“Do I owe tax if I collect rent?” in Korea splits completely depending on how many homes you own and how the tenancy is structured. The rules sit in two different provisions, which is why summaries state the thresholds slightly differently.
1. Do you owe anything. Monthly rent and jeonse are judged under entirely different provisions — rent turns on your home count and a ₩1.2 billion published price; jeonse (deemed rent) on three homes and ₩300 million of deposits. Even if caught, up to ₩20 million a year can be closed out under separate taxation.
2. Where the risk is. The small-home exclusion expires on 31 December 2026 — the rule that keeps homes of 40m² or less with a published price of ₩200 million or less out of your count. When it lapses, some owners' home count jumps next year.
3. What to do. Count your homes now — both with and without the small-home exclusion. Filing is in May, and tenants have the mirror-image relief on the other side.
What follows sets the government legal guidance and the statute itself side by side.
The small-home exclusion runs only to 31 December 2026. Income Tax Act art. 25(1), proviso — “a home whose residential-only floor area is 40 square metres or less per unit or household and whose published price for the taxable period is 200 million won or less shall not be counted in the number of homes until 31 December 2026.” When it lapses, some owners' home count goes up.
Monthly rent and jeonse are judged under different provisions
| Form | Taxable when (as written) | Provision |
|---|---|---|
| Monthly rent | an owner of two or more homes counted across the couple lets a home for monthly rent | Income Tax Act art. 12(2)(b) Decree art. 8-2(3)4 |
| even a single-home owner, where the published price exceeds 1.2 billion won | ||
| Jeonse deposit | three or more homes and total deposits above 300 million won | Income Tax Act art. 25(1) |
| two homes (those with a published price of 1.2 billion or less are not counted) and deposits of 300 million or more exceeding the amount set by Decree |
Only the rent test is measured across a couple. The source writes “two or more homes counted across the couple” for rent and uses no such phrase for deposits. Whose homes are counted on the deposit side is not resolvable from this page, so we do not state it.
“1.2 billion won” appears twice, doing opposite jobs. On the rent side it is the threshold that makes a single-home owner taxable; on the deposit side it is the line below which a home is not counted at all.
That deposits alone are generally untaxed is also verbatim: “basically, where you let a property receiving only a jeonse deposit, you need not file.”
The small-home exclusion — four worked cases in the source
How the homes are counted flips the answer. The guidance reproduces the tax office's own consultation cases.
| Case | Outcome |
|---|---|
| 3 homes (three of 109㎡), deposits above 300M | taxable |
| 3 homes (two of 109㎡ + one 40㎡ under 200M), deposits above 300M | not taxable — the small home drops out, leaving 2 homes |
| 4 homes (two of 109㎡ + two small), deposits above 300M | not taxable — two small homes drop out, leaving 2 |
| 4 homes (three of 109㎡ + one small), deposits above 300M | taxable only if the deposits on the three non-small homes exceed 300M |
The last case is the important one. A small home drops out of the deposit total as well as the home count. Total deposits can exceed 300 million and still be untaxed if the non-small homes alone stay under it.
And, as above, this exclusion runs only to 31 December 2026. Re-checked in August 2026: the provision still reads “until 31 December 2026,” so it has not been extended. Whether it is amended at year-end cannot be known now — for a 2027 contract, check again then.
Deemed rent is not charged on the whole deposit
Once deposits become taxable, the charge is on “deemed rent.” The name suggests the whole deposit is taxed; the formula cuts it twice.
| Filing basis | Formula (as written) | Provision |
|---|---|---|
| Books | (deposits above 300M) x 60% x term-deposit interest rate − interest and dividends arising in the rental business | Decree art. 53(3) |
| Estimation | (deposits above 300M) x 60% x term-deposit interest rate | Decree art. 53(4) |
On a 500 million won deposit, subtracting 300 million leaves 200 million, and 60% of that gives 120 million won to which the rate is applied (our arithmetic) — 24% of the original deposit.
The books basis subtracts one more thing: interest and dividends arising within the rental business. That prevents double counting where the deposit sat in an account and interest tax was already paid. The estimation basis has no such subtraction.
The term-deposit rate is 31 per 1,000 a year — 3.1%, written out in Article 23(1) of the Enforcement Rule. So a ₩500 million deposit gives ₩120 million × 3.1% = ₩3.72 million a year (our arithmetic). How it was found, and why it took so long, is set out below under “The rate is written out in the Ordinance, as a number”.
The two-home jeonse threshold is ₩1.2 billion, not ₩300 million
In the table above, the two-home row said only “₩300 million or more, as prescribed by Presidential Decree.” In August 2026 we opened Article 53 of the Income Tax Act Enforcement Decree.
Article 53(1) “The amount prescribed by Presidential Decree” under Article 25(1)2 of the Act means 1.2 billion won. <newly inserted 28 February 2025>
For a two-home owner the jeonse threshold is not ₩300 million but ₩1.2 billion. The Act sets only a floor — “₩300 million or more, as prescribed by Presidential Decree” — and leaves the figure to the Decree, which puts it at ₩1.2 billion.
Three or more homes: ₩300 million. Two homes: ₩1.2 billion. A fourfold gap turning on a single extra property.
And it was newly inserted on 28 February 2025 — last year. Guidance written before that has no two-home rule at all.
Note too that in the two-home test, homes with an assessed value of ₩1.2 billion or less are excluded from the count — so “₩1.2 billion” appears twice in this provision with two different meanings: once as what drops out of the count, once as the deposit threshold.
The rate is written out in the Ordinance, as a number
Below, this article says “the specific term-deposit rate could not be established.” We found it — we had been reading one level too high.
Income Tax Act Enforcement Rule, Article 23 (special rules for computing gross receipts)
(1) The “interest rate prescribed by Ministry ordinance” in the formula at Article 53(3)1 of the Decree means 31 per 1,000 a year.
31 per 1,000 is 3.1%. The Rule in force is dated 22 May 2026, and this paragraph was last amended on 2 January 2026.
- Reading the Decree alone will not find it. The formulas in Article 53(3) are embedded as equations rendered as images, so they never appear as on-screen text — the same situation as the Act's rate schedules. But the rate inside those images is spelled out in words in the Rule.
- And the images themselves could be read. As with the rate schedules, the text sits in the image's alt attribute — we have now read all five formulas in Article 53(3), (4) and (7) and the four construction-cost formulas in Rule 23(2) and (3). They are set out below.
- It changes nearly every year. Sixteen amendments since 2010, usually in March, though this one landed on 2 January. Last year's figure may not be this year's.
- The “construction cost equivalent” that feeds the books-basis formula came out of Article 23(2) too — for ordinary property (item 2) it is “purchase or construction cost of the leased property × leased area ÷ total floor area of the building”, with capital expenditure included and revaluation gains excluded (same paragraph, closing sentence).
Which makes a 500 million won deposit 3.72 million a year
With the structure being (deposit − ₩300m) × 60% × 3.1%, the figure now exists.
| Deposit | 60% of the excess over 300m | Imputed rent a year |
|---|---|---|
| KRW 300m | — | KRW 0 |
| KRW 400m | KRW 60,000,000 | KRW 1,860,000 |
| KRW 500m | KRW 120,000,000 | KRW 3,720,000 |
| KRW 700m | KRW 240,000,000 | KRW 7,440,000 |
| KRW 1000m | KRW 420,000,000 | KRW 13,020,000 |
The table is on the estimation basis; a books return subtracts the rental business's interest and dividends on top. Set against the ₩20 million separate-taxation line, imputed rent alone reaches it at a deposit of about ₩1,375 million (our arithmetic) — sooner if monthly rent comes in as well.
One more thing confirmed — the simplified day-count
From the tail of Article 53(3): “the day-count may be calculated by multiplying the balance of the deposits as at the end of each month by the number of days elapsed.” So a deposit that changes mid-year need not be counted day by day — and because it says “may,” it is optional. The same paragraph opens with “where the amount to be included is less than zero, it shall be treated as non-existent” — deemed rent can be zero but never negative.
The formulas were inside the images — and homes differ from everything else
Pulled out of the alt text, housing and other property turn out to run on different formulas altogether. The 300 million deduction and the 60 per cent this article has been discussing attach only to housing.
Article 53(7) holds one more, for subletting and sub-leasing: “the daily sum of deposits received on the sublet, less {the daily sum of deposits paid to take the lease × the share of the area sublet}”, times 1/365. What you paid in yourself comes off.
20 million won — the line where withholding can be the end of it
Being taxable does not force the income into your global return. Income Tax Act art. 14(3)7 defines “residential rental income of a person whose total gross receipts for the taxable period, as prescribed by Presidential Decree, are 20 million won or less” as separately taxed rental income.
| Income | Threshold | Measured on |
|---|---|---|
| Residential rental | 20M won or less | gross receipts (money in) |
| Interest and dividends | 20M won or less | combined amount (money in) |
| Other income | 3M won or less | other income amount (after expenses) |
All three are called “separate taxation” and all three are measured differently. Rental and financial income use money received; only other income nets off expenses first. That structure is worked through in where the freelance 3.3% comes from.
File in May, and what to put in it
- When — “submit the final return on the global income tax base to the competent tax office around May each year” (art. 70).
- If you receive rent — report “on the basis of the total monthly rent received over the year.”
- If you hold deposits — compute the deemed rent above.
- Where — art. 6(1): a resident's income tax is filed at their place of domicile, not where the property is.
If you also have a salary, the filing duty is decided elsewhere — the side-income article runs every combination through art. 73. Bracket rates are in the comprehensive income tax article, and past years in the amended return.
Tenants have the mirror-image relief
The same page covers the tenant's monthly rent tax credit. It goes to “the head of a household owning no home as at the end of the taxable period … being an employee whose total salary for the taxable period is 80 million won or less,” and excludes anyone whose global income exceeds 70 million won.
Two tests, not one — 80 million of salary and 70 million of global income both apply. The detail is in the rent tax credit article.
Questions that remain
Is a single home always exempt?
No. A published price above 1.2 billion won makes it taxable even with one home. And the source notes that rental income from a home located abroad is also outside the exemption.
What about a mixed deposit-and-rent tenancy?
Both count — neither provision switches the other off. Monthly rent is gross receipts under Article 24(1), “the total of amounts received or receivable in the tax period”, and the deposit figure computed under Article 25(1) is “included in” gross receipts. Included means added.
But the two tests run separately. Whether the rent is taxable turns on home count and assessed value; whether the deposit is included turns on home count and total deposits — taking rent as well does not turn Article 25(1) on or off.
If I never registered as a business, do I still file?
You file either way, and not registering carries its own penalty. The two duties do not stand in for each other.
Income Tax Act, Article 81-12 (1) Where a business operator with residential rental income fails to apply for registration under Article 168(1) and (3) by the deadline in the main text of Article 8(1) of the Value-Added Tax Act, 2/1,000 of the residential rental revenue from the business start date to the day before the application shall be added as a penalty to the global income tax determined for the period.
(2) The penalty in paragraph (1) applies even where there is no computed global income tax.
- The deadline is 20 days from the business start date — the main text of VAT Act Article 8(1), to which Article 81-12 points. Its proviso also allows applying before the business starts.
- The rate is 0.2% (2/1,000), measured on revenue, not income. The measuring period is not the tax year but from the business start date to the day before you apply — the later you are, the longer the base.
- Paragraph (2) shows what kind of penalty this is — it applies even if the tax works out at zero. Even where separate taxation brings the tax to nothing, this one remains if you never registered.
What happens above 20 million won?
It leaves separate taxation and joins your global income, which can push the whole into a higher bracket.
If I raise the deposit mid-year, does it count immediately?
It does — because the formula runs on a day-count. Article 53(3) multiplies not the deposit itself but its daily sum (balance × days) by 1/365. An increase enters for the days remaining, so it counts from that day, in proportion.
The tail of the same paragraph eases the arithmetic: “the day-count may be calculated by multiplying the balance as at the end of each month by the number of days elapsed.” It says “may”, so it is optional — set out above under the simplified day-count.
Is the jeonse home count combined with a spouse's?
It is. Decree Article 53(8) says that “the counting of homes shall be governed mutatis mutandis by Article 8-2(2) to (4)”, and Article 8-2(3)4 reads “where the person and their spouse each own a home, these shall be combined.”
The rest of that paragraph comes with it: a multi-household house counts as one (as several where separately registered), a jointly owned home counts to the largest shareholder, and a sublet home counts to the lessee. So “combined with spouse” is not confined to the rent side — the jeonse side borrows that provision.
Sources
- Korea Ministry of Government Legislation, National Law Information Centre — Income Tax Act, Article 81-12 (penalty for unregistered residential rental business). Source for “2/1,000 of the residential rental revenue”, the measuring period “from the business start date to the day before the application”, and paragraph (2), “applies even where there is no computed global income tax”. The deadline it points to, VAT Act Article 8(1) — “within 20 days from the business start date” — was opened at the same time (checked 18 September 2026).
- Korea Ministry of Government Legislation, National Law Information Centre — Income Tax Act Enforcement Decree, Article 53. Source for paragraph 1's ₩1.2 billion (inserted 28 February 2025), for “less than zero shall be treated as non-existent” and the simplified day-count, and for paragraph 5 delegating the construction-cost equivalent to Ministry ordinance, and paragraph 8 applying Article 8-2(2) to (4) to the counting of homes. The five formulas in paragraphs 3, 4 and 7 are images inside the provision, and the text was taken from the images' alt attributes.
- National Law Information Centre — Income Tax Act Enforcement Rule, Article 23. Source for the 31 per 1,000 in paragraph 1, the construction-cost formulas in paragraph 2 (item 2: purchase or build cost × leased area ÷ total floor area) with capital expenditure in and revaluation gains out, and paragraph 3's special rule for property acquired before 31 December 1990. In force 22 May 2026, Ministry Ordinance No. 33.
- National Law Information Centre — Income Tax Act Enforcement Decree, Article 8-2. Paragraph 3 on counting homes — item 4, “where the person and their spouse each own a home, these shall be combined”, with item 1 on multi-household houses, item 2 on joint ownership and item 3 on subletting. The jeonse side reaches it through Article 53(8).
- National Law Information Centre — Income Tax Act, Article 24. “Gross receipts shall be the total of amounts received or receivable” — where monthly rent lands.
- National Law Information Centre — Income Tax Act, Article 25. Source for three or more homes with deposits over ₩300 million (subpara. 1), two homes with sub-₩1.2 billion homes excluded from the count (subpara. 2), and the “until 31 December 2026” small-home proviso.
- Ministry of Government Legislation, Easy-to-Find Practical Laws — “Moving > Filing tax and claiming credits where you have let a property”. Source for the rent and deposit tests, the small-home exclusion with four tax-office cases, both deemed-rent formulas, the filing timing and basis, and the tenant credit requirements — with the provisions cited alongside.
- Ministry of Government Legislation, Easy-to-Find Practical Laws — “Comprehensive real estate holding tax and comprehensive income tax” (page states as of 15 June 2026). Source for the single-home exemption and its 1.2 billion won carve-out, the exclusion of homes abroad, the place of tax payment, and the six categories of global income.
- Korean Law Information Center — statute — Income Tax Act art. 14 (computation of the tax base) (in force 1 Jan 2026, Act no. 21221). Source for the 20M / 20M / 3M won separate-taxation thresholds.
- Our own arithmetic — a 500M won deposit giving a 120M won base (200M excess x 60%), i.e. 24% of the deposit.
Where to check further
- Whether the small-home exclusion gets extended. The provision ends at 31 December 2026 — if you depend on it, watch the year-end tax bill. The Ministry of Economy and Finance's tax revision announcement (usually July or August) and NTS Hometax notices carry it first.
- Whether this year's rate still holds. The 3.1% here came in with the 2 January 2026 amendment, and this paragraph is changed nearly every year. Re-read Article 23(1) of the Enforcement Rule before filing, or enter your deposit into the Hometax residential rental income screen to get that year's figure.
- Local-government “rental business operator” registration (Private Rental Housing Act). The penalty provision opened here measures only business registration with the tax office. Registration with the local government is a separate procedure under a different Act, and the wording differs too — Private Rental Housing Act art. 5(1): a person intending to let housing “may apply for registration” with the local authority (checked 23 September 2026). So local registration is optional, while business registration with the tax office (Income Tax Act art. 168) is mandatory and carries the penalty above. Local registration brings its own duties (minimum letting periods, increase limits), so check with your local government before choosing it.
- What counts as “purchase or construction cost”. Rule 23(2) says only that capital expenditure is in and revaluation gains are out — for individual items, your district tax office or the NTS helpline (126) is the accurate answer.
Rent turns on home count and 1.2 billion won; jeonse turns on three homes and 300 million — different provisions. And the small-home exclusion ends on 31 December 2026.
As of July 2026 (guidance page as of 15 June 2026; Income Tax Act in force 1 Jan 2026), revisited in September. Thresholds, formulas and cases are the sources verbatim; the 120 million won and the 24% are ours. On the September pass the formulas we had written off as “images we could not read” were taken from their alt text (Decree 53(3), (4), (7); Rule 23(2), (3)), and mixed tenancies, mid-year deposit increases and the spousal home count on the jeonse side were filled in from the provisions. This is not tax advice — confirm your own position through Hometax or a tax professional.
