How to Use the Security Deposit Interest Income Calculator
Korea's deemed rental income tax exists because jeonse — a system where a tenant hands the landlord a large lump-sum deposit instead of paying monthly rent — creates a real economic benefit for landlords with three or more properties: they get to invest and earn a return on that cash. The tax law imputes a rate of return on the portion of large jeonse deposits above 300 million won and taxes that imputed income as if it were rent.
The jeonse system itself does not exist in the United States, so there is no US equivalent to this tax. A US security deposit is fundamentally different: it's a refundable liability the landlord holds on the tenant's behalf, not income, and it is not taxed just for existing — no matter how large it is or how many properties the landlord owns.
There are only two situations where a US security deposit touches a landlord's taxable income. First, a small number of cities and states legally require landlords to pay tenants interest on deposits — in those cases, any interest the landlord actually earns and retains is taxable interest income. Second, if the landlord keeps part of a deposit to cover damages or unpaid rent, that retained portion becomes taxable income at the time it's kept. This calculator estimates the first, more common scenario: interest earned on a held deposit. Treat it as a loose analog, not a direct equivalent of Korea's deemed rental income tax.
Frequently Asked Questions
No. Korea's system taxes landlords on imputed income from large jeonse (lump-sum lease) deposits because jeonse itself doesn't exist in the US. A US refundable security deposit is not taxable income to a landlord — it's a liability, not earnings.
Yes, in two narrow cases: if the landlord earns interest on the deposit (some cities require this) that interest is taxable, and if part of the deposit is kept as damages or unpaid rent, that retained portion becomes taxable income at that time.