Korea Jeonse vs. Buying Comparison Calculator

Compares buying a home versus renting under jeonse (Korea's lump-sum deposit lease), starting from the same cash on hand, by directly comparing what that cash actually becomes (final capital) by the end of the holding period. Buying is "cash on hand + appreciation + surplus-cash return − acquisition tax − brokerage fee − loan interest − property tax − comprehensive real estate tax"; jeonse is "cash on hand + surplus-cash return − brokerage fee." Every line item in the results below shows the exact formula used, so you can see how each figure was derived.

Purchase price (KRW) Jeonse deposit (KRW) Cash on hand (KRW) For buying, this goes toward the purchase price first, and the shortfall is financed with a loan. For jeonse, whatever's left after the deposit is assumed to be invested as surplus cash. Comparison (expected residence) period (years) Loan annual interest rate (%) Loan term (years) Exclusive area over 85㎡ (subject to acquisition tax's special rural development tax) Located in an urban area (subject to property tax's urban area surtax)

Assumptions (defaults provided) Annual home price growth assumption (%) Annual return assumption for surplus cash (%) Whatever cash is left over after buying or the jeonse deposit is assumed to be invested at this rate. Use a safe-asset level such as a term deposit. Jeonse renewal (2-year cycle) deposit increase assumption (%) The statutory cap is 5%. Announced value ÷ purchase price ratio assumption (%) Used for the property tax calculation; typically 60–70% of market price.

Better option -

Final capital difference -

Final capital if buying -

Final capital if jeonse -

The table below starts from your starting capital (cash on hand) and adds what actually grows it (+) and subtracts what actually leaves your pocket (−) in each scenario, arriving at the final capital at the end of the comparison period. A larger final capital is better.

Buying scenario
Starting capital (cash on hand)	-
Loan amount (reference only, not directly part of final capital) = purchase price − cash on hand -	-
Acquisition tax etc. (one-time) = base tax + local education tax + rural development tax -	-
Brokerage fee (one-time) = purchase price × capped brokerage rate (bracketed) -	-
Loan interest paid over the period = equal-payment amortization(loan amount, annual rate, loan term) schedule's interest over the comparison period -	-
Property tax = (base tax + local education tax + urban area surtax) × comparison period -	-
Comprehensive real estate tax (on the amount exceeding the 1.2B KRW single-home deduction) = (calculated tax − property tax credit) × 1.2 (incl. surtax) × comparison period -	-
Surplus cash investment return (when cash on hand exceeds the purchase price) = surplus cash × ((1+return rate)^years − 1) -	-
Expected capital gain (appreciation) = purchase price × ((1+growth rate)^years − 1) -	-
Final capital if buying = starting capital + capital gain + surplus cash return − acquisition tax − brokerage fee − interest − property tax − comprehensive real estate tax -	-

Jeonse scenario
Starting capital (cash on hand)	-
Brokerage fee (one-time) = deposit × capped brokerage rate (bracketed) -	-
Surplus cash (reference only, not directly part of final capital) = cash on hand − deposit − brokerage fee -	-
Surplus cash investment return = surplus cash × ((1+return rate)^years − 1) -	-
Expected deposit at period end (reference only — the refund grows with each renewal increase, but that increase itself is returned at face value, so it isn't added separately to final capital. What renewal increases DO cost you is the foregone investment growth — see the row below) = deposit × (1+renewal increase rate)^renewal cycles -	-
Deposit top-up opportunity cost (assuming each renewal's deposit increase is funded by withdrawing from surplus cash, this is the investment return that withdrawal would have earned) = Σ each renewal's top-up × ((1+return rate)^years remaining after withdrawal − 1) -	-
Final capital if jeonse = starting capital + surplus cash return − brokerage fee − deposit top-up opportunity cost -	-

This result is a simplified estimate. Property tax and comprehensive real estate tax are assumed constant at the initial announced value throughout the comparison period (appreciation of the announced value is not reflected), and comprehensive real estate tax's senior/long-term-holding credits and tax burden cap, negotiated brokerage rates, actual loan limits (e.g. DSR), and capital gains tax on resale are not included. A jeonse deposit larger than the cash on hand (which would require a jeonse loan), and the loan's principal repayment (only interest is counted as a cost, since principal converts cash into home equity and is treated as net-worth-neutral), are also not modeled. Always consult a professional and confirm actual rates and market prices before making a real decision.

Frequently Asked Questions

Can you show a worked example with real numbers?

Let's calculate with: purchase price 500M KRW, jeonse deposit 300M KRW, cash on hand 400M KRW, a 3-year comparison period, a 4% loan rate over 20 years, 2% home price growth, 3% investment return, and a 70% announced-value ratio.

Buying scenario

Starting capital (cash on hand) = 400M KRW
Loan amount (reference) = purchase price − cash on hand = 500M − 400M = 100M KRW
Acquisition tax etc. (one-time) = 500M × tax rate ≈ −5.5M KRW
Brokerage fee (one-time) = 500M × brokerage rate (bracketed) ≈ −2M KRW
Interest over 3 years (first 36 months of a 100M/4%/20yr equal-payment schedule) ≈ −11.4M KRW
Announced value = 500M × 70% = 350M → property tax ≈ 1.536M/yr × 3yr ≈ −4.6M KRW (comprehensive tax is 0 since 350M < 1.2B)
Surplus cash = 0 (cash on hand 400M is less than the 500M purchase price, so nothing is left over) → surplus return is also 0
Expected capital gain (appreciation) = 500M × ((1.02)³ − 1) = 500M × 6.12% ≈ +30.6M KRW
Final capital if buying = 400 − 5.5 − 2 − 11.4 − 4.6 + 0 + 30.6M ≈ 411.2M KRW

Jeonse scenario

Starting capital (cash on hand) = 400M KRW
Brokerage fee (one-time) = 300M × brokerage rate (bracketed) ≈ −0.9M KRW
Surplus cash (reference) = 400M (cash on hand) − 300M (deposit) − 0.9M ≈ 99.1M KRW
Surplus cash investment return = 99.1M × ((1.03)³ − 1) = 99.1M × 9.27% ≈ +9.2M KRW
At the year-2 renewal, the deposit rises 5%, from 300M to 315M → the 15M top-up is assumed funded from surplus cash. Had it stayed invested for the 1 remaining year (3 − 2), it would have earned 15M × ((1.03)¹ − 1) ≈ −0.45M KRW (deposit top-up opportunity cost)
Final capital if jeonse = 400 − 0.9 + 9.2 − 0.45M ≈ 407.8M KRW

Buying's final capital (411.2M) is higher than jeonse's (407.8M) — so under these conditions buying leaves you about 3.4M KRW better off. All 400M KRW of the buyer's cash works toward appreciation on the full 500M home (leverage), while the renter only actually invests 99.1M KRW (the rest sits in the deposit, earning nothing) and loses a bit more to the renewal top-up's opportunity cost. Buying's brokerage fee (2M) is also larger than jeonse's (0.9M), which narrows the gap in the other direction. Enter these same inputs above and you'll see these exact figures in the results.

Is comprehensive real estate tax included?

Yes. If the announced value (purchase price × your announced-value ratio assumption) exceeds the 1.2 billion KRW single-home deduction, comprehensive real estate tax is calculated automatically and subtracted from the final capital if buying (the "Comprehensive real estate tax" row above only appears in that case). It also approximates the property tax credit so tax already paid via property tax isn't double-counted. Senior/long-term-holding credits and the tax burden cap aren't reflected, though, so the real amount may be somewhat lower — check the exact figure with the property holding tax calculator.

Why doesn't the jeonse deposit itself appear in the calculation?

The original deposit is returned in full, with no interest, when the lease ends — so that amount itself neither grows nor shrinks over the period. When comparing how much each scenario actually gains or loses, all that matters is how much the leftover surplus cash (after setting aside the deposit) actually grew. The buyer's cash on hand works the same way — its performance already shows up fully in the capital gain, so it isn't counted a second time. Renewal increases to the deposit are the one exception — see the next question.

What's the "deposit top-up opportunity cost"?

Jeonse deposits often increase at each 2-year renewal. The cash to cover that increase has to come from somewhere — the natural assumption here is that it's withdrawn from the surplus cash you'd otherwise have invested, since this calculator assumes both scenarios draw only from the same starting cash. The catch: once that money sits in the deposit, it earns zero interest — it just comes back at face value later. Had it stayed invested, it would have kept growing. So each renewal's top-up costs you the investment growth it would have earned for the rest of the comparison period, and that foregone growth is subtracted from the final capital if jeonse. This differs from the buy side's loan principal repayment, which is excluded — principal repayment converts cash into home equity that already appreciates (fully captured via the capital gain figure), so nothing is lost there. A jeonse deposit doesn't appreciate at all, so excluding its top-ups the same way would overstate jeonse's result. Set the renewal increase assumption to 0% and this line drops to zero.

Why does buying capture the full purchase price's appreciation instead of just the equity's? (Leverage)

Even with a loan, you own the entire home — so when its value rises, you capture the appreciation on the full purchase price, regardless of how much was financed. In exchange, you bear the loan interest as a real cost. That means a smaller equity share (more leverage) amplifies both the potential gain and the interest burden. This calculator doesn't count loan principal repayment as a cost or a gain either way — it converts cash directly into home equity, so it's treated as net-worth-neutral.

Changing the return assumption swings the result a lot — why?

The return assumption only affects surplus cash — whatever's left over after buying or after the jeonse deposit. When there's little or no surplus in either scenario (cash on hand close to the purchase price or deposit), changing this assumption barely moves the result. But when cash on hand is large relative to the purchase price or deposit, a lot of surplus cash is left in play, and where that surplus does better (buying's leftover cash vs. jeonse's leftover cash) can swing the comparison substantially. The same rate is always applied to both scenarios' surplus cash, so neither side is unfairly favored.

Why "interest over the period" instead of the loan's total interest?

Rather than the total interest over the entire loan term (e.g. 30 years), this only counts the interest paid during the actual holding period you're comparing (e.g. 5 years). Since equal-payment amortization front-loads interest, this better reflects the real burden for a shorter holding period.

When does buying win, and when does jeonse win?

If your assumed price growth rate is comfortably above the loan rate, buying tends to win thanks to leverage. If home prices are expected to stagnate or decline, or the loan rate is high, the interest burden dominates and jeonse tends to win. When cash on hand is large enough to leave significant surplus cash, a higher return assumption tends to favor jeonse — since buying generally requires more upfront cash, jeonse usually leaves more surplus cash to invest. Try adjusting the assumptions to compare different scenarios.