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As concerns about tin rent and reverse rent in jeonse transactions grow, the number of people looking for monthly rent in the rental market is increasing. I feel like the rent burden is greater for monthly rent than for jeonse. If monthly rent is a burden, you can use the ‘monthly rent refund system’ where you can receive a refund of one or two months’ rent. Let’s take a look at how the monthly rent refund system works.
1. What is the monthly rent refund system? 2. Monthly rent refund eligibility and required documents 3. In case of failure to apply for refund 4. Home Tax Monthly Rent Refund Application 5. Apply for a monthly rent refund at JariTalk
The monthly rent refund system is a system that allows you to receive a tax deduction of up to 17% of the monthly rent spent on housing expenses for one year, up to 7.5 million won per year. The tax credit rate is applied differently depending on the individual’s income, and a maximum of 1.27 million won can be refunded. Monthly rent deductions are largely divided into ‘tax deductions’ and ‘income deductions’. Each deduction method has different application targets and conditions, and cannot be claimed multiple times at the same time. Therefore, you must understand the characteristics and conditions of each method and then choose the method that best suits your situation.
Source: Hana Bank
This is a system that deducts from taxes the monthly rent paid for one year. The monthly rent tax credit can only be applied for by non-homeowners or household members with a total salary of 70 million won or less or a wage earner with a comprehensive income of 60 million won or less. The deduction limit for the monthly rent tax credit applies to details related to monthly rent, up to a maximum of KRW 7.5 million.
Deduction rate – Total salary less than KRW 55 million: 17% – Total salary exceeding KRW 55 million and less than KRW 70 million: 15%
Income deduction is a system that reduces the standard taxable amount by deducting monthly rent expenses from total income. Monthly rent is also included in the income deduction items, and since tax is ‘tax base x tax amount’, it means that the tax is reduced as the tax base decreases.
Deduction rate – Total salary less than KRW 70 million: Deduction limit is the lower of 20% of total salary or KRW 3 million – Total salary exceeds KRW 70 million and less than KRW 120 million: Deduction limit is KRW 2.5 million – Total salary exceeds KRW 120 million: Deduction limit is KRW 2 million
Monthly rent tax deductions are available from the time you report moving in after signing a monthly rent contract. If you have not reported your move-in, it must be treated as an income deduction rather than a tax deduction. Tax credits can be applied for by preparing documents at the time of year-end tax settlement. Required documents are a copy of resident registration, a copy of the rental agreement, and proof of monthly rent payment (bank transfer details, cash receipt). At this time, the management fee is not eligible for refund, so please check this.
✅ Reporting period: Year-end tax settlement (January 15 to February 28 every year), comprehensive income tax (May every year) reporting period
Applications for monthly rent refunds must be made during the year-end tax settlement or comprehensive income tax reporting period. If you did not know that such a system existed or did not know the specific method and could not apply within the period, you can use ‘Request for Correction’. You can receive a refund up to 5 years ago using correction claim. For example, if you were unable to apply for a refund in 2022, you can apply for a refund through a correction request until May 2027.
[National Tax Service Home Tax – Tax return – Comprehensive income tax return – Earned income report – Rectification request]
Let’s find out how to apply via home delivery between in-person and non-face-to-face applications. Applying for a monthly rent refund does not require the consent of the landlord. You can apply by accessing and logging in to Hometax.
[ Consultation/Report – Non-issuance of cash receipt/credit card – Housing rent (monthly rent) ]
You can apply without difficulty as you just need to enter basic personal information and contract details and attach documents.
An app has been released that provides rent refunds on behalf of tenants. It is convenient for tenants (lessees) to use. When logging in, select a tenant from among landlord, tenant, or broker, log in, and then sign up for the service to use it.
During the service subscription process, the landlord’s contact information is requested to confirm whether you are a monthly renter. It is not necessary to obtain permission from the landlord for a rent refund, but since it is personal information, there may be a dispute if it is passed on arbitrarily, so it is recommended that you check with the landlord before sending the contact information.
Also, please note that if you receive a rent refund using Geely Talk, an alert will be sent to the landlord.
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