#A retiree in his 70s, identified as A, spent 200 million won from his severance pay 15 years ago to buy miscellaneous land along a provincial roadside. He then leased it long term to a local yard operator, collecting 1 million won in monthly rent to use as living expenses in retirement. Recently, after seeing that the market price of the land had risen to 500 million won, he planned to sell it to cover hospital bills and retirement funds, but he hesitated after reviewing the new tax reform plan.
Starting in 2028, as the tax standards on non-business-use land are tightened, the tax burden is expected to rise for many older people—especially retirees—who have bought land for retirement planning or asset preservation. Non-business-use land refers to land that, under the tax code, is deemed to be held for speculative purposes because the owner does not farm it directly for the original purpose of farmland or does not live in the area where the farmland is located. Whether the owner resides in the village and farms the land personally is the criterion. Typically, miscellaneous land or vacant lots, farmland not farmed directly, and forest land separated from the residence fall into this category.
Under the current system, even for non-business-use land held long term for more than three years, up to 30% of capital gains is deducted depending on the holding period. However, for transfers on or after Jan. 1, 2028, the special long-term holding deduction will be abolished. Whether the holding period is 10 or 20 years, a 0% deduction rate will apply. The aim is to curb speculation by increasing the tax burden on land unrelated to productive activity and to guide idle land released to the market to connect directly or indirectly to the supply of dwellings.
In addition, the additional tax rate on capital gains from non-business-use land will double. Specifically, on top of the basic capital gains tax rate (6%–45%), the punitive surtax rate imposed on individuals' gains from selling non-business-use land will be raised from the current 10 percentage points (p) to 20 p. As a result, the top marginal rate in the highest taxable bracket will surge to 71.5% including local government tax (65% national tax + 6.5% local tax). Even for typical middle-income brackets, taxes of around 60% will apply.
In other words, if A sells this land after the revision takes full effect in 2028, the capital gains tax will nearly double. If he sells by the end of 2027 under current law, the tax would be about 87.62 million won, but if the sale slips into 2028, it would be about 167.87 million won—an increase of roughly 80.25 million won. In this case, out of the 500 million won sale price, A's net proceeds after tax would fall from the 412 million won range to the 332 million won range.
The problem is that many older people, who hold two-thirds of Korea's land assets, could be hit directly by this revision. According to the "land ownership status statistics at the end of 2025," released last month by the Ministry of Land, Infrastructure and Transport, people aged 60 and older hold 67.1% of the area of domestically owned private land. In particular, while the share of land held by those in their 70s and older is increasing, the share for those in their 50s and younger is declining. By land category, 92% of privately owned land was concentrated in forest land (57.6%) and farmland (34.4%).
There are many reasons they buy land. A common one is investing in "rent without buildings," where, instead of buildings like apartments or commercial units that require complex management, they buy provincial miscellaneous land or factory sites and lease them as logistics warehouses, parking lots, or yards to earn monthly revenue. Another case is purchasing land for rural life after retirement or for a weekend farm, but then leaving it idle because they cannot meet the requirements for actual residence and direct cultivation due to health reasons or family opposition. Some inherited farmland or forest land in their hometowns but, living in cities, cannot farm directly; others bought forest land near planned provincial development zones with expectations of rising land prices to prepare retirement funds.
An industry official said, "Unlike apartments, provincial land is less liquid and can take years just to find a buyer, and deals are tied up by the remaining term of leases with existing tenants, making it unrealistic to dispose of properties within 2027," adding, "Supplementary measures are needed, such as a grace period or easing the criteria for recognizing business use to reflect reality."