The Monthly Rent Tax Credit: What Comes Back on a Year of Rent

Who Can Claim It

The rent tax credit requires set conditions on income, home ownership, the lease, and the registered address.

This is not confined to householders. A household member belonging to a household owning no home and meeting the other requirements can also claim the rent tax credit.

The address is what most often goes missing on a claim. The address on the lease has to match the resident registration address, so a late move-in report after moving can put the rent for that period outside the credit.

Rent genuinely paid while living there is hard to have recognized where the resident registration address differs. Checking that the move-in report was properly filed after signing comes first.

The Credit at Each Rent Level

We applied the credit rate to a year of rent to calculate how much comes off the tax.

KRW 1 million a month for a year is KRW 12 million of actual rent, but only the annual limit of KRW 10 million is eligible. So the calculation reaches at most KRW 1.7 million at 17% and KRW 1.5 million at 15%.

Rent above roughly KRW 840,000 a month reaches the KRW 10 million annual limit over a year. Paying more than that does not increase the eligible amount.

How much changes around KRW 55 million of total salary

The rent credit rate splits at total salary of KRW 55 million into 17% and 15%. The same rent produces a different credit depending on total salary.

Once rent reaches the limit, the gap between the two credit rates settles at a maximum of KRW 200,000.

Above total salary of KRW 55 million the rate drops from 17% to 15%. On KRW 700,000 a month, the calculated credit differs by KRW 168,000. Above total salary of KRW 80 million the rent credit does not apply at all.

The rent credit is a tax credit, not an income deduction. It does not reduce taxable income; it comes straight off the calculated tax. The difference between the two methods is set out separately in income deductions and tax credits.

A calculated credit does not always translate into a refund of the same amount, though. Where determined tax is already low enough, the whole credit may not be usable.

Which Homes Qualify

Paying rent does not make every home automatically eligible. Conditions also apply to the size or the assessed value.

Size and assessed value need only one of the two. Exclusive floor area above 85㎡ can still qualify where the assessed value is KRW 400 million or less, and an assessed value above KRW 400 million can still meet the requirement where the home is within the national housing scale.

Residential officetels and goshiwons are included. Not being an apartment or a villa is not itself a reason to be shut out of the rent credit.

After checking the area and value conditions, the match between the lease and the resident registration address is worth checking alongside.

Since only one of size and value has to be met, a large home still qualifies where the assessed value is KRW 400 million or less. Conversely, a small home qualifies on the 85㎡ requirement regardless of assessed value.

What to Prepare When Claiming

Claiming the rent credit takes a resident registration certificate, a copy of the lease, and evidence that the rent was actually paid. Bank transfer records or deposit slips serve as payment evidence.

Rent does not all appear automatically in the simplified year-end settlement data, so gathering the necessary records yourself is worthwhile.

Rent paid in cash with no receipt or payment record can be hard to prove. Paying by a method that leaves a record, such as a bank transfer, is preferable where possible.

Where the landlord on the lease differs from the account holder actually receiving the rent, further confirmation may be needed. Where payments go to a family member's account, keeping records that explain the contractual relationship and the payments is worthwhile.

Where rent was paid by credit card, whether the card spending deduction and the rent credit overlap on the same expense also needs checking. The same amount cannot draw both at once.

The landlord's consent is not required to claim the rent credit. Meeting the statutory requirements with the evidence is enough.

Where jeonse loan principal and interest are being repaid, a separate income deduction exists for housing lease loan repayments. It is a different scheme from the rent credit, and each set of conditions has to be checked separately.

Rent counts toward the year in which it was actually paid. Rent paid in December falls into that year's credit, and an amount paid in January falls into the next.

Where a lease started or a move happened mid-year, only the rent actually paid that year is counted. A few months of rent in the first year reduces the eligible amount accordingly.

Where the claim was missed at the year-end settlement, a prior year can be reclaimed through a request for correction as long as the records remain.

Frequently Asked Questions