Seoul, South Korea – The National Tax Service (NTS) has announced new regulations for housing loan deductions, effective for this year's tax return. Under the revised guidelines, individuals who own more than one home will no longer be eligible for deductions on rent or mortgage interest, even if they are renting a property in a different city due to work or other reasons.
According to the NTS's "Housing Finance Income and Tax Deduction Benefits and Precautions" released on [date], approximately 20.2% of the 20.85 million taxpayers in 2023 received housing finance income or tax deductions. However, the new rules will limit these benefits.
Starting this year, employees with annual incomes of up to 80 million won are eligible for a maximum of 1.5 million won in rent tax deductions. However, if the taxpayer is the head of a household or a family member that owns a home, they will not be eligible for rent tax deductions or mortgage interest deductions, regardless of their living arrangements.
For instance, if the head of a household owning a home is transferred to a different city and rents an apartment, they will not be able to claim deductions for the mortgage interest or rent on the rented property.
However, homeowners, even if they do not reside in their owned property, can still claim deductions for long-term mortgage interest payments.
The NTS also cautioned taxpayers about using "in-house loans" for mortgage purposes. Mortgage interest deductions are only applicable for loans obtained from financial institutions, insurance companies, the Housing and Urban Guarantee Corporation, or individuals who are not engaged in the lending business (such as family members). Loans obtained from the taxpayer's employer are not eligible for deductions.
Additionally, interest payments on long-term mortgages for homes acquired for free are also not deductible.
The NTS further announced that taxpayers can now claim deductions of up to 20 million won on long-term mortgage interest payments starting this year.
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