Article 155 of the Enforcement Decree of the Income Tax Act / [Special Cases concerning One House for One Household]

2. The costs of lawsuit shall be borne by the Plaintiff.

A. On December 31, 1990, the Plaintiff acquired ○○○-dong, Seoul, ○○○-8 ○○ apartment, 1 and 903 (hereinafter “instant housing”) and resided until March 30, 2005. On June 4, 1997, the Plaintiff’s wife ○○○-dong, Seoul ○○-111 multi-household 37.3 square meters (hereinafter “redevelopment housing”).

B. Since the housing complex to which the redevelopment house belongs, the housing redevelopment project was implemented by the upper-level redevelopment association and the housing redevelopment project was approved on December 27, 2001, the management and disposal plan was approved on December 27, 2001, the ○○ House acquired and held the association's relocation right on December 27, 2001. After the apartment construction of the upper-level redevelopment association was completed, the apartment construction of the upper-level redevelopment association was approved on December 24, 2004, the Plaintiff's household moved into the ○○-gu, Seoul, ○○ apartment, ○○○, 431, 306, 502 (hereinafter referred to as "newly-built house") on March 31, 2005, and the Plaintiff sold the housing of this case on the same day and then sold it.

C. On October 13, 2006, the Defendant concluded that the instant house transferred after the approval date for use of a newly-built house under the Housing Redevelopment Act does not meet the requirements for non-taxation on two houses for one household temporarily, and determined and notified the Plaintiff of capital gains tax of KRW 16,848,670.

D. As to the transfer of the instant house on October 13, 2006, the Plaintiff filed a request for correction of the said transfer income tax by asserting that the special provisions on non-taxation for two houses for one household under Article 155(1) of the Income Tax Act shall apply based on the practice of national tax administration that deemed a new house to be acquired at the time of completion of construction.

E. On December 31, 2006, the Defendant issued the instant disposition rejecting the Plaintiff’s claim for correction on the ground that on December 3, 2006, the Plaintiff’s transfer of the instant apartment after December 24, 2004, where one of two houses for one household was approved for the management and disposal plan and the housing was destroyed and the remaining one house was transferred before the completion date of redevelopment house, the transfer income tax under Article 89(1)3 of the Income Tax Act and Article 154(1) of the Enforcement Decree of the same Act is exempt, but the Plaintiff cannot be subject to non-taxation by transferring the instant apartment after December 24, 2004, which is the approval date for use of redevelopment house.

F. On March 14, 2007, the Plaintiff asserted for the adjudgment against the Director of the National Tax Tribunal, but the above request for adjudgment was dismissed on November 20, 2007.

[Evidence] Facts without dispute, Gap 1, Gap 3, Gap 4, Gap 6, Eul 1, the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

(1) The first established rule of the National Tax Service was the content that "redeveloped newly-built house shall be deemed a new house at the time of completion," and on November 22, 2002, "redeveloped newly-built house shall be deemed an extension of the existing house at the time of completion." Without providing for the transitional provisions following the amendment, it excluded temporary one household tax exemption under Article 155 (1) of the Income Tax Act, which is based on the previous established rule, from the application of the amended rule. The instant disposition, which is subject to the above amended rule, is in violation of the principle of taxation in accordance with Article 18 (1) of the Framework Act on National Taxes and the principle of prohibition of retroactive taxation in accordance with Article 18 (3) of the same Act, and is unlawful as an abuse of discretionary power, contrary to the purpose of legislation of the temporary one household two houses.

(2) The Plaintiff’s right to move into the cooperative is composed of two parts of the private and public land. The time when the right to move into the cooperative is finally acquired, which form a premise for acquiring the right to move into the cooperative, constitutes a non-taxation object of two houses for one household temporarily, since the time when the right to move into the cooperative was completed on April 16, 2004, which form a premise for acquiring the right to move into the cooperative.

(b) Related statutes;

Omission

C. Determination

(1) As to the assertion on violation of the principle of equity in taxation

(A) Facts of recognition

1) General Rule of the Income Tax Act ○-15 (the two houses non-taxation requirements for one household for temporary acquisition by substitution) of the following contents was enforced from April 8, 1997.

(1) Even in cases where a resident who is one house for one household has newly acquired another house before transferring such house, and becomes two houses for one household temporarily, if he/she satisfies all of the following requirements, the transfer income tax shall be deemed as one house for one household, and he/she shall be exempted:

1. The previous house shall meet the requirements for non-taxation on one house for one household as of the date of transfer;

2. The previous house shall be transferred within one year from the date of acquiring another house.

(2) Where the former house falls under the provisions of Article 154 (1) of the Decree while the person who owns one house for one household has worn out the old house which he/she has purchased to build another house and owns it in the state of a vacant site, it shall be deemed as one house for one household.

(3) In cases of paragraph (2), when a new house is built, only one house for one household shall be deemed to be transferred within one year from the date on which the house is completed.

2) In applying Article 155(1) of the Enforcement Decree of the Income Tax Act to "property 46014-10135 of the Ministry of Finance and Economy" on November 22, 2002, where the former house is reconstructed (including redevelopment under the Urban Redevelopment Act and reconstruction under the Housing Construction Promotion Act) due to the destruction of fire room, Do, old age, etc., there is a case where two houses for one household under the existing regulations of the National Tax Service are exempt from taxation for two houses due to falling under one of two houses temporarily at the time of completion when one house is reconstructed and completed. This is not consistent with the basic purpose of non-taxation for one house for one household, but because the reconstructed house should be considered as an extension of the existing house, the reconstruction house should be deemed as a new house at the time of application of the temporary two houses, but it should be deemed as an extension of the existing house after the first revision of the existing regulations to the effect that "the extension of the existing house shall be deemed as an extension of the existing house" after the first application of the new regulations after 10th 2.

[Reasons for Recognition] The whole purport of the pleading

(B) Determination

Therefore, it is reasonable to view that the contents of the above basic rules were modified to the extent consistent with the above new rules after November 23, 2002. Thus, it is reasonable to view that the plaintiff's household destroyed the redevelopment house owned by Lee Jong-do, acquired a newly-built house above it, and the transfer date of the instant house was March 31, 2005, not the above basic rules, but the above new rules apply to this case.

Therefore, it is difficult to deem that the contents of the above general rule generally accepted by taxpayers to have reached the interpretation of the tax law or the practice of national tax administration, and there is no other evidence to acknowledge it, and thus, it cannot be deemed that it violates the principle of equity in taxation and the principle

Ultimately, the plaintiff's above assertion is without merit.

(2) As to the assertion that a member transferred his/her right to move into a cooperative within one year from the date of acquisition

(A) Article 89 of the former Income Tax Act (amended by Act No. 7837 of Dec. 31, 2005; hereinafter “Income Tax Act”) and Article 155(1) of the Enforcement Decree of the same Act provide that “where one household having one house in Korea has come to temporarily possess two houses by acquiring another house before transferring the said house, it shall be deemed as one house for one household if it is transferred within one year from the date of acquiring another house, and no capital gains tax shall be imposed on the said house.” However, in the case of the Plaintiff, whether the time of acquiring a newly-built house falls under two houses temporarily for one household depending on whether the time of acquiring the redevelopment house falls under the time of approval for use of the newly-built house on December 24, 2004.

(B) Therefore, in the case of a new redevelopment of an existing house with respect to non-taxation of capital gains tax on a temporary two houses, the time when the acquisition of a newly-built house should be deemed to be the time of acquisition of the newly-built house, and in light of the following points, the time of acquisition of the newly-built house is the time of acquisition

1) The purport of Article 89(1)3 of the Income Tax Act and Article 155(1) of the Enforcement Decree of the same Act is to ensure the stability of the people’s residential life and the freedom of their residence by failing to impose the income tax on the capital gains in cases where there are certain reasons to deem that the transfer of the house by one household who owns one house in Korea is not a temporary residence or a transfer of the house for the purpose of earning capital gains, or speculation.

2) According to Article 89 subparag. 3 of the Income Tax Act, Articles 154(1) and 155(1) and (16) of the Enforcement Decree of the same Act, where a member of the redevelopment association or a reconstruction association transfers the right to sell housing, the right to sell housing is distinct from that of the "right to acquire the real estate" under Article 94(1)2(a) of the Income Tax Act, which is a non-taxable provision on one house for one household, and Article 89 subparag. 3 of the Income Tax Act and Article 154(1) of the Enforcement Decree of the same Act, it cannot be exempted from capital gains tax by directly applying the same Article 59 subparag. 15 of the Income Tax Act and Article 154(1)5 of the same Enforcement Decree of the same Act. However, if the ownership of the existing house as of the date of the transfer of the right to sell housing is 3 years or longer, the ownership of the right to sell housing under Article 154(1)5 of the same Enforcement Decree can also be treated as the transfer right within 15.5 years.

3) Regarding the scope of one house for one household exempt from Article 154(8) of the Enforcement Decree of the Income Tax Act, “in the calculation of the residence period or retention period, if the house is reconstructed due to old age, etc. during possession, the period of the destroyed house and the reconstructed house shall be aggregated.”

4) In the event of a new redevelopment of an existing house, if the period for recognizing temporary non-taxation from the time of completion of the newly-built house is calculated, if the status of two houses for one household is maintained for a long time, it would result in non-taxation, and would not be in line with the purpose of the non-taxation system for one house for one household, and would also be in line with the legal system that treats the transfer of the right to sell a house for

(C) Therefore, even if the Plaintiff’s household owns the original two houses and thereafter acquired the newly-built house after the removal of the existing house, it shall be deemed that the newly-built house was acquired on June 4, 1997, instead of acquiring the existing house, rather than acquiring the newly-built house after the removal of the existing house. As such, there is no room to be a situation of two houses for temporary one household, and the Plaintiff’s above assertion is without merit without examining further the time of acquiring the Plaintiff’s right to move into the association members.

(3) As to the assertion of abuse of discretionary power

As seen earlier, even if the Plaintiff’s household removed the existing redevelopment house by implementing the housing redevelopment project and acquired the newly-built house constructed at that place, the time of acquisition of the newly-built house is the time of the redevelopment house. Therefore, the newly-built house cannot be deemed a separate house since it is the time of acquisition of the newly-built house. As such, the Plaintiff’s household only maintained the condition of two houses for a long time for one household, and the purport of the temporary one household’s non-taxation provision on capital gains tax is identical to the purport of the non-taxation provision on one house for one household, but it is exceptionally non-taxation in light of the fact that the instant disposition goes against the legislative intent of the non-taxation provision on two houses for one household, and thus, it goes against the Plaintiff’s assertion that it abused discretion.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.