Rental Registration Cancellation and Capital Gains Tax in Korea — A Sale Deadline Just Appeared

With rental registration cancellation, the first thing to check is the deadline. Until recently, a purchased rental apartment whose registration was cancelled automatically could be sold at any time. The rental period requirement was treated as met on the day of cancellation, so the multi-home heavy capital gains rate never applied no matter when it was sold. An amendment to the Income Tax Act Enforcement Decree, dated 30 September 2026 and in force from 1 October, added a deadline. To avoid the heavy rate, the unit now has to be sold by 31 December 2027.

There is more than one deadline. The new one applies to the heavy-rate exclusion. The exemption that treats your own home as a single house, setting aside the rentals, requires selling that home within five years of cancellation. And if you cancelled voluntarily, the heavy-rate exclusion runs for one year after cancellation. Mixing these up is easy.

Below I quote the Income Tax Act Enforcement Decree, the Restriction of Special Taxation Act, and the Special Act on Private Rental Housing directly and lay the deadlines out. I had in mind operators who registered around 2018 and whose registrations were recently cancelled automatically. One more note: the tax reform package announced on 3 August 2026 would lower the heavy rates and cut back the long-term holding deduction. That part adds a new Article 97-11 to the Restriction of Special Taxation Act, so it has to pass the National Assembly. As of 9 November 2026 that article is not in the law. Every figure below is based on the law currently in force.

How automatic and voluntary cancellation differ

Automatic cancellation happens on its own when the term ends

The Special Act on Private Rental Housing, as amended on 18 August 2020, abolished two categories: four-year short-term private rental housing, and long-term general private rental housing where the unit is a purchased apartment (eight years). Apartments classed as urban-living housing were not affected, and long-term general rentals of detached houses, multi-family houses, row houses and other non-apartments stayed.

Existing registrations in those categories are handled by Article 6(5) of the same Act.

Long-term general private rental housing under Article 2(5) of the former Special Act on Private Rental Housing, where the unit is an apartment acquired for rental, and short-term private rental housing under Article 2(6), shall have its registration cancelled on the day the mandatory rental period ends.

You do not apply and you are not notified. When the date comes, the registration is gone. Units whose mandatory period had already ended before the amendment were treated as cancelled on 18 August 2020. A constitutional complaint argued that this violated property rights, but the Constitutional Court rejected it on the ground that the provision does not take away tax benefits already received.

The short-term private rental housing in today's law has the same name but is a different scheme. It was brought back for non-apartments only, and the current Article 2(6)-2 defines it as housing rented "for six years or more." Long-term general private rental housing is now ten years. Since these are not the old four and eight years, check the category and dates on your own registration certificate first.

Voluntary cancellation is something you apply for during the term

Article 6(1)11 of the same Act lets an operator in the two abolished categories apply to cancel the registration before the mandatory period ends. If there is a lease in place at the time, the tenant has to agree.

Cancellation does not free you from every obligation straight away. Article 6(6) treats a cancelled operator as "a rental business operator under this Act in relation to the tenant until the term of the lease already concluded expires." The 5 percent rent limit and the limits on refusing renewal stay in place until that lease ends.

The multi-home heavy rate is back

It helps to start with why the deadlines matter now. The temporary suspension of the multi-home heavy capital gains rate, which had been in place since 2022, ended on 9 May 2026. Article 167-3(1)12-2(a) of the Income Tax Act Enforcement Decree reads "housing transferred by 9 May 2026," and only transitional rules based on the contract date remain. Where the land needs a land transaction permit, the permit had to be applied for by 9 May 2026 with the sale contract and deposit evidenced. Where no permit is needed, the contract had to be signed by 9 May 2026 and the sale completed within four months of the contract date (six months in some areas).

The current heavy rates are in Article 104(7) of the Income Tax Act: the basic rate plus 20 percentage points for a two-house household, and plus 30 for three or more. Each subparagraph refers to "housing located in an area subject to adjustment," so housing outside a designated adjustment target area is not subject to the heavy rate.

Before 9 May, whether the tax benefits survived cancellation hardly mattered, because the heavy rate itself was suspended. Now it can make a large difference to the tax bill.

The heavy-rate exclusion now has a 31 December 2027 deadline

Article 167-3(1)2 of the Income Tax Act Enforcement Decree lists, item by item, the long-term rental housing excluded from the heavy rate. The proviso before the list handles automatic cancellation like this:

… where registration is cancelled on the day the mandatory rental period ends under Article 6(5) of the Special Act on Private Rental Housing, the lease-period requirement set out in the relevant item shall be deemed satisfied on the day the mandatory rental period ended.

That part has not changed. What changed is a condition inside the items. Items (a)2, (b)2, (d)8 and (e)4 contain the same sentence: if the unit is an apartment acquired for rental, it must "be transferred by the deadline under paragraph (11)." Paragraph (11), added on 30 September 2026, sets that deadline.

The deadline under items (a)2, (b)2, (d)8, and (e)4 of paragraph (1)2 and under the second sentence of subparagraph 3 of the same paragraph shall be 31 December 2027. Provided, where the housing falls under any of the following, the deadline shall be the later of 31 December 2027 and the day specified in the relevant subparagraph.

The deadline moves later in three cases:

• If the mandatory rental period ends on or after 1 January 2027, one year from the date of automatic cancellation
• If the unit is in an area newly designated as an adjustment target area on or after 1 January 2027, one year from the public notice (areas already designated on 31 December 2026 do not count)
• If the unit is in a reconstruction, redevelopment or small-scale housing improvement project with association approval or a management disposal plan approved, one year from the transfer notice date

Whichever date is latest becomes the deadline.

Two points are easy to miss. First, the deadline only applies to apartments. A non-apartment registered as four-year short-term housing and then cancelled automatically is not "an apartment acquired for rental," so it has no sale deadline. Second, voluntarily cancelled housing is covered separately by item (g), and the proviso in item (a)2 defers to it: "where the housing falls under item (g), the transfer deadline under that item shall apply." Item (g) reads:

… housing whose registration is cancelled on the rental operator's application for cancellation within the mandatory rental period (limited to cases where the operator has rented it for at least one half of the mandatory rental period under Article 43 of that Act) and which is transferred within one year after cancellation of registration. In this case, the requirements of the relevant item other than the lease-period requirement must still be met.

The last sentence matters. Cancellation only waives the rental period requirement. The others still have to be met, such as a published price of 600 million won or less when the lease started (300 million won outside the Seoul metropolitan area) and rent increases of no more than 5 percent.

What you are trying to keep	Automatic cancellation	Voluntary cancellation
Heavy-rate exclusion (purchased apartment)	Sell by 31 December 2027 (later if an extension applies)	Rented at least half the mandatory period, sell within one year of cancellation
Heavy-rate exclusion (non-apartment)	No sale deadline	Rented at least half the mandatory period, sell within one year of cancellation
One-house exemption on your own home	Sell your home within five years of cancellation	Rented at least half the mandatory period, sell your home within five years of cancellation

The exemption on your own home runs on a different clock

The rule that sets the rentals aside and treats the one home you live in as your single house is Article 155(20) of the Income Tax Act Enforcement Decree. Paragraph (23) deals with cancelled rentals.

… where registration is cancelled for any of the following reasons, the housing shall be treated as long-term rental housing satisfying the lease-period requirement, and paragraph (20) shall apply, only where the primary residence is transferred within five years after the cancellation of registration (where two or more units of long-term rental housing are rented, after the cancellation of the first unit to be cancelled).

This applies to both automatic cancellation and voluntary cancellation (with at least half the period rented). If you have two or more rental units, the five years start from the first cancellation. Counting from a later one could put you past the deadline.

A sentence was added here on 30 September 2026 too: the requirements in "items (a)2, (d)8, and (e)4" of Article 167-3(1)2 do not apply. In other words, the 31 December 2027 deadline does not apply to the exemption on your own home. The same day's amendment gave the heavy-rate exclusion a new deadline but left this exemption at five years from cancellation.

The long-term holding deduction is 50 percent

The long-term holding deduction for long-term general private rental housing is in Article 97-3 of the Restriction of Special Taxation Act. The current text gives a 70 percent deduction where a privately constructed rental unit is registered by 31 December 2027 and rented continuously for at least ten years. The eight-year, 50 percent tier is no longer in the current text.

So what about a purchased rental apartment cancelled automatically at eight years? The National Tax Service answered this in ruling 사전-2024-법규재산-0768 (31 December 2024). It said that where long-term general private rental housing registered on or before 31 December 2020 was cancelled automatically, the unit can be treated as registered and rented for eight years under the former Article 97-3(2) of the Enforcement Decree (before its 28 February 2023 amendment), even if sold on or after 28 February 2023, so the former Article 97-3 applies. The rate for eight years is 50 percent. The 70 percent rate is for ten or more years of continuous rental.

It also matters what the deduction applies to. Article 97-3(5) of the Enforcement Decree limits the rate to the gain that arose during the rental period, calculated using published prices. It is not 50 percent of the whole gain. Any rise before registration gets the ordinary rate. The special rate also replaces the ordinary rate rather than being added on top.

The conditions are in Article 97-3(3) of the Enforcement Decree: rent and deposit increases of no more than 5 percent, a unit no larger than national housing scale, at least ten years of rental from the start date, and a total published price of 600 million won or less when the lease started (300 million won outside the Seoul metropolitan area). An increase cannot be claimed within a year of the last one, and conversions between deposit and rent follow Article 44(4) of the Private Rental Housing Act. If you went over 5 percent in any year, you may lose the deduction, so it is worth going back over past renewals using the per-item 5 percent cap when raising deposit and rent together.

If the property is a shop rather than a home, a different statute governs the lease terms. See how commercial lease conversion differs from housing.

What to check after rental registration cancellation

1. Look at the category and dates on your registration certificate: whether it was former short-term rental housing or former long-term general rental housing for an apartment, and when the mandatory period ended. Everything below depends on these.
2. Check whether it is an apartment. If it is, the heavy-rate exclusion has the 31 December 2027 deadline. If not, it does not.
3. Check whether it is in an adjustment target area. If it is not, the heavy rate never applied, so the deadline makes no difference.
4. If you own the home you live in, note the date of the first cancellation. The exemption deadline is five years from that date.
5. Make sure you never broke the 5 percent rent rule. It still has to be met after cancellation.
6. Work out the long-term holding deduction on the gain from the rental period only. Gathering the published price records early will save time when you file.
7. Ask in advance if you are unsure. As with the ruling above, you can set out your facts and get an advance answer. It costs less to ask before selling than to dispute it afterwards.

Closing

Rental registration cancellation comes with three deadlines, not one. For purchased rental apartments, the heavy-rate exclusion runs until 31 December 2027. The exemption on your own home runs for five years from cancellation. If you cancelled voluntarily, the heavy-rate exclusion runs for one year from cancellation. The long-term holding deduction treats automatic cancellation as eight years of rental, giving 50 percent on the gain during the rental period.

The new deadline has only been in force for a little over a month, and the rate cuts in the reform package still depend on the National Assembly. With rental registration cancellation, getting out your registration certificate and cancellation date already settles half of it. Go through the steps above once and you will not miss a deadline simply because you did not know about it.