On transferring land or buildings, a preliminary return of the capital gains tax base is due within two months from the last day of the month of transfer (Income Tax Act, Art. 105(1)1). A non-resident’s domestic-source gains on real estate are taxed by classification in the same way as a resident’s (Art. 121(2)).
The clock starts at month-end, not on the sale date
The most common error is counting the two months from the date of transfer. Article 105(1)1 of the Income Tax Act requires a return of the capital gains tax base within two months from the last day of the month in which the transfer date falls. The trigger is month-end, not the transfer date itself. If the balance was received on 5 March, the period runs from 31 March — so the preliminary return is due by 31 May. Counting from 5 March would give 5 May, which is merely early and therefore harmless; misreading "the last day of the month of transfer" as the following month-end, however, overruns the deadline. Where land in a transaction-permit zone is paid for before permission is granted, the clock instead runs from the last day of the month containing the permission date (or the date the zone designation is lifted, if that happens first).
When the final return can be skipped — and when it cannot
Article 110(1) requires a taxpayer with capital gains for the year to file a final return between 1 and 31 May of the following year. Article 110(4) then allows anyone who filed a preliminary return to omit the final return — except in cases prescribed by Presidential Decree, "such as where two or more preliminary returns for assets subject to progressive rates are filed in the same taxable period". In practice that exception bites when more than one property is sold in a single year: an apartment and a commercial unit disposed of before leaving Korea for good, or an inherited share transferred in parts. Even where each preliminary return was filed, the gains must be aggregated and the progressive rate applied, so a final return settles the difference. If two or more disposals are planned, it is worth first considering whether to split them across calendar years.
Individual buyers do not withhold; corporate buyers do
A non-resident’s domestic-source income is generally settled by the payer withholding at source. Article 156(1) requires a payer of a non-resident’s domestic-source income not attributable to a domestic place of business to withhold income tax on payment and remit it by the 10th of the following month. But the same paragraph expressly excludes, in parentheses, "residents and non-residents paying domestic-source gains on the transfer of real estate under Article 119(9)". An individual buyer of property is therefore not a withholding agent. A corporate buyer, by contrast, is not excluded: under item 5 of the same paragraph it withholds 10% of the amount paid, or, where the acquisition cost and transfer expenses are confirmed, the lesser of 10% of the amount paid and 20% of the gain. No withholding is made where the seller proves the tax was prepaid or that the gain is exempt or below the taxable threshold (Art. 156(15)). Where the buyer is an individual, nothing is deducted and settled by the buyer, so the duty to file and pay remains with the seller; and even where a corporate buyer has withheld, the seller’s own filing obligation still has to be checked. Article 121(2) further provides that a non-resident with domestic-source gains on the transfer of real estate is taxed by classification in the same way as a resident, so the computation itself resembles the resident case. Living abroad does not reduce the filing obligation.
The real obstacle on long-held property — proving acquisition cost
What moves the liability most is not the rate but the acquisition cost. The gain is the transfer price less acquisition cost and deductible expenses, so a cost that cannot be proved produces a gain larger than the real one. This arises constantly in overseas-Korean cases: property bought in the 1980s or 1990s, acquired by inheritance or gift with no contract from the time, or documents lost across moves and emigration. Capital expenditure is often missed too — extensions and structural changes that raised the value can be deductible, but few people still hold the invoices from decades ago. So the first task before signing a sale contract is to gather as much acquisition evidence as possible. There is often room to reconstruct it from entries in the property registry, historical acquisition and registration tax records, and bank records. What is accepted varies by case, which is why reviewing it before contract is the safer order.
Check whether resident status might actually apply
Preparation sometimes begins on the assumption of non-residence and then turns on review. Article 1-2(1) defines a resident as an individual with a domicile in Korea or a place of residence there for 183 days or more. Domicile is judged by where life is centred, independently of day count, so short presence can still support residence where the family, occupation and main assets are in Korea. The resident/non-resident line changes not only the capital gains treatment but also overseas financial account reporting and whether foreign-source income is aggregated. Even for a single property, it is better to settle the status first.