Buying Real Estate in South Korea as a Foreigner: What You Need to Know (Residential Property)

South Korea places few outright prohibitions on foreign ownership of real estate. Foreign individuals and corporations can generally acquire land, apartments, and commercial buildings on substantially the same terms as Korean nationals.

Parties also enjoy broad freedom of contract, so features familiar from U.S. practice, such as financing or diligence contingencies and escrow-style closings, can be negotiated into a Korean purchase agreement.

The default rules differ, however. Unless the parties agree otherwise, the contract deposit (계약금) operates as a cancellation deposit. Until either party begins performance, the buyer may walk away by forfeiting the deposit, and the seller may withdraw by returning double the amount (Civil Act Art. 565).

The difficulty lies in the procedure. A foreign buyer has to satisfy three regulatory regimes at once: real estate transaction reporting, foreign exchange controls, and property registration. Missing a deadline under any one of them can result in fines, or in some cases a void contract.

1. Transaction and Foreigner Acquisition Reports

Under the Act on Report on Real Estate Transactions (부동산 거래신고 등에 관한 법률), a purchase contract must be reported to the local government within 30 days of execution (Art. 3). Where a foreigner acquires property by a means other than a reportable sale, such as a gift or exchange, a separate foreigner acquisition report is due within 60 days (Art. 8(1)). Acquisitions by inheritance, auction, or merger must be reported within six months (Art. 8(2)).

In certain zones, a permit is required before the contract is signed, not merely a report afterward. These include military facility protection zones, cultural heritage protection zones, ecological and natural landscape conservation areas, and wildlife special protection zones (Art. 9). A contract concluded without the required permit is void.

Recent tightening. In August 2025, the government invoked the foreigner-specific designation power in Art. 10. It designated all of Seoul, together with parts of Incheon and most of Gyeonggi Province, as land transaction permit zones for residential acquisitions by foreigners. In those zones, a foreign buyer of an apartment or other housing needs prior permission. The buyer must also move in within four months and occupy the home for two years.

The initial designation ran for one year, so buyers should confirm whether it has been extended or modified before relying on it. Separately, apartments across Seoul and parts of Gyeonggi have since been designated as general permit zones applicable to all buyers, Korean and foreign alike.

2. Foreign Exchange Reporting

A non-resident acquiring Korean real estate must file a capital transaction report under the Foreign Exchange Transactions Act (외국환거래법) (Art. 18). The report is filed with a designated foreign exchange bank under the non-resident real estate provisions in Chapter 9 of the Foreign Exchange Transaction Regulations (외국환거래규정).

Purchase funds should come in through that bank with documentation of their source. Getting this right at the front end matters later: a clean inbound record is what allows sale proceeds to be repatriated without difficulty.

3. Registration and Title

Korea follows a registration-as-transfer principle. Ownership passes only upon registration, not upon payment or delivery (Civil Act Art. 186). Foreigners without an alien registration number must first obtain a real estate registration number (부동산등기용등록번호) from the immigration authorities (Registration of Real Estate Act Art. 49).

Buyers should not assume the register can be relied on. The Korean registry does not carry public faith (공신력). A buyer who relies in good faith on a defective entry acquires no title the transferor did not have. This differs both from Torrens jurisdictions, including the few U.S. counties that retain a Torrens system, and from the bona fide purchaser protection of U.S. recording acts.

Good-faith third parties are protected only in specific statutory instances:

• sham transactions (Civil Act Art. 108(2));

• mistake and fraud (Arts. 109(2), 110(3));

• rescission (Art. 548(1) proviso).

Independent title review, and title insurance where available, are therefore worth serious consideration.

4. Due Diligence Beyond the Register

Some interests never appear on the register. Chief among them are the rights of residential tenants, particularly jeonse (전세) deposit holders.

• A tenant who has taken possession and completed resident registration acquires opposability against third parties from the following day (Housing Lease Protection Act Art. 3(1)).

• A tenant who also holds a fixed-date stamp (확정일자) obtains priority repayment rights (Art. 3-2).

A buyer inherits these obligations.

A licensed broker must provide a written confirmation and explanation of the property (Licensed Real Estate Agents Act Art. 25). This should supplement the buyer's own review, not replace it.

5. Tax Exposure

Tax rates and thresholds are revised frequently; the following reflects the framework rather than current figures. Buyers should plan for tax at three stages:

• Acquisition: acquisition tax under the Local Tax Act (Art. 11), with surcharged rates for multiple-home owners and corporate buyers (Art. 13-2).

• Holding: annual property tax, plus the comprehensive real estate holding tax (종합부동산세) above the statutory thresholds.

• Disposition: capital gains tax. When a non-resident sells to a Korean corporate buyer, the buyer must withhold the lesser of 10% of the price or 20% of the gain (Income Tax Act Art. 156; Corporate Tax Act Art. 98). Treaty relief may apply depending on the seller's residence.

6. Acquiring Through a Korean Entity or Joint Venture

Some foreign buyers consider acquiring through a Korean subsidiary. This can offer advantages in financing, holding multiple assets, and structuring an eventual exit. An entity does not, however, by itself take the acquisition outside the foreign-buyer regime.

A Korean corporation is itself treated as a "foreigner" under the Act on Report on Real Estate Transactions if any of the following applies (Art. 2(4)):

• foreign nationals make up half or more of its members;

• foreign nationals make up half or more of its officers;

• foreign persons hold half or more of its capital or voting rights.

  
  

Foreign holdings are counted together for these tests. Such an entity remains subject to the reporting and permit requirements described above.

Joint ventures in which Korean partners hold a genuine majority of the equity, voting rights, and management fall outside the statutory definition of a foreign purchaser. Such structures must reflect real economic ownership and control. Arrangements that merely place nominal majority ownership in Korean hands risk being disregarded under the substance-over-form principle (Framework Act on National Taxes Art. 14) and in any later dispute.

Either structure carries its own costs:

• Foreign investment report. A foreign stake of 10% or more requires a report under the Foreign Investment Promotion Act (Art. 5).

• Acquisition tax. Corporate acquisitions of housing attract surcharged acquisition tax (Local Tax Act Art. 13-2). So do acquisitions by corporations formed within the past five years in the Seoul metropolitan overcrowding control region (Art. 13(2)).

• Residence requirements. General permit zones that require actual residence effectively rule out corporate purchases of housing.

• Share-sale exit. An exit by share sale may trigger deemed acquisition tax for a shareholder holding more than 50% (Local Tax Act Art. 7(5)). It may also trigger capital gains treatment as real property where the company's assets are predominantly real estate (Income Tax Act Art. 94(1)(iv)).

An entity or joint venture is therefore best evaluated for its commercial, tax, and exit implications, not as a way to bypass the procedures that apply to foreign purchasers.

Practical Takeaway

A foreign buyer's timeline should be built backward from the permit and reporting deadlines, not forward from the closing date. The most reliable way to avoid a transaction that is valid on paper but defective in substance is to coordinate the following before signing:

• the broker;

• the foreign exchange bank;

• legal counsel;

• tax counsel.

Where an entity or joint venture structure is under consideration, that decision should be made at the outset, since it changes which of these regimes apply. Keep in mind that the most restrictive measures above, including the permit zones, residence requirements, and housing tax surcharges, target residential property only.

Commercial purchases are comparatively less restricted, though the core reporting, foreign exchange, and registration procedures apply to all property types.

This article is provided for general informational purposes only and does not constitute legal advice. The author is admitted to practice in the United States and is not a Korean-qualified attorney. The outcome of any particular matter depends on its specific facts, and readers should consult qualified Korean counsel before acting.

— Won Jun Lee is Senior Foreign Counsel at Joowon Law Firm; Co-Chair, Cross-Border Real Estate Committee, American Bar Association International Law Section; and Director, Korea Real Estate Academy. He was a lecturer at two Korea's universities widely known for best real estate programs on Private Real Estate Law.