South Korea: Worked Example of Tax on Rent
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Tax Example: Rent
| Non-resident couple's joint monthly rental income1 | US$1,500 | |
| Annual Rental Income | 18,000 | |
| Less: tax-category % reduction2 | (9,072)3 | |
| Less: basic deduction4 | (2,000) | |
| = Taxable Income | 6,928 | |
| Income Tax Rates | ||
| Up to KRW10 million | 8% | 554 |
| KRW10 – KRW40 million | 17% | – |
| KRW40 – KRW80 million | 26% | – |
| Over KRW80 million | 35% | – |
| = Income Tax Due | 554 | |
| Additional Taxes | ||
| Surtax at 10% | 55 | |
| Annual Income Tax Due | US$609 | |
| Tax Due as % of Gross Income | 3.39% | |
Thanks to: |
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DISCLAIMER: The information contained above is marketing material only and is not written tax advice directed at the particular facts and circumstances of any person and should not be relied upon. We encourage you to discuss your particular situation with us or an independent tax advisor. This information was last updated on November 14, 2006.
Notes
1 The property is jointly owned by husband and wife, but then taxed separately (50% upon each partner). Exchange rate used: US$1 = KRW1,000.
2 There are two me thods of computation for the personal taxable income: Case 1: Income – (income * expense rate for real estate rental business which is between 20% and 66%). This is applicable only if the rental income is under KRW36 million.
Case 2: Income – major expenses (income * expense rate for real estate rental business which is between 15% and 48%). Major expenses consist of labor costs, purchase costs, and rental costs.
The National Tax Service (NTS) releases the expense rates annually.
3 The rental income is less than KRW36 million and the property value is assumed to be under KRW600 million.
4 Each individual taxpayer is entitled to a KRW1 million basic deduction.
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