Three checks before accepting Korean compensation bonds
This calculator helps individuals who own or inherit land subject to a Korean public project review their funding before compensation negotiations.
A confirmed compensation amount does not necessarily mean the whole amount will arrive as cash.
Receiving part of it in bonds can affect debt repayment and replacement-property plans.
The tool first reviews absentee-owner status, then distinguishes possible and mandatory bond payment, and finally compares a sale with holding to maturity using verified inputs.
Read the results in this order
- Check the residency assessment and the evidence supporting any exception.
- Check whether bond payment is mandatory or depends on the operator choosing to use it.
- Split cash and bonds, then compare after-tax amounts at the same present date.
The tool does not determine an appraisal or establish the compensation award itself.
Enter land compensation only; exclude separate structures, business losses and relocation compensation.
A result withheld for unknown evidence identifies the information to obtain next.
All legal references concern South Korea and the 2026 rules described below.
Distinguish the project notice from the evidence-review date
Project-recognition notice date
This anchors the registration, residence, business and inheritance-exception checks under Article 26 of the Land Compensation Act Enforcement Decree.
Following the inheritance reference stated in an official LH compensation notice, the calculator checks the one-year inheritance exception at the project-recognition notice date; confirm the actual project notice and succession records.
The tool displays a calendar anniversary one year earlier, rather than simply subtracting 365 days.
If the owner moved between addresses, confirm that the full address history remained within qualifying areas.
Evidence-review date
This records the as-of date of the information under review.
Changing it does not move the inheritance reference away from the project notice or create a new exception measured from today.
Inheritance after notice requires separate review of succession and the prior ownership position; recent inheritance alone does not automatically establish an exception.
The input review is designed for an individual owner.
Corporations, associations, co-owners with different residence histories, and disputed or beneficial ownership need individual review.
Leaving evidence unverified prevents a fictional example from becoming a confirmed assessment of the actual case.
The qualifying area and the one-year residence check
Under Decree Article 26, the qualifying area includes the same city, autonomous district, town or township as the land, adjoining cities, autonomous districts, towns or townships, and other areas within a 30km straight-line distance from the land boundary.
Check the statutory treatment of administrative cities and towns or townships within urban-rural composite cities; everyday place names alone do not establish adjacency.
For the distance route, use the land boundary rather than the parcel centre or driving distance.
Exactly 30km is included, while a greater distance does not meet that route.
Registration and actual residence both matter
Check uninterrupted registration in a qualifying area from one year before the notice, together with actual residence.
Registration beginning a day after the boundary date, or not continuing through the notice, does not satisfy that registration route.
A person registered locally but not actually resident may still fall within the absentee rule.
Unknown registration history, location or actual residence is not treated as a satisfied condition.
For a registered person absent because of medical recuperation, conscription, public duties, schooling or a comparable unavoidable reason, verify whether the reason is accepted.
That reason alone does not bypass a missing registration requirement.
Without qualifying registration, review another route such as legally supported proof of continuous actual residence.
Evidence for inheritance, residence and business exceptions
Less than one year since inheritance at notice
Decree Article 26(3) provides an exception for inherited land when one year has not yet elapsed.
The calculator compares inheritance with the project-recognition notice date, but withholds this route on the exact first anniversary until the counting basis, time and operator treatment are confirmed.
For inheritance on February 29 with no matching calendar anniversary in the following year, the boundary is likewise not resolved by an arbitrary one-day choice.
A separately proven residence or business route can still support a non-absentee result.
Inheritance after notice requires succession review, not an automatic new exception.
Do not automatically substitute the land-registration filing date for the legally relevant inheritance date.
Confirm the inheritance documents and the reference applied to the actual project notice.
Continuous actual residence from one year before notice
A separate exception can apply when actual residence in a qualifying area throughout the required period is proved through the statutory methods.
Enforcement Rule Article 15 covers local-authority confirmation and objective records such as utilities, insurance contributions, telecommunications bills, transport use, school attendance and tax records.
Evidence of residence today does not establish the whole earlier period.
Land owned for the qualifying business
Confirm continuous actual business in a qualifying area from one year before the notice, ownership of the land for that business, and the required evidence.
Business registration and any necessary permit, licence or filing records must be supported by objective records such as tax or utility documents.
A business-registration certificate alone is not sufficient for the calculator to accept the exception.
A clearly established exception can support a non-absentee result without requiring every other exception to apply.
Conversely, an unknown exception that could change the outcome prevents a definitive absentee assessment.
Unknown is not the same as no exception.
When bond payment is possible and when it is mandatory
Land Compensation Act Article 63(7) allows the state, local governments and bodies specified in Decree Article 25 to pay bonds in defined circumstances.
For a recognized project, permission to pay an absentee owner the above-threshold land compensation in bonds must be distinguished from an obligation to do so.
Match all three mandatory-payment conditions
- The operator is Korea Land and Housing Corporation (LH), Korea Tourism Organization, Korea Industrial Complex Corporation or a local public corporation.
- The location is a city, county or autonomous district containing a land-transaction permission zone, or an adjoining city, county or autonomous district.
- The project is qualifying housing-site or industrial-complex development, or a logistics-complex, tourism-complex, urban-development, public-housing or administrative-capital construction project.
The state, a local government or another authorized issuer does not automatically fall within the narrower mandatory issuer group under Article 63(8).
If the mandatory conditions are not met, discretionary payment under Article 63(7) may still be possible.
Enter the actual payment decision of the operator in that case; an unknown decision does not establish either full cash or a bond split.
The 30km area used for absentee status is a different test from the mandatory bond-payment area.
Split cash using KRW 100 million plus confirmed tax cash
Principal allocation
Cash C = min(land compensation L, 100,000,000 + requested confirmed tax Q)
Bond principal B = L − C
When the absentee bond-payment rule applies, Decree Article 27 sets the basic cash threshold at KRW 100 million.
If the owner requests cash for the relevant capital-gains-tax amount supported by a certified tax accountant confirmation, the provision adds that confirmed amount to the basic threshold.
The statutory tax-equivalent amount includes the associated taxes specified by the provision.
Do not replace the confirmed amount with an informal percentage estimate.
Without an additional cash request, Q is zero.
A request with an unknown confirmed tax amount withholds the split rather than guessing it.
Land compensation of KRW 100 million or less produces no above-threshold bond principal under this rule.
Cash cannot exceed the compensation total, and cash plus bonds always equals the original land compensation.
Cash earmarked for tax payment is not all freely available for another purchase.
Maturity and the statutory interest benchmark for absentee bonds
Maturity of three years or less
Verify the three-year fixed-deposit rate for the month preceding bond issuance.
The statutory benchmark averages the rates applied by banks established under the Banking Act with nationwide operations.
A current promotional rate from a single bank is not the prescribed average.
Over three years and no more than five
Verify the average secondary-market yield on five-year government bonds for the month preceding issuance.
Both four- and five-year compensation bonds use this branch.
Article 63(9) limits the redemption period to five years.
The rates entered in this tool are user-verified inputs, not automatically retrieved current official figures.
The example rates of 3% and 3.5% are fictional assumptions.
The different rate branch for a non-absentee owner voluntarily requesting bonds is outside this absentee-bond comparison.
Compare an immediate sale with holding to maturity
The financial model assumes confirmed simple interest and a single payment of principal and interest at maturity.
Do not apply it unchanged to periodic coupons, compounding, different actual payment dates, accrued-interest pricing or other transaction-tax treatment.
The tool withholds the financial comparison when that payment structure is not confirmed.
Shared symbols and formulas
M = B × (1 + r × n)
S = M ÷ (1 + y)ⁿ − F
V = B + B × r × n × (1 − t)
PV = V ÷ (1 + k)ⁿ
Here r is the entered statutory benchmark, n is maturity in years, y is the assumed market yield and F is the sale fee.
The entered effective tax rate on interest is t; the personal opportunity-cost discount rate is k.
S is an estimated sale receipt, V is after-tax principal and interest at maturity, and PV is the present value of that maturity receipt.
Market yield and personal opportunity cost serve different purposes.
For an urgent debt repayment, also review the actual loan rate and the date cash is needed.
Compare the estimated sale receipt with an actual financial-institution purchase quote.
A sale fee greater than the estimated proceeds is treated as an error rather than a normal receipt.
2026 relief rates and annual / five-tax-year caps
The verified Restriction of Special Taxation Act Article 77 rates are 15% for cash, 20% for ordinary compensation bonds, 35% for qualifying maturity-holding agreements of at least three years, and 45% for qualifying agreements of at least five years.
Choosing to retain a bond does not by itself establish eligibility for the enhanced rate.
Confirm the covered law, compensation bond, maturity-holding account arrangement and application evidence under Enforcement Decree Article 72.
Eligibility and remaining relief capacity
The base conditions include qualifying acquisition at least two years before the relevant notice reference and a transfer by 2026-12-31.
Transfers before notice use the relevant transfer-date reference, and inherited or certain gifted property can use a predecessor acquisition date.
A single holding-period number cannot establish all these conditions.
Article 133(2) provides a KRW 200,000,000 cap per tax period and a KRW 300,000,000 cap across the current and preceding four tax periods for the relevant public-project relief.
Remaining cap = max(0, min(200,000,000 − A, 300,000,000 − A − H))
A is relevant relief already used earlier this year, and H is use in the preceding four tax periods.
Include current-year use once in the five-period calculation.
Aggregation for split transfers and competing relief requires tax-accountant review.
Enter the national capital gains tax before relief attributable to this land; the tool weights relief by the cash and bond shares.
Local income tax, special rural tax and other additional amounts are not automatically assessed.
Enter the verified additional tax separately for the sale and holding scenarios, including zero only when it is a confirmed figure.
Do not turn unknown tax into zero.
Breaking a maturity agreement can trigger recovery of relief and an interest-equivalent amount, so review early disposal before agreeing.
Fictional example: KRW 500 million compensation
Assume absentee status and the LH housing-site / mandatory-area conditions have been verified.
Land compensation of KRW 500,000,000 with a requested confirmed tax cash amount of KRW 20,000,000 splits into KRW 120,000,000 cash and KRW 380,000,000 bonds.
The three-year maturity, 3% benchmark, 5% market yield, 4% personal discount rate, zero fee and 15.4% effective interest tax rate are all example assumptions.
Assume KRW 60,000,000 national tax before relief, verified base and maturity-agreement eligibility, no prior relief use and zero additional tax in both scenarios.
Fictional KRW 500 million sale and maturity-holding comparison, final figures truncated to whole KRW| Comparison item | Immediate sale | Hold to maturity |
|---|
| National tax relief | 11,280,000 | 18,120,000 |
| Estimated sale receipt / after-tax maturity PV | 357,801,533 | 363,540,125 |
| Present amount including cash, after entered taxes | 429,081,533 | 441,660,125 |
After-tax principal and interest at maturity is KRW 408,933,200.
The difference between the two after-tax present amounts is KRW 12,578,592 after final whole-KRW truncation.
Do not directly compare the holding scenario nominal total of KRW 487,053,200 with the immediate-sale present amount.
National tax before relief and the confirmed amount for an additional cash request are separate inputs.
Zero additional tax here is a fictional assumption, not a statement that real transactions have none.
Different yields, quotes or additional taxes change the outcome.
Interpretation and scope
The sale present amount equals cash plus estimated sale proceeds minus the sale-scenario tax.
The holding present amount equals cash plus the present value of after-tax maturity proceeds minus the holding-scenario tax.
Both scenarios assume taxes are paid at the present date.
A positive holding advantage does not show that the owner can afford to wait when immediate cash is needed.
Keep nominal totals separate from present values, and pre-tax cash separate from cash remaining after payment.
Separate rules can define absentee ownership differently
A Land Compensation Act assessment does not automatically settle replacement-acquisition tax relief under the Restriction of Special Local Taxation Act.
Recheck the dates, registration and business requirements for the particular tax with the dedicated tool and authority.
The result does not establish a legal entitlement, final operator decision, market price or tax return amount.
Dates in 2027 or later use a fixed 2026-rule assumption where a reference is displayed.
In particular, transfers after the relief sunset require a new legal check.
Missing inputs do not turn into confirmed eligibility or zero amounts.
Frequently asked questions
Does changing resident registration remove absentee status?
Check continuous registration from one year before notice, the qualifying area and actual residence together.
Registration without actual residence or an accepted absence reason can still lead to an absentee assessment.
Does the inheritance exception include the first anniversary?
The tool checks elapsed time at the project-recognition notice date and withholds an exact first-anniversary boundary pending confirmation of counting, time and operator treatment.
Changing the evidence-review date does not move that reference.
A missing February 29 anniversary and inheritance after notice require separate period or succession review.
Does a distance over 30km disqualify an adjoining area?
The same-area and adjoining-area routes are assessed separately.
The 30km test covers other areas and does not replace a verified adjacency assessment.
Is every public-operator project subject to mandatory bonds?
No; match the narrower operator, location and project conditions under Decree Article 27-2.
For the state, local governments and other authorized issuers, review the discretionary-payment rule and the actual decision separately.
Must the tax cash amount fit inside the KRW 100 million threshold?
A qualifying requested amount supported by a tax accountant confirmation is added to the basic threshold.
Cash increases and bonds decrease within the compensation total; without the request and confirmation, the tool does not add an assumed tax amount.
Does holding for three years automatically give 35% relief?
Base eligibility, a qualifying maturity-holding agreement and the account and evidence requirements must all be satisfied.
Keeping a bond differs from executing the required agreement, and early breach can trigger recovery.
Why can the estimated sale amount differ from a bank quote?
The estimate discounts a simple-interest maturity payment using your assumed market yield.
Actual quotes, payment frequency, accrued interest, fees and taxes depend on the transaction; obtain a real purchase quote before deciding.
Can I enter zero or no for unknown information?
Use zero or not applicable only for confirmed facts.
Keep exceptions, tax figures and payment decisions unknown or blank until verified, and use the withheld-result explanation to find the missing evidence.
Official sources and verification date
Verified on 2026-11-08 against current National Law Information Center OPEN API texts.
Before applying a result, recheck the law relevant to the actual notice date, later amendments, the project compensation plan and the issued bond terms.
LH Busan Gangdong compensation-plan notice, page 3 is a 2021 official project notice identifying the project-recognition notice as the reference for the one-year inheritance exception.
It supports the inheritance-date convention, not current 2026 tax-relief or interest figures.
Confirm the actual project notice and inheritance or succession treatment with its operator.
- Land Compensation Act Article 63 — MST289333, effective 2026-09-08: discretionary and mandatory payment, maturity and interest
- Enforcement Decree Articles 25, 26, 27 and 27-2 — MST285977, effective 2026-05-12: issuers, absentee exceptions, threshold, tax cash and mandatory conditions
- Enforcement Rule Article 15 — MST261727, effective 2024-04-09: residence and business evidence
- Restriction of Special Taxation Act Articles 77 and 133 — MST284389, effective 2026-09-18: rates, eligibility, recovery and caps
- Tax Act Enforcement Decree Article 72 — MST288915, effective 2026-09-18: compensation bonds, holding accounts and applications
Documents and the next practical steps
- Gather address-history records, inheritance documents and evidence of actual residence or business.
- Ask the operator for the assessment basis and date, and written confirmation of mandatory versus discretionary payment.
- Confirm the accountant-certified extra cash request, preceding-month benchmark and actual bond payment structure.
- Verify maturity-agreement accounts and both tax scenarios, then compare actual sale quotes.
Review the compensation components with the land compensation calculator.
For a replacement purchase, check separate eligibility with the replacement-acquisition tax relief calculator.