Government Considers Expanding Monthly Rent Tax Credit from 12% to 15%

Increase in Annual Income Deduction Limit for Jeonse Loan to 3 Million Won
Expanded Tax Benefits for Rental Business Owners of Houses Valued Under 600 Million Won in the Seoul Metropolitan Area

[Asia Economy Sejong=Reporter Kwon Haeyoung] The government is considering raising the maximum tax credit rate for monthly rent to around 15% and expanding the income deduction limit for Jeonse loan repayments to alleviate the housing cost burden for non-homeowners living in Jeonse or monthly rental housing. It also plans to increase tax support for rental business operators.

According to the government on the 20th, it plans to announce these measures regarding Jeonse and monthly rent on the 21st.

First, the government is reviewing a plan to raise the tax credit rate on monthly rent paid by non-homeowner household heads from the current maximum of 12% to around 15%. Currently, non-homeowner household heads with a total annual income of 70 million KRW or less who meet certain criteria can receive a tax credit of up to 10% on monthly rent payments (capped at 7.5 million KRW annually), and those with an income of 55 million KRW or less can receive up to 12%. However, adjusting the tax credit rate requires a revision of the tax law, making the consent of the opposition parties and the National Assembly essential.

Alongside this, the government is also considering expanding income deduction support for principal and interest repayments on Jeonse loans. Currently, non-homeowner household heads who borrow money to rent a home meeting certain criteria can deduct 40% of the principal and interest repayments (up to 3 million KRW annually) from their income tax, and increasing this deduction limit is reportedly a likely direction.

Furthermore, the government is exploring ways to increase support for private rental business operators. Rental business operators are those registered through local government procedures under the "Special Act on Private Rental Housing." In exchange for obligations such as a mandatory rental period (10 years) and limits on rent increases (5% on existing contracts), they currently receive benefits such as exclusion from comprehensive real estate tax aggregation for homes with a publicly announced price of 600 million KRW or less in the metropolitan area (300 million KRW or less outside the metropolitan area) based on the standards for purchased rental housing. If the government increases support for these operators, it is expected that the tax support requirements may be somewhat relaxed. There is also discussion of reintroducing short-term purchased rental housing or small apartment purchased rental housing, which were abolished under the previous Moon Jae-in administration. However, expanding tax support for rental business operators also requires amending related laws, making the opposition parties' consent necessary.

This content was produced with the assistance of AI translation services.