Owner-Occupied Home Tax Exemption May Disappear by 2027

However, this tax law amendment now places a time limit on these benefits.

The heavy taxation exclusion benefit, previously applied to multi-homeowners when disposing of long-term rental housing based on Article 167-3, Paragraph 1, Subparagraph 2 of the Enforcement Decree of the Income Tax Act, will only be maintained if the property is disposed of by the end of 2027.

Previously, if a property was disposed of within one year from the date of rental housing registration cancellation, it qualified for heavy transfer income tax exemption. However, this amendment abolishes the previous principle.

Under the new criteria, properties that have already met the automatic cancellation requirements must be disposed of by the end of 2027 to receive the heavy taxation exclusion benefit. Properties not yet canceled must be disposed of within one year from the date of future cancellation.

With this tax law amendment, automatically canceled apartments must be disposed of by the end of 2027 to be exempt from heavy taxation. Since the owner-occupied home tax exemption also presupposes the heavy taxation exclusion rule, it is interpreted that tax exemption can only be applied if the property is disposed of by the end of 2027. After the end of 2027, the effect of heavy taxation exclusion may be lost.

This was directly mentioned by a Ministry of Economy and Finance official at a debate held on September 3rd at the National Assembly Members' Office Building.

Therefore, the owner-occupied home tax exemption follows the heavy taxation exclusion rules for registered rental housing. With the deadline for these rules set at the end of 2027, the maintenance of tax exemption benefits has become unclear. In particular, there has been no clear answer yet on whether the condition of disposal within five years, as stipulated in the Enforcement Decree, will continue to be maintained.

This acts as a significant variable in the disposal plans for owner-occupied homes of multi-homeowners who own rental properties.

Since the law has not yet been finalized, taxpayers who own rental housing need to respond cautiously.

The government plans to announce a clear stance on this issue during the future process of concretizing the tax law amendment, and will re-notify if any changes occur accordingly.