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South Korea Reshapes Property Taxes and Adds Production Tax Credits

The package aims to shift relief to resident single-homeowners to raise modest revenue for incentives that strengthen onshore manufacturing

The skyline of central Seoul is seen during a foggy day in Seoul March 4, 2015. South Korea's central bank cut interest rates for the first time in five months on Thursday in a surprise move, joining the ranks of other economies which have recently taken advantage of lower inflation to ease monetary policy to spur sluggish growth. Picture taken on March 4, 2015. REUTERS/Kim Hong-Ji/File Photo
Rep. Jung Hee-yong, secretary-general of the main opposition People Power Party, speaks during a floor meeting on July 24, 2026. (Yonhap)
A person takes a photo of apartment complexes in Seoul in this file photo taken July 19, 2026. (Yonhap)
Finance Minister Koo Yun-cheol (R) speaks during a press conference on the government's tax code proposals in the central city of Sejong on July 30, 2026, in this photo released by the Ministry of Finance and Economy. (PHOTO NOT FOR SALE) (Yonhap)

Overview

  • The finance ministry unveiled the 2026 tax code revision package Monday, replacing the current home-count comprehensive real estate holding tax with a combined value-based system to be phased in from 2027 and fully applied in 2028.
  • Under the proposal holding-tax rates would be unified at 0.5%–5% based on total taxable value, the basic deduction for owner-occupiers would rise to 1.4 billion won while the deduction for non-resident single-home owners would fall to 900 million won.
  • Capital gains relief would be reworked so deductions are based only on years of residence with a cap of 2 billion won in 2028 and 1 billion won from 2029 and an annual residence deduction rate set at 8% starting in 2029.
  • The package creates production-based income and corporate tax credits through 2036 for six strategic sectors including solar, wind, secondary batteries, semiconductors, key materials and AI robots and projects an additional 3.44 trillion won in revenue from 2027 to 2031.
  • The plan moves quickly through a public comment window and scheduled reviews with a vice-ministerial review on Aug. 27, Cabinet review on Sept. 1 and planned submission to the National Assembly by Sept. 3 while opposition parties call it punitive and warn higher holding taxes could be passed to renters.