Minor Rental Income Filers Increase 158% in 5 Years... Rental Income Up 59.8%
Strengthened Investigation on Tax Evasion via Illegal Inheritance and Gifts by Minor Landlords
Taxation on Rental Income from Jeonse Deposits for Two Houses and Combined Taxation on Minor-Owned Houses per Household Needed
[Asia Economy Reporter Kangwook Cho] Last year, rental income earned by 2,842 minors reached 55.8 billion KRW, marking the highest figures ever recorded in both number of people and amount.
According to data received on the 23rd from the National Tax Service by Jin Seong-jun, a member of the National Assembly Land, Infrastructure and Transport Committee from the Democratic Party of Korea, real estate rental income earned by 11,627 minors (including duplicates) during 2015?2019 amounted to 234.2 billion KRW.
In particular, the average rental income per minor landlord was higher than that of adults. As of 2019, one minor earned an average annual rental income of 19.66 million KRW, whereas the average rental income per adult was only 18.93 million KRW.
Over the past five years, the increase in income and number of minor rental income earners has far exceeded that of adults. The number of minors earning rental income rose by 58.3%, from 1,795 in 2015 to 2,842 in 2019, and their rental income increased by 59.8%, from 35 billion KRW to 55.9 billion KRW. During the same period, adults increased by 27.6%, from 855,079 to 1,090,708, and their rental income rose by 21.3%, from 17.0026 trillion KRW to 20.6647 trillion KRW.
Representative Jin stated, "As real estate unearned income through parental advantages is rapidly increasing and unfairness at the starting line is intensifying, active investigation into tax evasion such as irregular inheritance and irregular gifts by minors is necessary."
He also said, "Unlike other real estate, the exemption from taxation on housing jeonse deposits is exceptionally allowed up to two houses, which is abused as a channel for irregular inheritance and gifts, making it difficult for actual residents to purchase their own homes. Therefore, deemed rental income should be calculated and taxed for two houses, just like monthly rent."
Representative Jin added, "Although the housing of minor children living together is mostly effectively the parents’ housing, rental income generated from it is not included in the total number of houses, raising concerns that it could be abused as a tax avoidance method when rental income arises under the child's name. Rental income tax should also be levied by aggregating the number of houses per household, just like capital gains tax."
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