Korea Company Housing Loan Tax | SME Exemption, 4.6% Market Rate and After-Tax Rate

Plan by loan year: average balance, market rate, benefit, taxable, income tax, local tax, health and long-term care, employment insurance, extra cost, company interest, real rate and saving versus the bank
Year	Avg balance	Market rate	Benefit	Taxable	Income tax	Local tax	Health + LTC	Employment	Extra cost	Company interest	Real rate	Saving
Year 1	95,416,667 KRW	4.6%	2,957,917 KRW	2,957,917 KRW	581,503 KRW	58,150 KRW	120,310 KRW	26,621 KRW	786,584 KRW	1,431,250 KRW	2.32%	1,789,666 KRW
Year 2	85,416,667 KRW	4.6%	2,647,917 KRW	2,647,917 KRW	537,328 KRW	53,732 KRW	107,700 KRW	23,831 KRW	722,591 KRW	1,281,250 KRW	2.35%	1,583,659 KRW
Year 3	75,416,667 KRW	4.6%	2,337,917 KRW	2,337,917 KRW	493,153 KRW	49,315 KRW	95,092 KRW	21,041 KRW	658,601 KRW	1,131,250 KRW	2.37%	1,377,649 KRW
Year 4	65,416,667 KRW	4.6%	2,027,917 KRW	2,027,917 KRW	448,978 KRW	44,897 KRW	82,482 KRW	18,251 KRW	594,608 KRW	981,250 KRW	2.41%	1,171,642 KRW
Year 5	55,416,667 KRW	4.6%	1,717,917 KRW	1,717,917 KRW	404,803 KRW	40,480 KRW	69,874 KRW	15,461 KRW	530,618 KRW	831,250 KRW	2.46%	965,632 KRW
Year 6	45,416,667 KRW	4.6%	1,407,917 KRW	1,407,917 KRW	360,628 KRW	36,062 KRW	57,264 KRW	12,671 KRW	466,625 KRW	681,250 KRW	2.53%	759,625 KRW
Year 7	35,416,667 KRW	4.6%	1,097,917 KRW	1,097,917 KRW	316,453 KRW	31,645 KRW	44,656 KRW	9,881 KRW	402,635 KRW	531,250 KRW	2.64%	553,615 KRW
Year 8	25,416,667 KRW	4.6%	787,917 KRW	787,917 KRW	272,278 KRW	27,227 KRW	32,047 KRW	7,091 KRW	338,643 KRW	381,250 KRW	2.83%	347,607 KRW
Year 9	15,416,667 KRW	4.6%	477,917 KRW	477,917 KRW	228,103 KRW	22,810 KRW	19,438 KRW	4,301 KRW	274,652 KRW	231,250 KRW	3.28%	141,598 KRW
Year 10	5,416,667 KRW	4.6%	167,917 KRW	167,917 KRW	107,886 KRW	10,788 KRW	6,829 KRW	1,511 KRW	127,014 KRW	81,250 KRW	3.84%	19,236 KRW

Allocation scenarios: amounts, company interest, extra cost, bank interest and total cost over the term
Scenario	Company loan	Bank loan	Company interest	Extra cost	Bank interest	Total cost
All from the bank	0 KRW	300,000,000 KRW	0 KRW	0 KRW	63,525,000 KRW	63,525,000 KRW
Your planned company loan★ lowest cost	100,000,000 KRW	200,000,000 KRW	7,562,500 KRW	4,902,571 KRW	42,350,000 KRW	54,815,071 KRW

Why a company housing loan can be taxed and what this calculator answers

When you buy a home or rent one on a jeonse deposit in Korea, a company housing loan is a powerful benefit that lends you housing funds at far below bank rates or interest-free.
Income Tax Enforcement Decree Article 38(1)7, however, treats the benefit an employee gains by borrowing home purchase or rental funds at a low or zero rate as wage income.
The amount you save versus the market rate is treated as pay from your employer and added to total salary at the year-end settlement.

Decree Article 17-4(2) makes that benefit tax-free for employees of an SME under the Restriction of Special Taxation Act.
So the same KRW 100 million at the same 1.5% costs a large-company employee extra tax and health insurance, while an SME employee pays nothing extra unless they are related to the controlling shareholder.
Without knowing this you can overrate the company loan or, conversely, skip a tax-free benefit and use a more expensive bank loan.

Enter the principal, company rate, term, repayment method and your salary to see the benefit and tax treatment by loan year, plus the extra income tax, local income tax, health, long-term care and employment insurance.
The calculator compares the after-tax real rate with your bank rate and shows the break-even company rate, the total cost of each company/bank split and a comparison with company housing.

This calculator is based on Korean rules: the 2026 Income Tax and Corporate Tax Enforcement Decrees and Rules, with laws checked through the National Law Information OPEN API on 2026-10-29.
The defaults are a fictional example and do not represent actual withholding or a tax office decision.

Tax rules for employer housing loans at a glance

The basis for taxing the benefit, the SME exemption and its exclusions, the company housing rules and the rate used to value the benefit are spread across several provisions.
If the employer is not an SME or you have a controlling-shareholder relationship, the whole benefit is taxable wage income.

Taxable and tax-free rules for employer housing loans and company housing with legal bases
Item	Rule	Basis	Threshold
Taxable benefit	Benefit an employee gains by borrowing funds to buy or rent a home (including its land) at a low or zero rate	Income Tax Enforcement Decree Article 38(1)7	Wage income
Tax-free exception	Housing purchase or rental loan benefit received by an employee of an SME under Restriction of Special Taxation Act Decree Article 2	Decree Article 17-4(2)	SME
Excluded from the exception	A corporation’s controlling shareholders (with their relatives and management-control parties); a sole proprietor’s relatives	Proviso to Article 17-4(2)	1%+ and largest group
Company housing benefit	Benefit from being provided with a home is wage income	Decree Article 38(1)6	Wage income
Tax-free company housing	Officers holding no shares, minority-shareholder officers, non-officer employees, central and local government employees	Article 17-4(1), Rule Article 9-2	Under 1%
Rate to value the benefit (assumption)	Borrowed from the employer’s deemed-interest market rate: weighted average borrowing rate in principle, overdraft rate as the exception	Corporate Tax Decree Article 89(3), Rule Article 43(2)(4)	4.6%

The SME exemption has no cap on the loan amount.
Corporate Tax Enforcement Rule Article 44(7-2) likewise removes housing purchase and jeonse loans to SME staff (other than controlling shareholders) from the employer’s deemed-interest calculation, so both laws point the same way.

The market rate: 4.6% or the weighted average borrowing rate?

Neither the Income Tax Act nor its Decree or Rule sets a rate for valuing this benefit.
Employees are related parties of the employer under the Corporate Tax Act, so the employer computes deemed interest on staff loans at the market rate in Corporate Tax Enforcement Decree Article 89(3) and treats the difference as the employee’s bonus.
This calculator assumes that market rate is borrowed to value the wage-income benefit.

Overdraft rate of 4.6% a year

Corporate Tax Enforcement Rule Article 43(2) sets it at 46/1,000.
It applies when the employer has no outside borrowing or elects it on its return (for that year and the next two business years).
It is the safest default.

Weighted average borrowing rate

The employer’s borrowing balances at the lending date weighted by each borrowing rate; it is the market rate in principle under the Corporate Tax Act (Rule Article 43(1)).
If the employer borrows cheaply, it is below 4.6% and the taxable benefit shrinks.
Ask payroll or accounting for the figure.

A loan outstanding for more than five years from the lending (or renewal) date to the business year end uses the overdraft rate even at an employer that uses the weighted average rate (Decree Article 89(3)1-2, Rule Article 43(4)).
So with the weighted rate selected, years 1–5 use your input and year 6 onward uses 4.6%.

Formula: from the benefit to the after-tax real rate

Step 1 — Benefit by loan year

Opening monthly balances follow the repayment method (interest-only, equal principal or equal payments).
Benefit = Σ opening monthly balance × max(0, market rate − company rate) ÷ 12
Average balance = sum of opening balances ÷ 12; company interest = Σ opening balance × company rate ÷ 12

Step 2 — Tax treatment and extra cost

An SME employee without a controlling-shareholder relationship has a taxable benefit of 0; otherwise the whole benefit is taxable.
Apply the earned income deduction (Act Article 47), basic rates (Article 55) and wage income tax credit cap (Article 59) to salary G and G + taxable benefit to get the change in determined tax.
Extra cost = income tax increase + 10% local income tax + health 3.595% + long-term care 0.4724% + employment 0.9%

Step 3 — Compare with the bank

After-tax real rate = (company interest + extra cost) ÷ average balance
Saving versus the bank = bank interest on the same principal − company interest − extra cost
Break-even company rate = the company rate at which the term-total saving is zero

How to use the calculator

Enter the housing funds and loan terms.
Total funds needed, the company loan limit and planned amount, the company rate, a bank rate you were actually quoted, the term and the repayment method.
Choose the rate used to value the benefit.
Keep the 4.6% overdraft rate if unsure, or enter the weighted average borrowing rate your employer gives you.
Check the tax-free conditions.
Whether the employer is a tax-law SME, whether you are a controlling shareholder or their relative (or the owner’s relative at a sole proprietorship), and your position and shareholding.
Enter your year-end settlement details.
Total salary excluding the benefit, other income deductions, other tax credits and whether the benefit counts toward insurance pay.
Compare and save.
Review the treatment, the year-by-year table, allocation scenarios, break-even rate and housing comparison, then save them as TXT with the checklist.

Fictional example 1: a large-company employee borrows KRW 100 million at 1.5%

A large-company employee with total salary of KRW 70 million, other income deductions of KRW 12 million and other tax credits of KRW 500,000 funds a KRW 300 million home with KRW 100 million from the company (1.5%, 10 years, equal principal) and KRW 200 million from a bank (4.2%).
The market rate is the 4.6% overdraft rate.

Example 1: year 1 benefit and extra cost by item, in KRW
Item	Amount (KRW)
Year 1 average balance	95,416,667
Benefit = taxable benefit (× 3.1%)	2,957,917
Income tax (increase in determined tax)	581,503
Local income tax (10%)	58,150
Health insurance (3.595%)	106,337
Long-term care insurance (0.4724%)	13,973
Employment insurance (0.9%)	26,621
Year 1 extra cost	786,584

Adding the KRW 2,957,917 taxable benefit raises the tax base from KRW 44,750,000 to KRW 47,560,022, and as salary passes KRW 70 million the wage income tax credit cap falls from KRW 660,000 to KRW 500,000.
Determined tax therefore rises from KRW 4,292,500 to KRW 4,874,003, up KRW 581,503, more than the 15% marginal rate alone.
Year 1 company interest of KRW 1,431,250 plus the KRW 786,584 extra cost gives an after-tax real rate of 2.32%, below the 4.2% bank rate, and KRW 1,789,666 less than the KRW 4,007,500 a bank would charge on the same principal.
The ten-year average real rate is 2.47% and the term-total saving is KRW 8,709,929.

Fictional example 2: SME, controlling-shareholder relative or interest-free

Changing only the employer size, the relationship with the controlling shareholder or the company rate changes year 1 as follows.

Example 2: year 1 taxable benefit, extra cost, real rate and saving by situation, in KRW
Situation	Taxable (KRW)	Extra cost (KRW)	Real rate	Year 1 saving (KRW)
Large-company employee at 1.5% (example 1)	2,957,917	786,584	2.32%	1,789,666
SME employee at 1.5%	0	0	1.5%	2,576,250
SME, but a relative of the controlling shareholder	2,957,917	786,584	2.32%	1,789,666
Large-company employee, interest-free (0%)	4,389,167	1,082,027	1.13%	2,925,473

For an SME employee the benefit is tax-free, so the real rate stays at the 1.5% company rate and the ten-year saving is KRW 13,612,500, KRW 4,902,571 more than at a large company.
Even at an SME, a relative of the controlling shareholder loses the exemption and pays the same extra KRW 786,584 as a large-company employee.
An interest-free loan raises the taxable benefit to KRW 4,389,167 but, with no interest, is cheapest at a 1.13% real rate.
If the employer uses a 3.5% weighted average borrowing rate, the year 1 benefit falls to KRW 1,908,333 and the extra cost to KRW 569,922, returning to the 4.6% basis from year 6 (year 6 benefit KRW 1,407,917).

Splitting between the company loan and the bank with the break-even rate

The calculator compares three splits over the same term and repayment method: all from the bank, your planned company loan, and the company loan up to the limit, showing the total cost of company interest, extra tax and premiums, and bank interest.

Allocation scenarios for KRW 300 million: company loan, bank loan and ten-year total cost, in KRW
Split	Company loan (KRW)	Bank loan (KRW)	10-year total cost (KRW)
All from the bank (KRW 300M)	0	300,000,000	63,525,000
Company KRW 100M + bank KRW 200M (large company)	100,000,000	200,000,000	54,815,071
Company KRW 100M + bank KRW 200M (SME, tax-free)	100,000,000	200,000,000	49,912,500

Break-even company rate of 3.73%

In example 1, a company rate of 3.73% or less is still cheaper than the 4.2% bank rate after tax and premiums.
Even if the employer raises its rate, staying below this line means using as much of the company loan as possible.

Tax-free means break-even = bank rate

With the SME exemption there is no extra cost, so any company rate below the bank rate is a gain.
Using the full company limit and shrinking the bank application then becomes a simple decision.

Company housing or the low-interest loan?

If your employer lets you choose company housing or a housing loan, the tax treatment differs first.
The company housing benefit is also wage income (Decree Article 38(1)6), but the people listed in Article 17-4(1) are tax-free.

Tax-free company housing

Officers who hold no shares
Minority-shareholder officers (under 1%)
Employees who are not officers
Central or local government employees

When it is not company housing

Rule Article 9-2(1) treats only employer-owned homes provided free or below market, or homes the employer leases directly and provides free, as company housing.
A leased home for which you pay part of the rent is not company housing, and the Supreme Court (2013Du35082) held that the benefit of jointly leased company housing cannot be excluded from wage income.

If the housing’s annual market-equivalent value is KRW 6 million, an ordinary employee is tax-free, so its net value of KRW 6,000,000 exceeds the loan’s year 1 saving of KRW 1,789,666.
An officer holding 1% or more is taxed on the housing, pays KRW 1,459,094 more and keeps KRW 4,540,906.
Also weigh that company housing builds no home ownership and that the loan usually must be repaid when you leave.

Use cases

Funding a home purchase

Before signing, decide how much to take from the company limit and the bank, and apply for only the bank amount you need.

Raising a jeonse deposit

When a deposit increase is covered by a company loan, check the extra tax and health insurance at the year-end settlement in advance.

Comparing job offers

See in numbers how much the SME exemption on a company loan changes the real pay gap between an SME and a large company.

Guidance for welfare and payroll teams

Use the taxable benefit by rate and the break-even rate when designing a loan scheme or explaining withholding effects to staff.

Check before applying

SME status and controlling-shareholder or relative relationships are not determined automatically, so get supporting documents from accounting or payroll.
Whether an officer counts as an employee under Article 17-4(2) may be disputed and needs confirmation from the tax office.
The 4.6% market rate is an assumption borrowed from the corporate-tax overdraft rate; the rate your employer actually withholds on takes priority.
Bank mortgage interest may qualify for the long-term mortgage interest income deduction, which would lower the bank’s after-tax rate.
Company loans often must be repaid in full when you leave, so check the repayment terms too.

Assumptions

You are treated as a resident with only wage income, applying the 2026 basic rates, earned income deduction and wage income tax credit.
Each loan year is treated as a tax year, and year 2 onward is a projection with the same salary and 2026 rates.
The employer’s corporate tax and deemed-interest treatment, loan limits (LTV and DSR), housing market value, the health insurance pay cap and the national pension are not calculated.

Frequently asked questions

Is an interest-free housing loan from my employer taxed?

Yes, in principle.
Income Tax Enforcement Decree Article 38(1)7 treats the benefit an employee gains by borrowing home purchase or rental funds at a low or zero rate as wage income.
SME employees who are not controlling shareholders or their relatives are tax-free under Article 17-4(2).
Employees of large and mid-sized companies add the gap between the market rate and the company rate to total salary.

Which rate is used to value the benefit?

The Income Tax Act sets no rate for this benefit.
In practice the reference is the market rate under Corporate Tax Enforcement Decree Article 89(3) that employers use for deemed interest on staff loans: the weighted average borrowing rate or the overdraft rate (Rule Article 43(2), 4.6% a year).
This calculator defaults to 4.6% and lets you enter your employer’s weighted average borrowing rate.
Confirm the rate actually used with payroll.

How do I know whether my employer is an SME?

The test is the SME definition in Restriction of Special Taxation Act Decree Article 2.
It combines industry-specific revenue thresholds, total assets below KRW 500 billion and independence from large business groups.
The result can differ from an SME certificate under the Framework Act on SMEs, so ask your employer’s accounting team about tax-law SME status.
This calculator does not determine it.

Who counts as a controlling shareholder?

Corporate Tax Enforcement Decree Article 43(7) defines a controlling shareholder as one holding 1% or more whose combined holding with related parties is the largest among the shareholders.
The proviso to Article 17-4(2) also excludes their relatives under Framework Act on National Taxes Decree Article 1-2(1) (blood relatives within the fourth degree, in-laws within the third degree, spouses and so on) and management-control parties.
For a sole proprietor, the owner’s relatives are excluded.

How much extra tax will I pay?

The taxable benefit is added to total salary and the earned income deduction, basic rates and wage income tax credit cap are all recalculated.
In the example, a year 1 taxable benefit of KRW 2,957,917 added income tax of KRW 581,503, local income tax of KRW 58,150 and health, long-term care and employment insurance of KRW 146,931, for KRW 786,584 in total.
It includes the effect of the wage income tax credit cap falling from KRW 660,000 to KRW 500,000 as salary passed KRW 70 million.

Is the company loan still cheaper than a bank after tax?

Usually yes.
The example’s year 1 after-tax rate is 2.32%, below the 4.2% bank rate, and it saves KRW 8,709,929 over ten years.
Once the company rate rises above the break-even rate (3.73% in the example), the cost including tax exceeds the bank.
If the company rate is at or above the market rate, there is no taxable benefit and you only compare rates.

Does this apply to jeonse or rental deposits?

Yes.
Both Article 38(1)7 and Article 17-4(2) refer to funds needed to buy or rent a home, so company loans for jeonse or monthly-rent deposits follow the same rules.
Loans for non-housing living costs fall under the employer’s deemed interest and bonus treatment instead and are outside this calculator.

Should I choose company housing or the low-interest loan?

Non-officer employees, officers holding no shares and officers holding under 1% are tax-free on company-owned housing or housing the employer leases and provides free.
If the employer leases a home and charges you part of the rent, it is not company housing under Rule Article 9-2(1) and the benefit is taxable.
Enter the housing’s annual market-equivalent value to compare its net value with the loan’s year 1 saving.

Legal basis and reference date

Laws were checked in their current versions through the National Law Information OPEN API on 2026-10-29 (Income Tax Enforcement Decree MST 290841, Income Tax Enforcement Rule MST 286379, Corporate Tax Enforcement Decree MST 290843, Corporate Tax Enforcement Rule MST 287787, Framework Act on National Taxes Decree MST 283623, Restriction of Special Taxation Act Decree MST 288915, Income Tax Act MST 280405).
The cited precedent is Supreme Court decision 2013Du35082 of April 10, 2014 (jointly leased company housing as wage income); no official interpretation on low-interest housing loans was found, so none is cited.
Tax law and premium rates can change every year, so recheck the amendments for the year the loan is made.

Check the after-tax real rate before fixing your company loan amount

With the principal, company rate, bank rate and salary you can see whether the benefit is taxed, the extra tax and how much cheaper than a bank the loan really is.
To compare bank rates or check family loan gift tax as well, use the calculators below.

Korean Employer Housing Loan Benefit Tax and Real Company-Loan Rate Calculator

1. Housing funds and loan terms

2. Rate used to value the benefit

3. Tax-free test and position

4. Your year-end settlement

5. Compare with company housing (optional)

Tax treatment and real after-tax rate

Withholding timing and the national pension