Article 98-5 (Special Taxation of Capital Gains Tax for Purchasers of Unsold Housing Units in Areas Outside the Seoul Metropolitan Area)

With respect to income arising from the transfer of unsold housing units defined by Presidential Decree, located in areas outside the Seoul Metropolitan Area as of February 11, 2010 (hereinafter referred to as "unsold housing units" in this Article), acquired by a resident or a non-resident without a domestic business site as defined in Article 120 of the Income Tax Act, by entering into the first sales contract with the developer supplying housing units pursuant to Article 54 of the 「Housing Act」, etc., by April 30, 2011 (including cases where a sales contract was entered into and a deposit was paid by April 30, 2011), and transferred within five years from the date of acquisition, the capital gains tax shall be reduced by an amount calculated by multiplying the reduction rate according to the reduction rates of the sales price (referring to the sales price publicly announced in the public notice of resident recruitment under the 「Housing Act」. The same applies hereinafter in this Article) as follows: For transfers made after five years from the date of acquisition of the unsold housing unit, the amount calculated by multiplying the reduction rate according to the reduction rates of the sales price as follows by the capital gains amount generated within five years from the date of acquisition of the unsold housing unit shall be deducted from the taxable capital gains amount of the unsold housing unit. In this case, if the deducted amount exceeds the taxable capital gains amount, the excess amount shall be disregarded. <Amended on Jan. 19, 2016> 1. Where the reduction rate of the sales price is 10 percent or less: 60 percent 2. Where the reduction rate of the sales price exceeds 10 percent and is 20 percent or less: 80 percent 3. Where the reduction rate of the sales price exceeds 20 percent: 100 percent

With respect to income arising from the transfer of unsold housing units to which paragraph ① applies, notwithstanding the provisions of Article 95 (2) and Article 104 (1) 3 of the Income Tax Act, the special deduction for long-term holding and the tax rates shall be applied as follows. <Amended on Jan. 1, 2014> 1. Special deduction for long-term holding: An amount calculated by multiplying the capital gains by the deduction rates according to the holding period as prescribed in Table 1 (or Table 2 in cases falling under the proviso of the same paragraph) of Article 95 (2) of the Income Tax Act. 2. Tax rates: The tax rates prescribed in Article 104 (1) 1 of the Income Tax Act.