I Bought a House for $1M and It's Worth $1.5M. Did I Really Make $500K?
Translated from the original Korean post. 한국어 원문 보기 →
Where the "I made 500 grand" math goes wrong
You hear this at housewarmings. "Bought it for 1B won, it's worth 1.5B now. Made 500 million." Everyone nods. The person saying it genuinely believes it.
I have an occupational disease. Spend enough years in infrastructure and you get it: see a number, immediately go looking for the costs stapled to the back of it. Nobody budgets a server at its purchase price. You budget TCO — power, rack space, ops headcount, decommissioning. I've watched more than one company decide on a cloud migration off the sticker price and go very quiet three years later in front of the invoice.
A house is an asset too. But somehow with houses, everybody compares purchase price to sale price and stops there. Where did the ten years in between go?
So I ran the numbers. I kept the setup as ordinary as I could.
- Buy at 1B won: 400M equity + 600M mortgage
- Loan terms: 30-year amortizing, 4% annual
- Live in it 10 years, sell at 1.5B, single-home household
Subtracting, line by line
Start with what leaves your account on the way in. Acquisition tax in the 1B bracket runs 3.3% including local education tax — 33M won. Broker's fee, negotiated down: 5M. Legal fees, bond discount, miscellaneous: 3M. About 41M won just to walk through the door.
Ten years of holding it. This is the body of the calculation.
Borrow 600M at 4% on a 30-year amortizing schedule and the monthly payment is about 2.86M won. Ten years is 120 payments — 344M won sent to the bank. Of that, only 127M went to principal. The other 216M is interest. That's how amortization works: the first decade is the interest-heavy stretch. You paid every single month and the balance is still 473M.
Property tax varies with the assessed value, but at this price point, roughly 30M won over ten years.
Now the exit. Selling at 1.5B means a broker's fee around 10M. Capital gains tax: single-home households are exempt up to 1.2B, and only the excess is taxed. Of the 500M gain, the taxable portion is 500M × (300M/1.5B) = 100M. Ten years of holding and living there earns an 80% long-term holding deduction, which collapses the tax base down to about 1.5M won including local income tax. This part is gentler than people expect. But only if you actually met the residency requirement.
Adding it up.
| 항목 | 금액 |
|---|---|
| 명목 차익 (15억 − 10억) | +5억 |
| 취득 비용 (취득세·중개·법무) | −4,100만 |
| 대출이자 10년 누적 | −2억 1,600만 |
| 보유세 10년 | −3,000만 |
| 매도 비용 (중개보수) | −1,000만 |
| 양도세 (거주 요건 충족 시) | −150만 |
| 실제 남는 돈 | 약 2억 |
500 million became 200 million. And there's still one more step.
Why it lands there — the hidden line item called opportunity cost
Your 400M in equity was locked in that house for ten years. Parked in a 3% deposit account and nothing else, it would have thrown off about 120M after tax. Risk-free money you could have had.
Real excess return = 200M − 120M = about 80 million won.
Over ten years. You put down 400M, paid 2.86M every month, waited a decade, and cleared 80M above the safe alternative. That's 8M a year. Yes, you lived there, and the housing costs you avoided are real and substantial. But "I made 500 million" and "8M a year in excess return plus a place to live" are completely different sentences.
Inflation works even more quietly. At 2.5% a year, that 1.5B ten years out is worth about 1.17B in today's money. A large chunk of the nominal 500M jump is money losing value, not the house gaining it.
In systems terms: the sale price is one big number pinned to the dashboard. Interest, taxes, opportunity cost, inflation are background processes that only show up in the logs. Watch the dashboard and the system looks healthy. Open the logs and you find out where the resources are going.
Three variables that move the answer
Interest rate first. At 5% instead of 4%, ten years of interest goes from 216M to about 275M. A 59M swing. At 3% it drops to around 160M. One percentage point is a 50–60M won variable in this calculation. To someone who's never run the numbers, 1%p is just a number. To someone who has, it's two mid-size cars.
Residency next. Everything above assumes you actually lived there for ten years. Hold without living in it and the long-term holding deduction gets cut in half — and depending on whether the area was designated as regulated at the time of purchase, the 1.2B exemption can disappear entirely. Then capital gains tax isn't 1.5M, it's tens of millions. Same house, same price, and there are real thresholds where the tax bill changes by an order of magnitude.
Realizability last. All of this assumes the place actually sold at 1.5B. If the asking price is 1.5B and nobody will pay it, nothing has happened yet. And if you plan to stay in the same neighborhood after selling, the complex next door went up too — the moment you trade across, the gain evaporates in practical terms. Selling an appreciated house to buy an appreciated house isn't realizing a profit. It's moving a position.
But who actually created that gain?
Up to here this has been a household budget. Step back and a less comfortable question shows up. That 80M, or 200M, or whatever the number is — where did it come from?
The owner didn't make the house better. In ten years they repapered the walls twice. What went up was the value of the location. A subway line extended. A GTX route confirmed. Jobs clustering nearby. The school district holding. All of it produced by taxes, public investment, and other people's economic activity. That value gets absorbed into land prices, and whoever happened to hold that spot at that moment collects the absorbed amount.
From an infrastructure perspective, it's a strange settlement structure. The party that upgraded the system and the party that captures the upgrade returns are different parties. You expand the network and the asset value of the tenants who got there first goes up. It's the same reason only Seoul and specific parts of the metro area appreciate — infrastructure and jobs pile up there, so land value rises there. Housing price polarization isn't market caprice so much as a map that traces national infrastructure allocation.
Same starting line, different finish
Think about two people who joined the same company in 2016. Same salary, similar savings. One stretched and bought a small apartment in Mapo. The other rented on jeonse and waited for the right moment. Ten years later the gap in their net worth is hundreds of millions of won. Doing the same job, drawing the same paycheck.
Was that skill? With stocks you could at least argue it. Stocks start small, you adjust when you're wrong, you diversify, and dozens of accumulated judgments become the result. The process has a chance to resemble skill. Housing is different. One of the largest leveraged decisions of your life happens all at once, is hard to reverse, and the rate environment and policy and mood at that exact moment determine most of the outcome. The line between a good call and a lucky one is far blurrier than it is in equities.
The harder part is that participation in this game isn't optional. You can just not buy stocks. Housing is a necessity. Don't buy and you're in the game as a renter anyway, and rents track prices. A game you can't sit out, where one moment of timing splits your asset trajectory. That's precisely where the younger generation is stuck right now. The entry fee has already gone up by the previous cohort's gains, DSR rules cap borrowing against income, and so the choice is between wiring a large slice of your paycheck to a bank as interest or giving up on entry altogether.
Conclusion
The real report card on a house that went from 1B to 1.5B, under ordinary conditions, looks roughly like this. Nominal gain 500M. Net of costs, about 200M. Net of opportunity cost, about 80M. Adjust for inflation and it feels smaller still.
So "I made 500 million" is the same as looking at a server's purchase price and declaring the system cheap. You read the first line of the invoice.
And even that remaining gain is mostly not value the individual created — it's public value absorbed into a location. That's why conversations about housing prices always turn uncomfortable, I think. It isn't a numbers problem, it's a structural one. In this market the link between working hard and your assets growing is unusually weak.
These figures use tax rates from a specific point in time and simplified assumptions, and the numbers change with your situation. Treat it as a framework for calculating, not as a basis for an investment decision.
I wish I'd run this math before buying. I ran it after. Most people do. And it was only after running it that I realized this isn't a problem that ends with one person's arithmetic.
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