to increase local infrastructure investment.
  • Projects can now proceed without preliminary studies for total project costs up to 100 billion won and fiscal support up to 50 billion won.
  • Enhanced appeal of local residence through expanded living infrastructure like transportation, culture, and sports facilities.

• Promoting long-term balanced regional development and efficient land use. Key goals include:

  • Resolving Seoul metropolitan area overcrowding while revitalizing areas at risk of regional extinction.
  • Encouraging retired generation relocation to local areas to bring vitality to aging regions.
  • Supporting local settlement linked with new work cultures like remote work and workations.
  • Pursuing overall quality of life improvement through balanced national development.

4️⃣ Related Terms

🔎 Population Decline Areas

• Population decline areas are a system where the government provides special support to local governments with continuously decreasing population.
  • Population decline areas refer to special management areas designated under the 'Population Decline Area Support Special Act' implemented in 2022. Areas with population decline rates of 20% or more over 20 years, 15% or more over the recent 5 years, or elderly population ratios of 30% or more are targeted.
  • Designation criteria include: First, long-term population decline rate criteria for areas with 20% or more population decrease from 1995 to 2015. Second, short-term population decline rate criteria for areas with 15% or more decrease from 2010 to 2015. Third, aging rate criteria for super-aged areas with 65+ population ratios of 30% or more. Fourth, fiscally vulnerable areas with financial independence rates below 25%.
  • Currently, 89 cities and counties nationwide are designated as population decline areas, receiving various benefits including tax benefits, expanded fiscal support, improved living conditions, and job creation support. The government is working to prevent regional extinction and restore regional vitality through this system.

🔎 Comprehensive Real Estate Tax

• Comprehensive real estate tax is a national tax imposed on high-value real estate owners.
  • Comprehensive real estate tax is a holding tax imposed when the combined official price of houses and land owned by individuals or corporations exceeds certain criteria. This tax, introduced in 2005, aims to recover unearned income from real estate holdings and suppress real estate speculation.
  • Tax criteria include: First, for houses, tax applies when combined official prices exceed 600 million won (900 million won for single homeowners). Second, for land, tax applies when combined official prices exceed 500 million won. Third, multiple homeowners face higher tax rates, with heavy taxation for owning 2 or more houses in adjustment target areas.
  • With second home tax benefits, local houses are excluded from comprehensive real estate tax calculation or recognized as single homeowner status, greatly reducing tax burden. This allows even multiple homeowners to avoid heavy comprehensive real estate taxation when investing locally, greatly increasing investment incentives.

🔎 Preliminary Feasibility Study

• Preliminary feasibility study is a system that verifies the feasibility of large-scale public projects in advance.
  • Preliminary feasibility study refers to procedures where the government comprehensively reviews economic efficiency, policy necessity, and balanced regional development before pursuing large-scale new projects costing 50 billion won or more. This system, introduced in 1999, is a mechanism to prevent budget waste and improve investment efficiency.
  • Evaluation criteria include: First, economic analysis where benefit-cost ratio must be 1.0 or higher. Second, policy evaluation assessing policy necessity and implementation will. Third, balanced regional development effects reviewing impact on balance between Seoul metropolitan area and non-metropolitan areas.
  • The government's relaxed standards now exempt projects with total costs up to 100 billion won and fiscal support up to 50 billion won from preliminary studies. This enables rapid promotion of living SOC projects like transportation, culture, and sports facilities in local areas, expected to contribute to local development and real estate value increases.

5️⃣ Frequently Asked Questions (FAQ)

Q: What conditions are needed to receive second home tax benefits?

A: You must buy a house meeting certain requirements in designated population decline areas and fulfill actual residence obligations.

• There are key conditions for receiving second home tax benefits. First, you must buy a house in one of 89 cities/counties designated as population decline areas. Second, the house must have an acquisition price of 1.2 billion won or less, or official price of 900 million won or less. Third, one household can own only 1 second home. Fourth, you must actually live there for 30+ days annually or 3+ days monthly to maintain benefits. Fifth, it must be used only for residential purposes, with rental or commercial use potentially restricted.
• Residence obligation fulfillment is verified through resident registration, health insurance, communication bills, electricity bills, etc. Violating conditions may result in retroactive tax charges, so thorough review is needed before purchase. It's also good to consider the local housing market situation and living infrastructure carefully for prudent decisions.

Q: How much tax can actually be saved when investing in second homes?

A: Though it varies by house price and holding period, you can expect tax savings in the hundreds of millions.

• Specific tax savings vary by house price and situation. For example, when buying a 1 billion won house: First, acquisition tax is usually 11~30 million won but mostly exempted with second home benefits. Second, comprehensive real estate tax would cost hundreds of thousands annually for multiple homeowners, but second homes are recognized as single homeowner status and exempted. Third, transfer tax applies general rates (6~45%) instead of multiple homeowner heavy taxation (50~60%) and allows long-term holding deductions.
• Calculated for 5-year holding: acquisition tax savings 10~30 million won, annual comprehensive real estate tax savings 5~20 million won, transfer tax savings 100~300 million won, totaling 200~500 million won in tax benefits. However, these are rough estimates and actual amounts vary based on individual income levels, other real estate holdings, residence, and various other factors.

Q: Which areas are most advantageous for second home investment?

A: It's good to prioritize areas with good tourism infrastructure and high future development potential.

• When selecting advantageous areas for second home investment, multiple factors should be comprehensively considered. First, places with good tourism infrastructure and accessibility like Gangneung (beaches, ski resorts), Gyeongju (cultural heritage), and Tongyeong (coastal tourism) are representative. Second, places accessible within 2-3 hours from the Seoul area have higher actual usage rates. Third, areas with future transportation infrastructure improvements or tourism development plans have high real estate value appreciation potential. Fourth, you should choose places with relatively stable regional economies and basic living infrastructure.
• Regional selection based on investment purpose is also important. For rest and residence purposes, consider places with good natural environments and medical facilities; for expected trading profits, consider new cities or special tourism zones with development plans. It's also advisable to carefully review local real estate market trends, rental demand, and future supply plans for prudent investment decisions.

Table of Contents

• Go to Guide