Can a non-resident get the same tax break as a resident for renting one house in Korea?



Andrew Kim is sitting in Mr. Oh’s office. Mr. Oh is organizing some documents, ready to listen to Andrew’s questions.)

Andrew Kim: Mr. Oh, I own a house in Korea, and I’m renting it out. The government-assessed value is about 500 million KRW. Since I live in LA, I’m considered a non-resident. Do I still qualify for any tax exemptions on this rental income?

Mr. Oh: Well, Andrew, rental income is generally taxable. However, under Korean tax law, if you own only one property in Korea with an assessed value of less than 1.2 billion KRW, the rental income can be tax-exempt.

Andrew Kim: (surprised) Really? Even if I’m a non-resident, I can still get that exemption?

Mr. Oh: That’s where it gets a bit tricky. According to Article 121 of the Korean Income Tax Act, non-residents with real estate income in Korea are subject to global taxation. However, Article 122 states that when calculating taxable income, the same rules that apply to residents are also applied to non-residents.

Andrew Kim: So, legally speaking, I can claim the same tax exemption as a resident?

Mr. Oh: Technically, yes. The wording of the law allows you to claim this exemption. Article 14 of the Income Tax Act mentions that tax-exempt income should not be included in the taxable income calculation.

Andrew Kim: (nodding thoughtfully) But… it feels like the government wouldn’t really want to give non-residents the same benefits as residents.

Mr. Oh: You’re exactly right. The intent of the tax exemption is to support residents’ housing stability. Applying it to non-residents doesn’t quite align with that purpose. So, while you can claim the exemption now, the Korean tax authorities might issue new guidelines or interpretations in the future that could reverse this and make the income taxable.

Andrew Kim: (concerned) So, I could be tax-exempt now, but they might come back later and decide to tax me anyway?

Mr. Oh: Yes, that’s a possibility. For now, you can file your taxes claiming the exemption, but you should be prepared in case the policy changes and the government decides to impose taxes retroactively.

Andrew Kim: (smiling) Thanks for explaining all of this so clearly, Mr. Oh. It’s good to know where I stand. I’ll definitely reach out again if I have more tax questions.

Mr. Oh: My pleasure, Andrew. Feel free to contact me anytime. I’ll keep an eye on any changes in the regulations and let you know right away.

(Andrew Kim thanks Mr. Oh and stands up to leave, while Mr. Oh organizes his documents, preparing for the next client.)