Owning just one home does not guarantee a tax exemption on overseas property

Buying property overseas to diversify an asset portfolio can lead to an unexpectedly large capital-gains tax bill, even for people who own only one home in South Korea.

The trend has grown among investors purchasing homes and commercial properties in countries such as the United States, Canada, Japan and Vietnam. But the tax rules change when the property is sold.

Unlike the acquisition and ownership stages, disposal of overseas real estate falls under capital-gains tax standards that differ substantially from those for property in South Korea. Investors who fail to understand those rules could face a heavy tax burden while expecting the sale to produce a profit.