Compare selling Korean farmland now with selling after entrustment
This Korea-based farmland sale-timing calculator helps owners and families compare an immediate sale, a future sale after Farmland Bank entrustment, and a sale on the same future date without additional entrustment.
It connects non-business land classification with capital gains tax, rental receipts, holding costs and the value of receiving money at different dates.
All money is in KRW and calculations freeze the verified Korean 2026 rules.
A smaller tax bill does not necessarily leave you better off after years of waiting.
Rent may be offset by holding costs, falling land prices and the opportunity cost of delayed sale proceeds.
The result is a comparison statement for the entered facts and assumptions, not a tax return or an approval to entrust farmland.
Use consistent assumptions across three options
Sell now
Sell on the reference date at the current assumed price.
Recognized ownership history and a separately confirmed immediate-sale reduction apply.
No rent or holding costs after disposal are added.
Entrust, then sell
Use bank entrustment before the future sale date.
Recognized entrustment days affect the land test, while rent, fees and post-reference holding costs affect cash flow.
Hold, then sell
Use the same future date, price and disposal expenses as the entrustment option.
Do not add the additional entrustment interval or its rental receipts.
Continue to include holding costs.
The tax difference between the two future options isolates the classification effect at the same sale date.
Comparing an immediate sale with a future sale also requires distinguishing nominal proceeds from present value.
Rental receipts already earned before the reference date are not added again as future income.
Eight years creates recognized days, not a blanket exemption
Distinguish intended contracts from qualifying history
Income Tax Act Enforcement Decree Article 168-8(3)(9) covers farmland entrusted by an individual to Korea Rural Community Corporation for eight years or more and leased or lent for use.
NTS interpretation Real Estate Transaction Management Division-627 treats the qualifying entrustment period as residence and self-cultivation for the non-business land test.
It does not convert every day of ownership into business use or cancel capital gains tax.
NTS interpretation Property Tax Division-2642 allows aggregation of entrustment periods between acquisition and disposal.
A gap or renewed contract therefore does not automatically mean a legal restart.
This calculator supports one confirmed interval belonging to the present owner; multiple intervals, vacancies and ownership changes require a review beyond its supported model.
Enter the recognized start and end confirmed from actual entrustment and leasing or use-lending records.
A consultation booking or contract-signature date is not automatically the recognized start.
For example, a confirmed start of 2026-11-07 gives an eight-year reference anniversary of 2034-11-07.
This is not a guarantee that closing on that date meets the legal test; confirm the counting method and actual termination and disposal dates.
Check inherited-land exceptions before deciding to wait
Eight years of residence and direct cultivation by an ascendant or spouse
Decree Article 168-14(3)(1-2) can exclude qualifying inherited or gifted farmland from non-business land treatment.
Confirm the lineal-ascendant or spouse relationship, eight-year residence and direct-cultivation records, acquisition basis and urban-area exclusion.
When this route is established, review whether another eight years of entrustment is needed merely to avoid the surcharge.
Keep unresolved evidence as unresolved rather than selecting a negative answer to force a result.
The initial three years after inheritance
Article 168-8(3)(2) covers qualifying inherited farmland under the Farmland Act where three years have not elapsed since inheritance commenced.
Those initial recognized days remain part of the historical period test at a later disposal date.
The three-year boundary is a review reminder, not an automatic final date for avoiding the surcharge.
Inherited cultivation time for the separate self-cultivation reduction has different conditions and statutory wording.
Tax comparisons support one registered farmland parcel owned by an individual in a confirmed supported area: non-urban land or qualifying greenbelt or development-restriction areas.
Other urban farmland has additional designation and inheritance rules, so an unresolved location remains a review case.
Lawful farmland ownership, leasing eligibility and bank acceptance require separate confirmation from this tax classification.
Apply the ownership-period conditions together
Decree Article 168-6 does not simply ask whether the land was used for half of its ownership.
All listed non-business-period conditions for the applicable ownership band must be met.
The result still depends on confirmed land, location and exception facts.
Non-business land period conditions by ownership duration| Ownership | Additional non-business-period conditions | Share of total |
|---|
| At least 5 years | More than 2 years in the last 5; more than 1 year in the last 3 | Over 40% |
| At least 3, below 5 years | Total exceeds ownership minus 3 years; more than 1 year in the last 3 | Over 40% |
| At least 2, below 3 years | Total exceeds ownership minus 2 years | Over 40% |
| Below 2 years | Omit the ownership-minus-2-years condition | Over 40% |
Periods are checked in days rather than approximate month totals.
Overlapping inheritance, confirmed residence and cultivation, and qualifying entrustment intervals are merged so the same day is not counted twice.
A leap-year boundary where calendar-year counting and a 365-day conversion change the verdict is sent for individual review instead of selecting the favorable result.
Match inputs to ownership, contract and cultivation records
Acquisition and dates
Use the purchase acquisition date or inheritance commencement date and the verified tax acquisition cost or inheritance valuation.
The immediate-sale reference date, recognized entrustment start and end, and future sale date are separate inputs.
Inherited property has a predecessor-acquisition rule for short-term tax rates, so the predecessor date may also be needed.
Do not assume that the short-term holding clock and long-term deduction clock start together.
Prices and expenses
Use a realistic current price for the whole parcel.
Enter the purchase price or inheritance valuation separately from already-paid allowable acquisition expenses and capital improvements.
Already-paid acquisition expenses reduce taxable gain but are not subtracted again from cash received at disposal.
Disposal expenses contain only allowable amounts payable for this sale; they reduce both taxable gain and sale cash.
Do not duplicate amounts already included in acquisition price, already-paid acquisition expenses, bank fees or recurring holding costs.
Annual land-price growth is an assumption, not a promised return; test negative growth as well as positive growth.
Rent, fees and evidence
Annual rent is the total for the parcel rather than a price per area unit.
Use the bank-confirmed exemption or contract fee; the 12% limit in Annex 1 is a ceiling, not a universal fee.
This percentage-based cash-flow model covers paid rental entrustment, to which the 12% ceiling applies.
Use-lending entrustment has a separate fixed-fee rule under Decree Article 19-8 and Annex 1 that is not automatically modeled here.
Free use does not guarantee zero contract costs; confirm the actual applicable costs before comparing options.
Keep unresolved land scope, ownership, lease history and other taxable disposals in the same year marked for review.
Entering an assumed answer does not establish the legal facts or eligibility.
Follow the national and local capital gains tax calculation
- Capital gain = sale price − acquisition price or inheritance valuation − already-paid allowable acquisition expenses − expenses payable for disposal
- Long-term deduction = positive gain × Table 1 deduction rate
- Taxable base = gain − long-term deduction − remaining basic deduction
- National tax before reduction = the applicable progressive or required short-term comparison amount, whichever is larger
- National tax after reduction = tax before reduction − confirmed immediate-sale reduction within remaining limits
- Local income tax under the frozen 2026 assumption = 10% of national tax after reduction
Income Tax Act Article 95 Table 1 starts at 6% for at least three years of ownership, adds two percentage points per completed year, and reaches 30% at fifteen years.
Enter the remaining annual basic deduction for each option, up to KRW 2,500,000; do not reuse a deduction already consumed elsewhere.
Progressive rates by taxable-base ceiling are 6% through KRW 14 million, 15% through 50 million, 24% through 88 million, 35% through 150 million, 38% through 300 million, 40% through 500 million, 42% through one billion and 45% above it.
Non-business land adds ten percentage points to the progressive rates.
Registered ordinary land held below one year has a 50% short-term rate, and at least one but below two years a 40% rate, subject to the statutory comparison.
A loss produces zero taxable base for this parcel, without completing any loss aggregation with other disposals.
Displayed KRW amounts are reference calculations and can differ from return-level rounding, other credits and penalties.
Use only a professionally confirmed self-cultivation reduction
Special Tax Treatment Control Act Article 69 requires more than cultivation years: residence, income tests, farmland at disposal, and location or designation conditions also matter.
Decree Article 66(11) and (12) address inherited cultivation time when an heir continuously cultivates for at least one year, or sells without that cultivation by the day three years after inheritance.
Neither eight years of parental farming nor eight years of bank entrustment alone creates an automatic reduction here.
The immediate-sale reduction input must be an amount whose full eligibility and eligible tax have been confirmed.
Article 133 limits reductions to the remaining KRW 100 million for the tax year and KRW 200 million over the current and preceding four tax years, as well as the tax on this disposal.
The future options assume no new self-cultivation and apply no such reduction.
A confirmed inherited-land exclusion from non-business status is not confirmation of the separate reduction.
Article 167-2(1) of the Restriction of Special Local Taxation Act provides the local capital-gains-income tax reduction at 10% of the final national reduction through 2026-12-31.
Calculating local tax as 10% of national tax after reduction therefore freezes this 2026 provision.
Before an actual future disposal, recheck whether the provision has been extended and what law applies then.
Include rental cash flow and present value
Future price and sale cash
The future price compounds the current price at the assumed annual land-price change for the elapsed time.
Sale cash is price less expenses payable for disposal and disposal taxes.
Acquisition price and already-paid acquisition expenses reduce taxable gain but are not subtracted again from cash received on the sale date.
Cash proceeds therefore differ from taxable gain or the overall return measured from acquisition.
Timing of receipts and costs
Subtract confirmed bank fees from rent over the modeled interval, and account separately for holding costs after the reference date.
Holding costs can continue without rent and also apply to the simple-hold option.
Taxes related to rental income and differences in actual contract payment schedules are excluded, so net rent is not a guaranteed after-tax receipt.
Present value discounts future cash to the reference date.
A 0% discount rate removes the time discount; a higher positive rate lowers the current value of distant sale proceeds and rental receipts.
Economic elapsed years and partial years use actual days divided by 365.2425.
Receipts and costs are modeled at annual reference-date anniversaries and the final stub-period end, so an exact eight-calendar-year interval can differ slightly from eight times an annual amount.
Supported assumptions are −50% to 50% annual land-price change, 0% to 30% discount rates and a future horizon up to thirty years; these are tool limits, not legal ceilings or recommended investment assumptions.
The break-even land-price growth rate is the annual change at which the entrustment option has the same present value as an immediate sale, holding other assumptions constant.
It is not a forecast or a guaranteed minimum return.
If there is no solution within the −50% to 50% annual-growth search range or unresolved classification evidence prevents calculation, no forced numeric answer is supplied.
How to use the calculator
- Check the registry, inheritance records and land-use plan for ownership, dates and the supported area.
Review any ascendant or spouse cultivation exclusion before committing to a waiting period.
- Enter the confirmed entrustment and lease recognition interval and inspect the eight-year reference anniversary.
Do not combine vacancies, separate contracts or predecessor ownership into an unsupported continuous interval.
- Separate the current sale price, acquisition price, already-paid acquisition expenses and expenses payable at disposal, then enter supported annual rent, fees and holding costs.
Example values are fictional, not market prices or bank quotes.
- Inspect how inheritance, residence and cultivation, and entrustment days occupy the trailing three-year and five-year windows.
Enter a tax reduction only after its eligibility and amount are confirmed.
- Reduce the land-price growth assumption, try a negative rate and change the discount rate.
Separate the same-date surcharge difference from the present-value comparison with selling now.
- Save the inputs and comparison statement for the bank, agent and tax adviser.
Confirm actual recognition, closing and return amounts, then update the law and evidence before the real future sale.
Worked check: surcharge at the same taxable base
Assume registered ordinary farmland owned for at least fifteen years, a KRW 100,000,000 gain and a remaining KRW 2,500,000 basic deduction.
The 30% long-term deduction is KRW 30,000,000, leaving a taxable base of KRW 67,500,000.
This isolates the rate difference without reductions, other disposals or short-term rates; it does not determine the land-use classification of a real parcel.
Hypothetical capital gains tax at a KRW 67,500,000 taxable base| Item | Business-use assumption | Non-business assumption |
|---|
| Progressive rate | 24% | 34% |
| Progressive deduction | KRW 5,760,000 | KRW 5,760,000 |
| National tax | KRW 10,440,000 | KRW 17,190,000 |
| Local income tax | KRW 1,044,000 | KRW 1,719,000 |
| Total | KRW 11,484,000 | KRW 18,909,000 |
The difference is KRW 7,425,000: KRW 6,750,000 of national tax plus KRW 675,000 of local tax.
An actual sale eight years later can have a different price, deduction, taxable base and discount effect, so this is not a universal saving from entrustment.
Even a lower future tax bill can accompany a lower present value after price falls or the cost of waiting.
Interpret results within the supported scope
- A confirmed inherited-land exclusion can make the incremental surcharge benefit of entrustment small or zero.
Rent, management effort and immediate cash needs can still matter.
- Selling long after entrustment ends can reduce recognized days in the trailing three-year and five-year windows.
Completing eight years once does not guarantee business-use treatment for every later sale.
- Corporate or unregistered property, expropriation, exchanges, co-ownership, other urban-area exceptions and multiple recognition intervals are outside automatic classification.
Gift carryover rules and predecessor-period exceptions can also require withholding a final tax result.
- Other taxable disposals in the year or unresolved evidence can pause complete tax totals, rankings and break-even rates.
Review required means neither zero tax nor rejection by the bank.
- Farmland ownership and leasing eligibility, disposal duties, minimum contract terms and ledger updates are separate issues.
The minimum five-year entrustment term and eight-year tax-recognition threshold are different rules.
Future-sale results are conditional comparisons using fixed 2026 rates, period tests, deductions and local tax treatment.
They are not definite tax assessments under future law or land-price forecasts.
Longer plans require particular attention to later legislation and changing contract conditions.
Frequently asked questions
Does eight years of Farmland Bank entrustment eliminate capital gains tax?
No.
Non-business land classification and the self-cultivated farmland reduction under Article 69 are separate rules.
Recognized entrustment days are treated as residence and cultivation days for the period test.
Ordinary capital gains tax can remain even when the parcel is excluded from non-business land treatment.
Does signing an eight-year contract qualify the first year immediately?
An intended eight-year contract is not eight years of completed qualifying entrustment and leasing.
Confirm the actual recognized history during the present ownership.
A sale before the required eight years does not obtain recognized days through this entrustment provision.
Does every vacancy or contract change restart the eight-year clock?
That cannot be assumed.
An official NTS interpretation allows aggregation of entrustment periods from acquisition through disposal.
This tool supports one confirmed interval; multiple contracts, vacancies or changes of ownership require a professional review of which periods qualify.
Does inherited farmland automatically become non-business land on its third anniversary?
No.
The initial three-year recognized interval is placed within the ownership, trailing three-year and trailing five-year windows before the period test is applied.
Previously recognized days do not all disappear on the anniversary.
The separate inherited-cultivation rule for an Article 69 reduction has its own conditions.
What if a parent or spouse lived near and cultivated the land for eight years?
Decree Article 168-14(3)(1-2) can exclude qualifying inherited or gifted land where a lineal ascendant or spouse met the eight-year residence and direct-cultivation conditions.
Confirm the relationship, records and urban-area exclusion.
This may remove the surcharge reason for waiting, but it does not automatically grant the self-cultivation tax reduction.
Can compulsory acquisition before eight years still qualify the entrustment period?
NTS Advance Ruling 2025-Legal-Property-0101 states that disposal by negotiated public acquisition or expropriation before eight years does not deem the entrustment period to be residence and cultivation.
Other public-acquisition exceptions need separate review.
This calculator does not calculate those disposals.
Should I immediately choose the option with the highest future proceeds?
The comparison holds assumed prices, rent, costs, discount rates and 2026 Korean rules constant.
It does not guarantee future law, land prices, bank acceptance, tenants or compliance with farmland disposal duties.
Compare present values and falling-price scenarios, then recheck before closing.
Why does another taxable disposal in the same year pause the comparison?
Aggregation, basic-deduction usage, rate comparisons and combined reduction caps can change the single-parcel result.
Merely lowering the remaining basic deduction does not resolve all aggregation issues.
Other or unconfirmed taxable disposals therefore prevent a complete tax total, ranking and break-even conclusion.
Official sources and rule dates
Official law OPEN API records and NTS interpretations were checked on 2026-11-07.
Income Tax Act MST280405 is effective 2026-07-01; its Enforcement Decree MST290841 is effective 2026-10-01; Restriction of Special Local Taxation Act MST286607 is effective 2026-06-02.
The Corporation Act MST287807 is effective 2026-07-07 and its Decree MST281573 is effective 2026-01-02.
- Income Tax Act, Articles 55, 95, 103, 104 and 104-3: rates, deductions and land classification
- Income Tax Act Enforcement Decree, Articles 168-6, 168-8 and 168-14: day tests and inheritance or entrustment routes
- Special Tax Treatment Control Act, Articles 69 and 133, and its Enforcement Decree, Article 66(11) and (12): cultivation reduction and inherited cultivation time
- Restriction of Special Local Taxation Act, Article 167-2(1): local tax reduction through 2026-12-31
- Korea Rural Community Corporation and Farmland Management Fund Act, Article 24-4, and its Enforcement Decree, Articles 19-7, 19-8 and Annex 1: entrustment and fees
- NTS Real Estate Transaction Management Division-627, 2012-11-20: deemed residence and cultivation during entrustment
- NTS Property Tax Division-2642, 2008-09-04: aggregation between acquisition and disposal
- NTS Advance Ruling 2025-Legal-Property-0101, 2025-03-06: no entrustment recognition for public acquisition before eight years
Save the statement and confirm the actual sale schedule
Keep the entered dates, recognized days, confirmed reduction and price or discount assumptions with the result.
Ask the bank about recognition and actual fees, the tax adviser about inherited exceptions, reductions and aggregation, and the agent about realistic prices and closing dates.