It’s the time of the year to prepare for income tax filings again. Navigating the tax system might be a challenge especially for first-timers and many might miss some tax benefits that you might not know about. One common tax benefits that many foreigners miss is actually on monthly rent (월세). I never knew about this until a friend told me this year but fear not as it will be possible to submit up to the past 3 years worth of monthly rent filings, so keep reading on.
Tax deductions in Korea work in 2 main ways:
① 세액공제 deduction on tax amount
② 소득공제 deduction on taxable income
The tax deduction direct on the final tax amount will be more beneficial for tax reductions. And the monthly rent tax benefits also can be catagorised into these 2 types: 월세 세액공제 deduction on tax and 월세 소득공제 deduction on taxable income.
Briefly, ① 월세 세액공제 deduction on tax amount for monthly rent is not available for foreigners. But if you are a citizen and meet the following criteria, you can apply for this during the 연말정산 tax filing period by submitting the relavant documents to your company.
For people who are not eligible for the 월세 세액공제 deduction on tax income, let’s look at the second type ② 월세 소득공제 deduction on taxable income.
NOTE IMPORTANT: you can only get tax benefits on either one of these, so make sure you are not eligible for ① 월세 세액공제 before you proceed with ② 월세 소득공제.
To get the ② 월세 소득공제 deduction on taxable income on monthly rent, all you need to do this file for 현금영수증 (cash receipts) on the monthly rent you paid for on Hometax. Your address on your ARC for the period of rent payment must match the address on your lease contract for this to be approved. Emphasising that you MUST do 전입신고 (register for change in address) whenever you move to a new address, else you will not be able to get any tax deductions.
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1. Search for 월세 on Hometax. navigate to주택임차료 (월세) 신고 -
2. Click on 주택임차료 (월새) 신고하기 -
3. Enter particulars as directed
Once you navigate to Hometax’s page and follow the instructions as above, you will need to submit your lease contract and proof of monthly rent payment in either .jpg or .pdf format. You can download your bank transaction record for transfer of rent as proof of payment, which is what I did.
Your local tax office will take some time (from my experience about 2 weeks) to check your filings and approve it, and you can see the approval process on Hometax. After it is approved, you are done!
My last tip is to only file for tax reduction AFTER you move out to a new place. Filing for 소득공제 for rent can be done up to the past 3 years, and rent contracts are usually for 1~2 years. The reason is because some landlords are not that pleased with their renters filing for this tax rebate, as it reveals all their rent income. Previously, you could only file for tax reductions on rent with the consent on your landlord but the laws have changed so you do not need their consent anymore. So I would do it after moving out just in case ^^
Hope this helps, and it will definitely not be easy on the first try so take some time to understand the tax calculations and system and it should be fine.
Edit: You may also refer to my post on tax adjustments for previous year taxi periods.
KoreaInsider 
[…] post is a follow up to my previous post on guide to tax deductions on monthly rent for foreigners. Please do read the first part before going on to this post on tax […]
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