South Korea’s National Tax Service (NTS) has clarified rules regarding deductions for long-term housing mortgage loan interest payments, responding to queries about application limits. The NTS, in a formal ruling (Document Number: Seomyeon-2024-Woncheon-0133), detailed conditions for eligible deductions as part of year-end tax settlements.
The ruling confirms that individuals who do not own a home, or who are heads of households owning only one home, are eligible for deductions on interest paid on long-term, mortgage-backed loans. Eligibility extends to certain household members and foreign nationals, provided they do not claim deductions for housing rental payments, long-term housing loan interest, or comprehensive housing subscription savings.
A key element of the deduction centers on the assessed value of the property at the time of acquisition. The NTS specifies that the home’s assessed value must be 600 million won or less. This threshold, updated from 500 million won, applies to homes acquired after January 1, 2024, according to the NTS guidance. The ruling emphasizes that the assessed value, not the market price, is the determining factor.
The maximum deduction amount varies based on the loan’s repayment period and interest rate structure. Loans with repayment periods of 15 years or more qualify for a maximum deduction of 8 million won. Loans with repayment periods of 10 years or more, featuring fixed interest rates or non-deferrable principal and interest payments, also qualify for deductions, though the specific amount is not detailed in the ruling.
The NTS also clarified that the total amount of deductions – including those for long-term housing loan interest, rental payments, and housing subscription savings – cannot exceed specified limits. Further details on these limits are available through the NTS website and related guidance materials.
Recent reports indicate that the change in the assessed value threshold to 600 million won has broadened the number of homeowners eligible for the deduction. According to a blog post detailing the 2025 year-end settlement, the deduction represents a significant tax benefit for those financing home purchases. A Tistory blog post further emphasized the importance of verifying the assessed value of the property, as opposed to the sale price, to ensure eligibility.
The NTS has not yet announced a date for the release of detailed guidelines for the 2025 year-end tax settlement, leaving taxpayers awaiting further instructions on the documentation required to claim the deduction. The agency continues to provide information on its website regarding the requirements for claiming the deduction, including the require for a certificate of interest payment.
