How capital gains tax works when the purchase price is unknown
This calculator is based on Korean rules: the 2026 Income Tax Act and its Enforcement Decree as checked on 2026-10-29.
When selling land bought decades ago or a house held by parents for a long time, the first obstacle is usually the acquisition price.
The contract is lost, there was no actual-price reporting system at the time, and nothing proves what was paid.
Korean tax law does not treat the cost as zero; it estimates it by applying comparable sales, appraisals and the converted acquisition value in order.
The calculator computes the most commonly used of these, the converted acquisition value, from the sale price and the official standard values at both dates, and automatically chooses between the 3% estimated deduction and documented expenses.
For buildings you built yourself or extended by more than 85 m², it also checks the 5% conversion surcharge on sales within five years.
If you enter the price you expect an old contract to show, it compares both filing methods and shows the break-even price at which searching for evidence pays off.
Three questions this tool answers
- What are capital gains tax and local income tax if I file with the converted value?
- Is the tax difference large enough to justify searching for old contracts and bank records?
- For a new building, how many days must completion move to avoid the 5% surcharge?
Order of acquisition values: conversion is a last resort, not a choice
Many people think the converted value is one tax-saving option, but the law does not work that way.
Income Tax Act Article 97(1)1 makes the actual transaction price the rule and applies the following order only when that price cannot be confirmed.
- Actual transaction price: the price confirmed by contracts, receipts, financial records or registration cause documents.
- Comparable sale price: sales of identical or similar assets within three months before or after acquisition (Decree Article 176-2(3)1).
- Appraised value: an appraisal dated within three months of acquisition; for assets with a standard value of KRW 1 billion or less a single appraisal firm suffices (item 2).
- Converted acquisition value: the actual sale price multiplied by the ratio of standard values (item 3).
- Standard value: applied last when none of the above is available.
That is why the calculator first asks about your evidence and about comparable sales or appraisals.
If you select “actual price confirmed”, the converted result is hidden and only the actual-price tax is shown; if comparable values exist, converted figures are marked as reference only.
Converted value formula and standard value inputs
Formula (Decree Article 176-2(2)2)
Converted value = actual sale price × standard value at acquisition ÷ standard value at sale
Example: KRW 800 million sale price × KRW 120 million ÷ KRW 400 million = KRW 240 million.
Land
Multiply the individual official land price per m² for each year by the area.
Land bought before individual land prices were first published on 1990-08-30 needs the Decree Article 164 grade-based value, so confirm the computed figure with the tax office.
Houses and buildings
Detached houses use the individual house price, apartments the apartment price, and other buildings the NTS standard value.
Houses acquired before the first housing price publication in 2005 need the Decree Article 164(7) computed value.
If you bought the land first and built later, add the land value at the land acquisition date and the building value at the use-approval date, and enter the sum as the acquisition standard value.
The building share of the converted value then splits by the same ratio and feeds the surcharge calculation below.
Comparing the 3% estimated deduction with actual expenses
When filing with the converted value, a fixed estimated deduction replaces receipts for acquisition tax, brokerage and repairs.
Article 97(2)2 of the Act and Decree Article 163(6) set the following rates.
Estimated deduction rates by asset| Asset | Base amount | Registered | Unregistered |
|---|
| Land | Official land price at acquisition | 3% | 0.3% |
| House (incl. attached land) | Official house or apartment price at acquisition | 3% | 0.3% |
| Other buildings | NTS standard value at acquisition | 3% | 0.3% |
If you spent heavily on extensions or remodeling over a long holding period, actual capital expenditure can exceed the estimated deduction.
The proviso to Article 97(2)2 lets you use capital expenditure plus transfer costs when the converted value plus the estimated deduction is smaller.
The calculator compares both totals, applies the larger and shows which path was selected.
Easy to miss
Choosing the actual-expense path removes the converted value itself; only capital expenditure and transfer costs remain.
It helps only in the rare case where capital expenditure exceeds the converted value.
New builds and extensions: the 5% surcharge within five years
Owners who built a house themselves often lack complete construction receipts and want to file with the converted value.
Income Tax Act Article 114-2 adds 5% of the building (or extension) converted value to the determined tax when a building is newly built or extended by more than 85 m² of floor area and sold within five years using an appraisal or converted value.
Scope
New buildings, or extensions over 85 m² of total floor area.
Purchased buildings and land are excluded.
Amount
Building converted value × 5%.
The land share is not charged.
Even with no tax
It applies even if no tax is computed, for example on a loss (paragraph 2).
For example, if a house approved for use on 2022-03-10 has a building converted value of KRW 120 million, the surcharge is KRW 6 million.
The fifth anniversary is 2027-03-10, and the calculator suggests completion on 2027-03-11 or later as the conservative safe date.
Moving the completion date by a few days can save millions of won, so check before signing.
Inputs and step-by-step use
- Asset and cause: choose land, house or non-residential building and confirm it was purchased or built.
Inherited and gifted assets are excluded.
- Evidence status: choose “cannot be confirmed”, “still searching” or “confirmed”.
- Dates: enter the acquisition date and the sale date (the earlier of balance payment and registration).
Holdings before 1985-01-01 count from the deemed acquisition date.
- Values: enter the actual sale price, both standard values, documented capital expenditure and transfer costs.
- Actual-price comparison: when searching, enter the price you expect evidence to show plus acquisition costs such as acquisition tax and brokerage.
- Construction: for houses and buildings, enter whether you built or extended, the use-approval date and the building share of the acquisition standard value.
- Save: download the TXT review sheet for an adviser meeting or the preliminary return.
For houses, the household home count, residence period and regulated-area status feed the same engine as the general calculator: the single-home exemption up to a KRW 1.2 billion sale price, high-value apportionment and long-term deductions up to 80%.
Fictional example: converted filing versus actual-price filing
Assume land acquired on 1998-05-20 is sold on 2026-11-30 for KRW 800 million.
The standard value was KRW 120 million at acquisition and KRW 400 million at sale, transfer costs are KRW 8 million, and an old contract is expected to show KRW 200 million plus KRW 10 million of acquisition costs.
Converted versus actual-price filing for the fictional land sale| Item | Converted filing | Expected actual price |
|---|
| Amount treated as acquisition cost | KRW 240,000,000 | KRW 210,000,000 |
| Other necessary expenses | KRW 3,600,000 (estimated) | KRW 8,000,000 (transfer) |
| Capital gain | KRW 556,400,000 | KRW 582,000,000 |
| Long-term deduction 30% | KRW 166,920,000 | KRW 174,600,000 |
| Tax base (after KRW 2.5 million allowance) | KRW 386,980,000 | KRW 404,900,000 |
| Capital gains tax (40%, KRW 25.94 million progressive deduction) | KRW 128,852,000 | KRW 136,020,000 |
| Local income tax 10% | KRW 12,885,200 | KRW 13,602,000 |
| Total burden | KRW 141,737,200 | KRW 149,622,000 |
Here the converted filing is KRW 7,884,800 lower and the break-even actual price is about KRW 225.6 million.
Searching for evidence reduces tax only if a contract above that amount is likely to turn up.
If evidence of a lower actual price already exists, you must not file with the converted value; if it surfaces later you pay the difference plus the under-reporting penalty.
When to use it
Selling old rural land
Estimate tax before the preliminary return on farmland or forest bought in the 1990s and decide whether a separate non-business land check is needed.
A self-built country house
If use approval was under five years ago, see the surcharge and safe date and negotiate the completion date with the buyer.
Selling for parents
While the family searches for papers, compute the converted tax and break-even price first to decide which records to chase.
Preparing for an adviser
The TXT sheet records inputs and statutory references, shortening the consultation and catching standard value errors early.
Cautions and scope
- The non-business land surcharge (+10 percentage points), the 70% rate for unregistered transfers and reliefs are not modeled.
For land, check the non-business land calculator separately.
- Land and non-residential buildings held under two years need short-term rates (50%/40%), so the decision is withheld.
- For new houses where land and building dates differ, the long-term deduction uses the single acquisition date entered.
A shorter building holding period may mean a smaller actual deduction.
- The producer-price comparison for pre-1985 acquisitions (Decree Article 176-2(4)) is not computed.
- 2027 sales are compared under fixed 2026 rules and may change with legislation.
- Local income tax is 10% of the computed tax; local-tax penalties and late-payment charges are excluded.
Frequently asked questions
Without a purchase contract, must I always file with the converted value?
No.
Income Tax Act Article 97(1)1 proviso allows comparable sales, appraisals and then the converted value only when the actual price cannot be confirmed.
If registration cause documents, bank transfers or the previous owner’s tax return confirm the actual price, that price must be used.
Where do I find the official standard values?
For land, multiply the individual official land price per m² by the area; detached houses use the individual house price, apartments the apartment price, and stores or officetels the NTS standard value on Hometax.
Use the same method for both the acquisition and the sale date so the ratio is not distorted.
What is the 3% estimated deduction applied to?
It applies to the official standard value at acquisition, not the sale price.
Decree Article 163(6) sets 3/100 of the land price at acquisition for land and of the standard value at acquisition for buildings and houses (3/1,000 for unregistered assets).
Can large renovation costs replace the estimated deduction?
If the converted value plus the estimated deduction is smaller than documented capital expenditure plus transfer costs, the latter may be used as necessary expenses (Article 97(2)2 proviso).
The converted value then drops out entirely, so the calculator compares both totals and applies the larger automatically.
How do I tell whether five years have passed since construction?
A new building is usually acquired on its use-approval date (or the earlier temporary-use approval); an extension on the extension date.
Day-counting conventions can shift the result by one day, so the calculator treats the fifth anniversary itself as inside the window and suggests the next day as a conservative safe date.
If the sale is a loss and no tax is due, is the surcharge also zero?
No.
Article 114-2(2) applies the surcharge even when no capital gains tax is computed.
Whether it applies when the sale is fully exempt, such as the single-home exemption, needs confirmation with the tax office, so the calculator shows the amount conditionally.
Can inherited land use the converted value?
Inherited or gifted assets use the valuation under the Inheritance and Gift Tax Act at the inheritance or gift date as their acquisition cost (Decree Article 163(9)).
This calculator therefore excludes them and points you to the valuation in the inheritance or gift tax return.
What happens if I file with the converted value and the actual price surfaces later?
The tax office reassesses using the actual price and adds a 10% under-reporting penalty (40% for fraudulent conduct, Framework Act on National Taxes Article 47-3) plus late-payment interest.
The calculator’s recapture card shows the additional tax and the ordinary penalty based on your expected actual price.
Official sources, effective versions and items to recheck
Checked on 2026-10-29.
Through the Korean National Law Information OPEN API we queried the Income Tax Act MST280405 (effective 2026-01-01, current), its Enforcement Decree MST290841 (effective 2026-10-01, current) and the Framework Act on National Taxes MST289999 (effective 2026-10-02, current).
Because the statutory formula is published as an image, it was cross-checked against the National Tax Service guidance.
Recheck the published standard values, whether the actual price can be confirmed, comparable sales or appraisals, use-approval dates and extension area, and non-business land status for every transaction.
Results are whole-KRW budgeting estimates and do not replace a filing or assessment.
Decide on evidence and timing, then prepare the preliminary return
If a contract above the break-even price may exist, request registration cause documents and financial records first; otherwise prepare the preliminary return with the converted computation within two months after the end of the month of sale.
Within five years of construction, agreeing a completion date after the safe date with the buyer is the simplest saving.
Know the actual price? Use the general capital gains tax calculator