[10 Questions and Answers] Can I Also Receive the Sangsaeng Landlord Benefits... If You Buy with Jeonse, 'NO'

10 Questions and Answers on Special Capital Gains Tax Exemptions for Sangsaeng Rental Housing

[Asia Economy Sejong=Reporter Kwon Haeyoung] 'Win-win landlords' who raise jeonse or monthly rent by within 5% until the end of 2024 can receive capital gains tax exemption benefits without fulfilling the 2-year actual residence requirement. Even if the official price exceeds 900 million KRW, the property can be recognized as a win-win rental house. Homeowners who bought a house with an existing tenant and a jeonse contract will not qualify as win-win landlords even if they raise the rent by within 5% after the existing tenant’s jeonse contract expires. On the other hand, homeowners who rent out to new tenants with jeonse simultaneously with the purchase of the house can receive win-win landlord benefits. The Ministry of Economy and Finance released a '10 Q&A on Capital Gains Tax Special Cases for Win-win Rental Houses' focusing on easily confusing matters. Below are the main points.

－Are all owned houses operated as win-win rental houses exempt from the 2-year residence requirement for capital gains tax exemption and the 2-year residence requirement for special deduction?

△No. Only the residence requirement for the one house finally transferred, which was operated as a win-win rental house, is exempted.

－To be recognized as a win-win lease contract, the rent increase must be within 5% compared to the previous lease contract. What is meant by the previous lease contract in this case?

△The previous lease contract refers to the contract newly concluded between resident A who acquired the house and the tenant. In other words, if A succeeds the contract concluded between the previous landlord B and tenant C before acquiring the house, it does not count as the previous lease contract.

－Must the tenant be the same in the previous lease contract and the win-win lease contract?

△No. The landlord must be the same in both contracts, but the tenant can be different. That is, even if the tenant changes, the rent increase must be within 5%.

－Is it allowed to have a time gap (landlord’s direct residence, vacancy, etc.) between the previous lease contract and the win-win lease contract?

△Yes. The lease under the two contracts does not need to be continuously maintained without gaps.

－By when must the win-win lease contract be concluded to be recognized as a win-win rental house?

△It must be concluded between December 20, 2021, and December 31, 2024, and the receipt of the deposit must be confirmed.

－Are contracts renewed by exercising the right to request contract renewal recognized as win-win lease contracts?

△Yes, it is possible.

－Can rental houses owned by registered rental housing business operators also be win-win rental houses?

△Yes, it is possible.

－If the rental house is a multi-family house, must a win-win lease contract be concluded for each unit (household) to be recognized as a win-win rental house?

△It depends on the future transfer plan. If the entire multi-family house is planned to be transferred, win-win lease contracts must be concluded for all units. However, if the multi-family house is planned to be transferred by unit, recognition as a win-win rental house depends on whether win-win lease contracts are concluded for each unit.

－How is the mandatory lease period of 1 year and 6 months under the previous lease contract and the mandatory lease period of 2 years under the win-win lease contract judged?

△It is judged based on the actual lease period according to the respective contracts.

－When concluding a win-win lease contract and converting from jeonse to monthly rent or from monthly rent to jeonse, how is the rent increase within 5% judged?

△It is calculated using the conversion rate (jeonse↔monthly rent conversion rate) according to Article 44 Paragraph 4 of the Private Rental Housing Special Act.