South Korea Capital Gains Tax Guide 2026

Capital Gains on Securities — General Rules

The taxation of capital gains from securities depends on the type of stock and the shareholder's status:

• Listed stocks (KOSPI, KOSDAQ, KONEX): Gains of small shareholders (those holding less than 2% of shares or KRW 1 billion in market value) are generally tax-exempt. Large shareholders (1%+ or KRW 1B+) are taxed at 6–45% (IIT brackets) with a KRW 2.5M annual basic deduction.
• Unlisted stocks: All gains are taxable at IIT progressive rates (6–45%) regardless of shareholding size.
• Derivatives and futures: Gains from derivatives trading are taxed at a flat 15.4% (10% surtax included) for individuals, or included in comprehensive taxation under certain circumstances.

Large Shareholder Surcharge

Large shareholders (대주주) face additional compliance obligations and potential surcharges. A large shareholder is defined as a person who owns directly or indirectly 1% or more of the total shares of a listed company, or whose acquisition cost exceeds KRW 1 billion. For large shareholders:

• Gains are included in comprehensive IIT at 6–45% rates
• A KRW 2.5 million annual basic deduction applies to securities gains
• Obligation to report and pay in the annual global income tax return by May 31
• Holding period is irrelevant for securities (no special deduction)

The financial investment income taxation regime (금융투자소득세), originally scheduled for 2023, has been postponed. As of 2026, the existing regime remains in place, with small shareholders continuing to enjoy tax exemption on listed stock gains.

Capital Gains on Real Estate (양도소득세)

Real estate capital gains are taxed separately under the transfer income tax regime. The tax is calculated on the net gain (selling price minus acquisition price, incidental costs, and holding period deductions). The applicable rates follow the IIT brackets (6–45%), with key variations:

• General rate: 6–45% based on the IIT bracket structure
• Short-term gains: Property held less than 1 year — 70% tax rate (50% if held 1–2 years)
• Multi-homeowner penalty: Additional 10–30% surcharge
• Unregistered land: 70% penalty rate
• One-household exemption: Fully exempt for houses held 2+ years with gain under KRW 1.2B (as of 2026)

Holding Period Relief — Real Estate

A key feature of property capital gains tax is the long-term holding special deduction (장기보유특별공제):

• Holding period 3–15+ years: 2% deduction per year of gain (up to 30% max)
• For one-household homeowners: up to 80% deduction for holding 15+ years, including an additional factor for age
• The deduction applies to the net gain before applying the tax rate

Calculation Example — Securities (Large Shareholder)

A large shareholder sells KOSPI shares: acquisition cost KRW 500M, selling price KRW 800M, gain KRW 300M. After the KRW 2.5M basic deduction, taxable gain = KRW 297.5M. This is included in global income and taxed at IIT rates (e.g., at 38% less progressive deduction, plus 10% resident surtax).

Calculation Example — Real Estate

A person sells an apartment held for 8 years: acquisition KRW 400M, selling KRW 700M, gain KRW 300M. Holding period deduction: 8×2% = 16% × KRW 300M = KRW 48M. Net gain = KRW 252M. Tax is calculated at IIT rates (6–45%) on this amount plus 10% resident surtax. Filing due within 2 months of sale.

Reporting and Payment

Securities gains (large shareholders): Reported in the annual global income tax return due 31 May of the following year. No withholding at source — gains are calculated by the taxpayer.

Real estate gains: A preliminary return (예정신고) is due within 2 months of the sale, with tax paid at that time. A final return (확정신고) may be filed with the annual global income return. Failure to file within 2 months results in a 10–40% negligence penalty plus daily interest.

FAQs

Do I pay tax on KOSPI stock gains as a small investor?

No, gains on listed stock trades by small shareholders (holding less than 2% or KRW 1B) are tax-exempt as of 2026. This exemption does not apply to unlisted stocks or derivatives.

What qualifies as a large shareholder?

A shareholder holding 1% or more of a listed company's total shares, or whose total acquisition cost exceeds KRW 1 billion.

What is the one-household exemption for property gains?

If you have owned one house for 2+ years and the gain is under KRW 1.2 billion, the gain is fully exempt from capital gains tax. This is one of Korea's most valuable tax benefits for homeowners.

How long do I have to pay CGT on a property sale?

You must file and pay the preliminary return within 2 months of the sale date. Late filing incurs penalties of 10–40% plus daily interest.

Disclaimer

This guide provides general information about South Korean capital gains tax for the 2026 tax year. Tax laws and rates may change. Always consult with a qualified Korean tax advisor (세무사) or the NTS directly for advice specific to your situation. InvestmentKit does not provide tax advice.