This post covers South Korean tax rules (Korean rules, as of the check date above).
Every year-end settlement season people ask the same thing: what salary can I earn and still claim the monthly rent tax credit? There are two key points. With gross pay up to 55 million won the credit is 17% of rent, from 55 million up to 80 million won it is 15%, and above 80 million won it is not available. A tax credit only reduces the tax you owe, though, so at a low salary you may not be able to use all of it. This post uses the Calcmoa salary calculator’s function to estimate annual income tax and compares what can really be recovered on rent of 500,000 won a month (6 million won a year).
Who can claim the monthly rent tax credit?
The credit is based on Article 95-2 of the Restriction of Special Taxation Act (조세특례제한법). The broad outline from official guidance is:
- Employees with gross pay of 80 million won or less
- A householder with no home at year end (in some cases household members can claim, so check the HomeTax guide)
- Renting a home of national housing size or smaller, or with an assessed value of 400 million won or less
- Rent up to 10 million won a year counts, at 17% for gross pay up to 55 million won and 15% above that
Detailed requirements (the total-income test, matching addresses on the lease and resident registration, proof of transfers) can change each year, so check the National Tax Service HomeTax guide and the statute before you apply. The figures below apply the outline above as written.
How much can you get back at each salary?
I assumed rent of 500,000 won a month (6 million won a year), one dependent (yourself) and a 200,000 won monthly tax-free meal allowance, then compared the credit with the annual income tax estimated by the salary calculator function (monthly income tax x 12). Other deductions such as credit cards and medical expenses are not included, so this is a simple comparison.
| Gross pay | Rate | Rent credit | Estimated annual income tax | Tax actually reduced |
|---|---|---|---|---|
| 30 million won | 17% | 1,020,000 won | 249,840 won | 249,840 won |
| 40 million won | 17% | 1,020,000 won | 1,140,240 won | 1,020,000 won |
| 55 million won | 17% | 1,020,000 won | 2,991,240 won | 1,020,000 won |
| 56 million won | 15% | 900,000 won | 3,119,160 won | 900,000 won |
| 70 million won | 15% | 900,000 won | 4,910,160 won | 900,000 won |
| 80 million won | 15% | 900,000 won | 6,793,080 won | 900,000 won |
| 81 million won | Not eligible | 0 won | 6,997,680 won | 0 won |
Two things stand out. At 30 million won the credit is 1,020,000 won but the estimated income tax is only 249,840 won, so that is all that gets reduced. A tax credit works against tax you paid, so any credit larger than your tax goes unused. Also, between 55 and 56 million won the rate drops from 17% to 15% and the credit falls by 120,000 won. If your gross pay sits near this line, check on your payslip how tax-free items such as meal allowances count toward gross pay.
What if the rent is higher?
Rent counts only up to 10 million won a year. Even if you pay 1 million won a month, 12 million won a year, the calculation stops at 10 million won, so the maximum is 1,700,000 won at 17% and 1,500,000 won at 15%. Set realistic expectations about what share of your total rent comes back.
Points to watch when applying
- You are told you cannot claim both the cash receipt income deduction and the rent tax credit on the same rent.
- Maintenance fees and utilities are excluded; only pure rent counts.
- Proof is easier if your address registration, actual residence and lease address match.
- If you missed it at your company’s year-end settlement, check on HomeTax whether you can claim later through the May income tax return or an amended claim.
- The table is a calculator estimate; your actual determined tax depends on other deductions and monthly withholding.
Frequently asked questions
Is the landlord’s consent required? Many explanations say consent is not a requirement, but you still need proof such as the lease and transfer records. Check the HomeTax guide for details.
Does a lease with a deposit and monthly rent qualify? Only the monthly rent written in the contract counts. Deposit interest and jeonse loan interest are handled under separate rules.
Am I worse off if my salary goes up? Above 55 million won the rate falls from 17% to 15%, but the extra salary is larger. Above 80 million won the credit disappears, so near that line compare take-home pay.
To see your take-home pay first, use the Salary calculator (Korean page), and to see the monthly burden when converting a jeonse deposit to rent, use the Jeonse-monthly rent converter (Korean page).