Many people live in Australia while still owning property in Korea.
An apartment in Seoul. An apartment in a regional city. A home co-owned with your parents. A place let out on jeonse. A home you might live in someday if you ever go back.
At first it is an asset. Over time it becomes homework.
Which country do you pay tax in?
Can you keep the loan?
How do you manage the jeonse deposit?
If you sell, can you bring the money to Australia?
Do you have to report it in Australia too?
Korean property does not become simple just because you live in Australia.
If anything, it gets more complicated as the two countries’ systems overlap.
The bottom line
- If you are an Australian tax resident and own Korean property, Korean tax and Australian tax can become tangled together.
- Understanding loan rules only through the lens of a Korean resident is risky.
- You need to look at rental income, capital gains tax, residency status, inheritance and gifts, and remittance evidence all at once.
- Before selling, calculate not the headline price but the after-tax, after-remittance, after-FX amount.
- Korean property is an asset and, at the same time, a cross-border project that needs record-keeping.
Key terms first
| Term | Meaning |
|---|---|
| Tax resident | The test for which country can tax your worldwide income |
| Capital gains tax (Korean) | Tax on the gain when you sell property |
| CGT | Capital Gains Tax. The Australian capital-gains concept |
| Rental income | Income from letting out a home |
| Source of funds | The evidence that explains where money came from |
| Remittance evidence | Contracts, tax-payment records, sale documents and the like needed when sending a large sum overseas |
The most important term is tax resident.
Separate from where your visa is or where your citizenship is, tax law looks separately at “which country you are actually a resident of.”
The home sits in Korea, but the tax crosses the border
Korean property sits in Korea.
So Korean tax comes to mind first.
Acquisition tax, property tax, comprehensive real estate tax, rental income tax, capital gains tax. It can vary by the type of home, the holding period, whether you live in it, how many homes you own, and whether it is in a regulated zone.
But if you are an Australian tax resident, one more layer is added.
Australia can look at the worldwide income of a tax resident. Your Korean rental income or the gain on selling Korean property can be connected to your Australian reporting.
At that point, if you have paid tax in Korea, you would review adjustment mechanisms such as the tax treaty or a foreign income tax offset.
Put simply, it is this.
Having a home in Korea does not mean you only look at Korea.
Living in Australia does not mean you only look at Australia.
You have to look at both countries together.
Assuming loan rules do not apply to you is risky
Korean property loan rules change often.
LTV (loan-to-value), DSR (debt service ratio), multiple-home regulations, jeonse loans, registered rental landlords, non-resident loan treatment and so on can vary by timing, bank, region, ownership name and income evidence.
The reason this is hard for expats is that your circumstances differ from an ordinary salaried worker inside Korea.
You may have no Korean salary.
It may be unclear how a Korean bank will view your Australian income.
Tax-resident and foreign-exchange-resident determinations can get mixed up.
A Korean address, family-name ownership and co-ownership can all be entangled.
So you cannot decide based only on “I heard on the news that loans were loosened.”
You have to look again through the lens of your ownership name, your residency status, your income evidence and your bank’s criteria.
Rental income may look small, but it needs records
Many people leave a Korean home on jeonse or monthly rent while living in Australia.
With jeonse, managing the deposit matters; with monthly rent, reporting the rental income matters.
If you are an Australian tax resident, your Korean rental income can be connected to your Australian reporting. Even if you have already reported it in Korea, you need to confirm how it is reflected in Australia.
What matters here is records.
The lease agreement.
Records of monthly rent received.
Maintenance-fee settlements.
Repair receipts.
Korean tax-filing documents.
Later, when you handle capital gains tax, Australian reporting or remittance evidence, these records can become necessary.
Memory is not evidence.
Before selling, look at the after-tax amount
When people wonder whether to sell a Korean home, most of them look at the price.
“How much would I get if I sold now?”
But the more important question for an expat is this.
“After paying tax, repaying the loan, returning the jeonse deposit, remitting the money and converting the currency, how much is left in Australia?”
For example, even if the price has risen, a large capital gains tax reduces the real gain.
When the won is weak, converting to Australian dollars changes how much it actually feels like.
Remitting the sale proceeds can require source of funds and tax-payment evidence.
Additional Australian tax reporting may be needed.
The price is the starting point.
The conclusion is the after-tax, after-remittance, after-FX amount.
Inheritance and gifts look like a family matter but are a tax matter
Korean property is often entangled with family.
You might inherit your parents’ home later, gift a home to your children, or end up co-owning one with a sibling.
Living in Australia makes it more complicated.
Korean inheritance and gift tax.
The acquisition cost for Australian tax.
FX.
Transfer of ownership.
Remittance.
Movement of money between family members.
Even something the family has agreed on among themselves, tax is calculated separately.
In particular, a decision along the lines of “let’s just change the ownership name for now” can become a large cost later.
Read next
- Sending money from Australia to Korea
- The Korea–Australia tax treaty and double taxation
- Scared of tax on moving back to Korea?
- Moving back to Korea — super, property, tax
- The Korea–Australia money map
Disclaimer
This article is general information. Korean property loans, tax, foreign-exchange reporting and Australian tax treatment can vary greatly depending on your residency status, ownership name, number of homes, holding period, income and your bank’s criteria. Before you actually sell, borrow or remit, please check the latest guidance from a Korean tax accountant, an Australian tax agent, your bank and an FX specialist.