Korea's housing subscription deduction is usually described as "up to 1.2 million won." But 1.2 million won does not arrive in your account. And closing the account within five years can cost more than the relief ever gave you. Here is art. 87 of the Restriction of Special Taxation Act, read as written.
1. How much. 40% of up to 3,000,000 won a year comes off your income - a maximum of 1,200,000 won (art. 87(2)). Being a deduction, only your rate comes back: 198,000 won in the 15% band, 79,200 won in the 6% band (local tax included, our arithmetic).
2. The ceilings stack. Together with rent-loan relief it is capped at 4,000,000 won a year, and with mortgage interest added, at 8 million won (art. 87(5)).
3. Break it and you repay. Closing within five years of opening recaptures 6% of everything paid in (para. 7). Three years in that is 540,000 won, against 237,600 won actually saved in the 6% band - 2.27 times.
It follows art. 87 of the Restriction of Special Taxation Act as written. It is for resident employees (not daily workers) with total pay of 70,000,000 won or less who are the head, or the spouse of the head, of a household owning no home during the year (para. 2). The amount is 40% of up to 3,000,000 won a year paid into a housing subscription savings account by 31 December 2028, taken off earned income - a maximum of 1,200,000 won. The ceilings stack: this relief plus rent-loan repayments under Income Tax Act art. 52(4) cannot exceed 4,000,000 won, and those together with mortgage interest under art. 52(5) and (6) cannot exceed 8,000,000 won (or the limits in art. 52(6) where they apply); the excess is simply not deducted (para. 5). Household status is judged on the last day of the tax year. The no-home certificate must reach the bank by the end of February of the following year, and only payments made after that tax year count (para. 4(1)). Recapture applies if the account is closed within five years of opening or if you win a home above the national housing size: 6% of the cumulative amount paid in (3,000,000 won a year cap) - unless you prove the tax you actually saved was less, in which case only that is recovered (para. 7). Late payment of the recapture adds 10% (para. 8). Death and emigration are excepted. The tax back is estimated as the deduction times the rate plus 10% local tax, with fractions of a won dropped. The interest exemption for the youth account (para. 3), the loss of the year's relief on early closure (proviso to para. 2), and ordering against other deductions are not covered. An estimate - confirm with Hometax or your bank.
The 40% comes off income, not tax
Art. 87(2) says the amount is "40% of the sum paid in (subject to an annual limit of 3 million won), deducted from earned income for the tax year." From earned income - not from the tax.
So the same 1,200,000 won deduction is a different sum for different people. At a 6% bracket it returns 79,200 won; at 15%, 198,000 won; at 24%, 316,800 won; at 35%, 462,000 won (10% local tax included, our arithmetic).
The condition of total pay at or below 70,000,000 won largely fixes the bracket too. Most people eligible for this relief sit in the 6% or 15% band, which puts the money back between 79,200 won and 198,000 won. "Up to 1.2 million" is the deduction, not the refund.
Three ceilings, stacked
The first is the 3,000,000 won annual limit on payments. Pay in four million and only three million counts.
The second is the opening of art. 87(5): "where the sum of the amounts deducted under para. 2 and art. 52(4) of the Income Tax Act exceeds 4 million won a year, the excess shall not be deducted." It shares a room with rent-loan relief.
With 3 million won of rent-loan relief the room left is one million, so 200,000 won of the 1,200,000 won is cut and only 1,000,000 won gets through (our arithmetic). Fill the four million entirely with rent relief and the subscription deduction is nothing.
The third is the rest of the same paragraph: add mortgage interest relief and a total above 8 million won a year (or the specific limits in art. 52(6) where the loan meets those conditions) is likewise not deducted. Those interest limits are worked through in the housing loan deduction article.
The no-home certificate, by the end of February
Art. 87(4)1 - to take the deduction you must file a no-home certificate with the bank "by the end of February of the year following the tax year for which the deduction is claimed." It goes to the bank, and it is the Ministry of Land, not the tax office, that verifies and notifies (para. 10).
A parenthesis in para. 2 quietly adds a line - only "amounts paid in after the tax year for which the deduction under para. 4(1) is claimed" count. Years of payments made before you filed the certificate are not picked up retroactively. If the account has been open a while, ask the bank first which year the count starts from.
And whether you are the householder or their spouse is judged "as at the last day of the tax year" (second sentence of para. 5). Being a no-home householder, or their spouse, on 31 December is what counts.
Close within five years and you can repay more than you got
Art. 87(7). Where someone who took the deduction "terminates the savings contract within five years of the date of opening," the bank recaptures "6% of the cumulative amount paid in after the tax year for which the deduction was claimed (subject to the annual limit of 3 million won)" out of the account balance on closure.
The 6% attaches to what you paid in, not to the relief. So it is the same figure in every bracket - 3,000,000 won a year for three years gives 540,000 won.
| Bracket | Tax saved over three years | Recapture |
|---|---|---|
| 6% | 237,600 won | 540,000 won - 302,400 won more |
| 15% | 594,000 won | 540,000 won |
| 24% | 950,400 won | 540,000 won |
| 35% | 1,386,000 won | 540,000 won |
Only the 6% band inverts. A 40% deduction taken at a 6.6% rate (local tax included) is an effective 2.64%, while the recapture is 6%. That is 2.27 times (our arithmetic).
There is a proviso. Same paragraph: "where the person proves that the tax actually reduced by the deduction is less than the recapture, only the amount actually reduced shall be recovered." It does not apply automatically. Without the proof, the 6% goes. And late payment adds 10% of the unpaid amount (para. 8).
The exceptions to recapture are written in too: the saver's death, emigration under the Emigration Act, and other grounds set by Presidential Decree.
Winning a home can trigger it as well
Subparagraph 2 of art. 87(7) recaptures without any closure: "where the person applies for and is awarded a home exceeding the national housing size, built under an approved project plan under the Housing Act."
The account exists to bid for homes, yet winning a large one unwinds the relief. The deduction presumes saving toward a home at or below the national housing size.
And the proviso to para. 2: closing mid-year for any reason other than a win or the grounds set by Decree means the payments made that year are not deducted at all. Separately from the recapture, the year of closure loses its relief first.
The youth account is a different scheme
Para. 3 of the same article covers the youth housing subscription account, and it is an exemption on interest, not a deduction. The two are easy to confuse.
- Open one by 31 December 2028 and interest from it is exempt up to a total of 5 million won.
- The payments that qualify for the exemption are capped at 6 million won a year across all institutions.
- You must be a young person as defined by Decree and a no-home householder or spouse at opening, with total pay of 36 million won or less in the previous year (where that is all you had) or aggregate income of 26 million won or less.
- The contract must run two years or more, and the certificate for the exemption is filed within two years of opening (para. 4(2)).
- Withdrawing principal or interest, or closing, within two years of the contract date recaptures the tax exempted (para. 6(2)).
The deduction (para. 2) and the interest exemption (para. 3) have different tests and different limits. This calculator covers only the deduction. The age test with military service subtracted, and the two clawback clocks, are separated out in the youth account checker.
Questions this leaves
What if I am not the householder?
The householder's spouse also qualifies. Para. 2 says "the head, or the spouse of the head, of a household owning no home." Judged as at the last day of the tax year.
What if I pay in more than 3 million a year?
The excess does nothing for the deduction. Subscription points and recognised payment rounds are governed elsewhere, so if you are saving for those reasons, weigh them separately.
What if I buy a home partway through?
Because status is judged on the last day of the tax year, owning a home on 31 December costs you that year's deduction. That alone does not trigger recapture - recapture is the two cases in para. 7 (closing within five years, winning above the national housing size).
How long does the scheme run?
Para. 2 covers amounts paid in "by 31 December 2028." Beyond that it has to be looked at again.
What does the calculator not cover?
The youth account's interest exemption, the loss of the year's relief on early closure (proviso to para. 2), the third ceiling at 8 million once mortgage interest is added, and the ordering against other deductions. The bracket is also a value you pick - your real one falls out of the year-end settlement.
Sources
- Restriction of Special Taxation Act - the statute itself - the source for art. 87(2) (who qualifies, 3 million a year, 40%, 31 December 2028, the early-closure proviso), (3) (the youth account: 5 million of exempt interest, 6 million of qualifying payments, the income tests), (4) (when the certificate is filed), (5) (the 4 million and 8 million ceilings and the last-day test), (6) (two years for the youth account), (7) (the 6% recapture, the proof proviso, and winning above the national housing size), (8) (the 10% addition) and (10) (verification by the Ministry of Land). Korean Law Information Center
- Income Tax Act - the statute itself - art. 52(4) (rent-loan repayments), art. 52(5) and (6) (mortgage interest and its limits) and art. 55 (the rate table). Korean Law Information Center
- Our arithmetic - the 79,200 won, 198,000 won, 316,800 won and 462,000 won returned on a 1,200,000 won deduction, the 1,000,000 won that survives and 200,000 won that is cut against 3 million of rent relief, and the 540,000 won recapture against 237,600 won saved in the 6% band, a gap of 302,400 won or 2.27 times are ours, computed from the provisions above. The calculator was checked across 2,560 combinations in both languages.
What to check elsewhere
- The "grounds set by Presidential Decree" that escape recapture. Beyond death and emigration they sit in the Decree, which we did not open - ask your bank first if you have a reason to close.
- Who counts as a "young person". Also defined in the Decree, for para. 3(1).
- Recognised payment rounds and subscription points. Those belong to the housing supply rules and are not covered here - see the subscription basics and the points calculator.
- Your own bracket. It is a value you choose in this calculator; the real one falls out after earned-income and personal deductions - see the year-end settlement calculator.
Based on the 2026 provisions. The conditions, ceilings and recapture rate are the statute's own; the refunds and the recapture comparison are our arithmetic. The calculator is an estimate - confirm eligibility and amounts with Hometax or your bank. For housing relief as a whole see the housing loan deduction, for the whole settlement the year-end calculator and the deductions the portal does not show, and for the subscription itself the subscription basics.
