[2] Whether acquisition tax rate under Article 11(1)8 of the former Local Tax Act applies to the land annexed to a building solely on the ground that the structure of the building was not entered in the building ledger as a house and cannot be actually used for a real residence even if the building was purchased for a housing purpose and completed the registration of ownership transfer, and whether the acquisition tax rate under the above tax rate applies to the building where the additional construction is completed after the completion of the construction after the completion of the registration of ownership transfer (negative), and where the building was registered in the building ledger with the approval of use after the completion of the construction (negative)

In light of the structure and contents of these relevant regulations, if a letter of approval (or a letter of approval for temporary use) is not available and a completed building is purchased and the registration of ownership transfer is completed, regardless of ownership transfer registration, it should be deemed that the earlier date between the date of approval for temporary use (or the date of approval for temporary use) and the date of de facto use is the date of acquisition

[2] Article 11(1)8 (b) of the former Local Tax Act (amended by Act No. 14475, Dec. 27, 2016; hereinafter the same) on the acquisition tax rate reduces the acquisition tax rate on real estate other than farmland due to a commercial transaction different from that prescribed by Article 11(1)7 (b) of the former Local Tax Act by 40/1,000, which is to promote residential stability and housing transaction normalization by relaxing the burden of acquisition tax due to a housing transaction.

In full view of the details and legislative intent of the acquisition tax rate regulations, it is reasonable to view that the acquisition tax rate under the tax rate regulations is limited to the case where taxpayers acquire the buildings and appurtenant land that are entered in the building ledger as a house and can be used for residential purpose as a house for a long time.

In light of such legal principles, even if the purchaser purchased a unredeemed building and land annexed to the building which is under construction for the purpose of a house and completed the registration of ownership transfer thereof, if the structure of the building was not recorded in the building ledger as a house and cannot be actually used for a residential purpose, the acquisition tax rate under the tax rate on land annexed to the building cannot be deemed to apply solely on the ground that the building completed the registration of ownership transfer. In addition, even if the purchaser completed additional construction after the acquisition of the unredeemed building and completed the registration on the building ledger with approval for use, it does not mean that the acquisition tax rate under the tax rate shall not apply to the building.

1. Regarding ground of appeal No. 1

A. The main text of Article 10(7) of the former Local Tax Act (amended by Act No. 14475, Dec. 27, 2016; hereinafter the same) provides that when a building is constructed and acquired, the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 28627, Feb. 9, 2018; hereinafter the same shall apply) shall be deemed to be the date of acquisition as “the date of issuance of an approval for temporary use (where approval for temporary use is obtained before the issuance of an approval for temporary use, referring to the date of the approval for temporary use; in cases of a building for which the approval for temporary use or the approval for temporary use cannot be obtained, referring to the date of de facto use) and the date of de facto use” under Article 20(6) of the former Enforcement Decree of the Local Tax Act (amended by Act No. 28627, Feb. 9, 2018).

In light of the structure and contents of these relevant regulations, if a letter of approval (or a letter of approval for temporary use) is not available and a completed building is purchased and completed the registration of ownership transfer, regardless of ownership transfer registration, it should be deemed that the earlier date between the date of approval for subsequent use (or the date of approval for temporary use) and the date of actual use is the date of acquisition of the building

B. Review of the reasoning of the lower judgment and the record reveals the following facts.

1) On May 21, 2012, the Nonparty: (a) completed the registration of the establishment of a collective housing (multi-household housing) with the size of five stories on the ground of the total floor area of 642.38 square meters on the instant land on May 21, 2012, with respect to the land ( Address 1 omitted) and the ( Address 2 omitted) large of 185 square meters (hereinafter “land”) (hereinafter “resident 2 omitted”); and (b) completed the registration of the establishment of a new collective housing (multi-household housing) with the maximum debt amount of 700,000,000 square meters, the Nonparty began construction work on November 26, 2012 after obtaining a construction permit on the instant land with the size of five stories on the ground of the total floor area of 642.3

2) On October 20, 2014, the Yongsan Saemaeul District Court received a voluntary decision to commence the auction of the instant land and ( Address 2 omitted) land (hereinafter “instant auction”), and upon the entrustment of registration under the said decision, the registration of preservation of ownership was completed in the name of the Nonparty on the same day with respect to the building under construction permit (hereinafter “the instant unregistered building”).

3) In the instant auction procedure, the Plaintiff purchased each of the said real estate in a lump sum at KRW 390,00,000 (hereinafter “total sale price”), and paid the price and completed the registration of ownership transfer in the name of the Plaintiff on October 21, 2015.

4) Since then, the Plaintiff was granted approval for use on June 8, 2016, after completing the additional construction work by taking into account KRW 280,500,000 on the instant uncompletioned building.

C. Examining these factual relations in light of the aforementioned provisions and legal principles, it is difficult to deem that the Plaintiff acquired the instant incomplete building at the instant auction procedure and completed the registration of ownership transfer on October 21, 2015, thereby acquiring a building subject to acquisition tax. It is reasonable to deem that the Plaintiff acquired it only at the time of obtaining approval for use on June 8, 2016 after completing additional construction on the instant incomplete building.

D. Nevertheless, solely on the grounds indicated in its reasoning, the lower court determined otherwise by: (a) solely based on the grounds indicated in its reasoning, that the Nonparty acquired the building in question originally, and the Plaintiff succeeded to it at the time of completing the registration of ownership transfer; and (b) cannot be deemed to have acquired it on the date of approval for use after additional construction. In so determining, the lower court erred by misapprehending the legal doctrine on the time of acquisition of “a building

2. Regarding ground of appeal No. 2

A. Article 11(1)8 of the former Local Tax Act (hereinafter “instant tax rate provision”) provides that “The tax rate of acquisition tax shall be 10/1,000 in cases of acquiring a house (referring to a house defined in Article 2 subparag. 1 of the Housing Act, which is entered in a building ledger under Article 38 of the Building Act, and is used for residential purposes, and a building and its appurtenant land) the value of which at the time of acquisition is 60 million won or less due to floating transactions; the tax rate of 20/1,00 in cases of acquiring a house exceeding 60 million won, and the tax rate of 30/1,00 in cases of acquiring a house exceeding 90 million won, respectively.”

The instant tax rate provisions, unlike Article 11(1)7(b) of the former Local Tax Act, reduce the acquisition tax rate for real estate other than farmland due to commercial transactions from 40/1,00 to 40/1,00, to promote residential stability and normalization of housing transactions by relaxing acquisition tax burden due to housing transactions.

In full view of the contents and legislative intent of the instant tax rate provisions, it is reasonable to deem that the acquisition tax rate under the instant tax rate provisions is limited to the case where a taxpayer acquires a building and its appurtenant land that can be used as a residence and entered in the building ledger as a house for a long time as a member of the household can live an independent residential life.

In light of the above legal principles, even if the purchaser purchased a unredeemed building and its appurtenant land which are under construction for the purpose of a house and completed the registration of ownership transfer thereof, if the structure of the building was not recorded in the building ledger as a house, and cannot be actually used for a residential purpose, the acquisition tax rate pursuant to the instant tax rate cannot be deemed to apply to the land annexed to the building solely on the ground that the above registration of ownership transfer is completed. In addition, even if the purchaser completed the additional construction after the completion of the construction and obtained approval for use after the completion of the construction, and registered in the building ledger, it does not mean that the acquisition tax rate pursuant to the instant tax rate is not applied to the building.

B. Review of the reasoning of the lower judgment and the record reveals the following facts.

1) On October 21, 2015, the Plaintiff reported and paid acquisition tax, etc. calculated by applying the acquisition tax rate of 40/1,000 as stipulated in Article 11(1)7(b) of the former Local Tax Act by converting the sale price of each of the above lands into the standard market price ratio of 133,523,247, based on the sale price of each of the above lands, which was acquired through the auction of this case and the land ( Address 2 omitted) as the tax base. As for the buildings not completed in this case, the Plaintiff reported and paid registration license tax, etc. applying the registration license tax rate of 20/1,000 as stipulated in Article 28(1)1 [1] of the former Local Tax Act to the sale price of the above buildings converted into the standard market price ratio of the total sale price.

2) Meanwhile, on October 17, 2016, under the premise that the Plaintiff acquired the instant unregistered building on October 21, 2015, not on June 8, 2016, not on the date of approval for use, but on the premise that the ownership transfer registration was made on the date of registration of ownership transfer, the Plaintiff filed a claim for correction of the reduction of the portion exceeding the pertinent legitimate tax amount and the special tax for rural development on the portion of the building that was not originally reported, on the ground that “the instant building is a house and its ownership transfer registration was made on the ground of acquisition.” As such, the registration of acquisition and ownership transfer of the said building is an object of acquisition tax rather than registration and license tax, and the acquisition tax, etc. to which the tax rate of 10/1000 prescribed by the instant tax rate is applied is a legitimate tax amount.” The instant land also constitutes land annexed to the building, and thus, constitutes land annexed to the said building.

3) However, on October 19, 2016, the Defendant rendered a disposition rejecting the correction of the instant case, rejecting the claim for correction on the ground that the tax amount initially reported to the Plaintiff was a justifiable tax amount.

C. Examining these facts in light of the aforementioned provisions and legal principles, even if the Plaintiff purchased the instant unregistered buildings and the instant land, which are the instant unregistered buildings and their appurtenant land, and completed the registration of ownership transfer, the acquisition tax rate pursuant to the instant tax rate cannot be deemed to apply to the acquisition of the instant unregistered buildings or the instant land, which are their appurtenant land, through the instant auction. First, at the time of the registration of ownership transfer, it is difficult to deem that the instant unregistered buildings were not entered in the building ledger as housing units, and that they were built of a structure suitable for housing units. Moreover, the Plaintiff may acquire the instant unregistered buildings only after completing additional construction on the instant unregistered buildings and obtaining approval for use on June 8, 2016, which are subject to acquisition tax, and such acquisition does not mean “acquisition a building as a house on the building ledger for consideration.”

D. Nevertheless, solely on the grounds indicated in its reasoning, the lower court determined that the provision of this case’s tax rate applies to the acquisition of the instant land and buildings not yet completed, and determined that the remainder of the disposition rejecting the correction of this case’s tax rate was unlawful. In so determining, the lower court erred by misapprehending the legal doctrine on the scope of application of the provision of this case’s tax rate, thereby adversely affecting the conclusion of the judgment. Accordingly, the

3. Conclusion

Therefore, the part of the lower judgment against the Defendant is reversed, and that part of the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Sang-ok (Presiding Justice)