When Will the Long-Term Holding Special Deduction Be Reduced? Grace Period and Closing Date Rules Explained
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This article is based on the latest reports and official materials available as of 2026-07-19 Korea Standard Time.
The long-term holding special deduction is not being reduced immediately. As of 2026-07-19, the government has not yet finalized or announced the deduction rates, properties subject to the changes, or implementation date.
Although the government is discussing measures to reduce holding-period deductions for high-value homes that are not owner-occupied, proposals also include introducing a grace period and implementing the changes gradually rather than making immediate, across-the-board reductions.
If you are planning to sell your home, the question you need to consider now is not simply whether you should rush to sign a contract.
Which tax rules actually apply will depend on the implementation date, the timing of the property transfer, and the transitional provisions in the supplementary provisions of the amended law.
How Is the Long-Term Holding Special Deduction Currently Calculated?
The long-term holding special deduction allows property owners who have held real estate for an extended period to deduct part of their capital gains when calculating taxable capital gains income.
For ordinary land and buildings held for at least 3 years, deductions start at 6% and increase according to the holding period. Properties held for at least 15 years qualify for a maximum deduction of 30%.
Different requirements apply to 1-household, 1-home owners. When calculating taxable capital gains on high-value homes, both the holding period and the period of actual residence are taken into account separately.
| Category | Annual Deduction Rate | Maximum Deduction Rate |
|---|---|---|
| Holding period | 4% per year | 40% |
| Residence period | 4% per year | 40% |
| Total | Calculated based on holding and residence periods | Up to 80% |
If you have owned a property for at least 10 years and lived in it for at least 10 years, the 40% holding-period deduction and 40% residence-period deduction can be combined for a maximum deduction of 80%.
Conversely, if you have owned the property for a long time but lived in it for only a short period, you cannot receive the full maximum deduction.
The deduction rate is not determined solely by whether you qualify as a 1-household, 1-home owner. Individual circumstances must also be considered, including the acquisition date, period of residence, transfer price, and whether you temporarily owned 2 homes.
Proposed Reform Direction: Prioritizing Residence Over Ownership
The current discussion focuses less on eliminating the entire long-term holding special deduction and more on reducing benefits granted for periods of ownership without actual residence.
For example, a key issue is whether it is appropriate to grant the same holding-period deduction to a high-value home owned for 10 years without being occupied by its owner and a home in which the owner actually lived for 10 years.
What has been officially confirmed is that the government is gathering opinions on the following issues.
Whether to reduce long-term holding benefits for homes that are not owner-occupied
Whether to adjust deduction rates or deduction limits for ultra-high-value homes
Whether to give greater weight to the residence period than the holding period
Whether to adjust property holding taxes, acquisition taxes, and capital gains taxes together
Although reports suggest that reductions in holding-period deductions for non-owner-occupied homes are likely, neither the extent of the reductions nor the properties affected has been finalized.
Therefore, it is too early to conclude that the deduction for holding a property for 10 years will be eliminated or that only a maximum of 40% will apply starting next year.
What Happens to Buyers and Sellers Already Under Contract If the Deduction Is Reduced Immediately?
A real estate transaction cannot be completed on the same day a policy is announced.
After listing a property for sale and finding a buyer, the price
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