Skip to content
Kor Eng

Latest tax News in Korea

home Latest tax News in Korea
Taxation on House Rental Income

Taxation on House Rental Income


Date: April 2, 2021


I. Introduction

As housing prices are increasing rapidly in several metropolitan areas, the government has been tighten taxes including withholding taxes and capital gain taxes. It also has introduced tougher rental housing system this year. Therefore, this paper is to look into taxation systems of housing in Korea.  


II. Overview

1. Taxationon registered rental business entities

To be recognized as a rental business entity,any person who intends to rent housing should apply for registration as a srental business entity at the district office and also register a business operator at the tax office. ‘Long-term housing rental business entities’ refer to those who operate real-estate leasing business for more than 8 years and ‘short-term rental business entities’ are for more than 4 years.


Where a rental business entity starts itsrental business with a house cheaper than KRW 600 million (fair market price) and retains the increase rate of rental fees including security deposit below 5% the entity would be given tax benefits. In addition to that, retaining the rental housing for more than 5 years is required to have it excluded from the counting of houses in retention in deciding capital gain taxes. In this cases short-term rental house business entities should retain its rental housing for more than 5 years in order to enjoy tax breaks for non-taxable capital gains.


2. Taxationon unregistered, general, rental business entities

Taxation on lease income for unregistered rental business entities decides based on the number of houses a rental business entities have.

  1. Incometax is not levied on single home owners with the exception of those who retaina house which exceeds KRW 900 million.

  2. Incometax is levied on households with 2 houses but deemed rent for security depositsis not the subject to income tax.

  3. Incometax is levied on households with 3 houses and it goes for monthly rent and deemed rent for security deposit as well.



  • Options between separatetaxation & global taxation for rental business entities with income exceeding KRW 20 million

Until 2018 housing rent not exceeding KRW 20 million was subject to non-taxation but it was reformed to be taxable giving options to taxpayers between separate taxation and global taxation. For housing rent over KRW 20 million has been subject to global taxation and not changed.


Where a rental business entity who registered long-term rental business entity holds another general rental housing taxeswill be levied based on , , and above.For example, where a rental business entity with two long-term rental housing and holds another general rental housing it is regarded as three house owners regardless of whether it is leased out or not. Therefore income tax shall belevied on aggregated monthly rent and deemed rent for security deposits.


  • Calculation of separatetaxation on income tax

In accordance with revised taxation law a rental business entity has been given an option to pay taxes based on separate taxation system. Its calculation is as follows,

[Total income * (1- necessary expense rate) –deducted tax amount] * 14


  • Registration as rentalbusiness entity

From 2019 as rental business entities with small-scale housing are allowed to have options between separate taxation and global taxation all rental business entities are required to register in order to enhance the efficiency of taxation. If not registered additional taxes will be levied for that. With exception of the two following cases. When a single house owner has rental income it is not subject to taxation and a two house owner has security deposits as income is also not subject to taxation.

(*) 2 percent of the total income from housingrental business will be levied as penalty tax from 2020.

(*) Those who started rental business beforeDecember 2019 have to register before Jan 21, 2020.



Learn more about Korean tax system by visiting our website

Incorporation Service Bookkeeping Service Corporate Tax Standard Fees