Gov’t to levy tax on ‘jeonse’ deposit of multiple home owners

March 9, 2014 Leave a comment

Gov’t to levy tax on ‘jeonse’ deposit of multiple home owners

Lee Geun-woo, Shin Hyun-gyu

2014.03.05 17:43:46

Home proprietors who own two or more houses will be paying tax on lump-sum housing rent deposit ‘jeonse’ income from 2016. The government will impose income tax equivalent to banks’ interest rate on the combined jeonse deposit in excess of 300 million won ($280,157), in addition to taxation on monthly rental income. 
As a result, if owners of two houses earning 50 million won lease a home on 500 million won jeonse deposit, they will need to pay 190,000 won tax each year.
The Ministry of Strategy and Finance announced such measure Wednesday that supplements the previously released housing rent market improvement measure. The government decided to levy no tax on two-home proprietors who bring in 20 million won or less monthly home rents a year for a temporary period of two years and apply a 14 percent separate taxation rate from 2016, and instead raise required expense rate from 45 percent to 60 percent to ease tax burden.
Furthermore, the government decided to grant basic four million won deduction to those who live solely on monthly rent incomes or make 20 million won or less monthly rent incomes. The National Tax Service (NTS) decided to forgo inspection and condone prior rent incomes unreported by small-scale landlords.
But the NTS said it will be tough and slap heavy tax on owners of three or more houses, owners of two houses with over 20 million won annual housing rent incomes, and owners of single home valued more than 900 million won.

 

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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