Article 154 of the Enforcement Decree of the Income Tax Act / [Scope of One House for One Household]

[Seoul High Court Decision 2007Nu8340 ( October 11, 2007)]

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

Cheong-gu Office

The judgment of the first instance shall be revoked. The defendant's rejection of a request for correction regarding KRW 102,616,800 for the transfer income tax belonging to the year 2005, which belongs to the plaintiff on July 5, 2005 shall be revoked.

The court's explanation concerning this case is identical to the entry in the reasoning of the judgment of the court of first instance, except for the dismissal or addition of part of the entry in the reasoning of the judgment of the court of first instance as follows. Thus, it is citing it as it is in accordance with Article 8 (2) of the Administrative Litigation Act and Article 420

(a) The second sentence of the judgment of the first instance.... In the case of the reconstruction apartment of this case, the term "the reconstruction apartment". In the case of the reconstruction apartment of this case...... The reconstruction apartment of this case is kind to the term "on May 2002".

(b) On December 20, 1984, the term "in the second sentence of the judgment of the court of the first instance". The term "in the case of the second sentence of the judgment of the court of the first instance, the date of a sales contract shall be deemed to read " May 4, 1989 ( September 23, 1983)".

다. 제1심 판결 이유란 제2의 다. ⑵항 부분(제1심 판결 제4면 아래로부터 제3행 ∼ 제7행)의 다음에 아래의 ″⑶항″의 주장 및 판단 사항을 신설 · 추가한다.

″⑶ 그 밖의 주장과 판단에 관하여

In addition, the Plaintiff asserts to the effect that the revision of the relevant regulations to the effect that the term “re-building” is unfair because the National Tax Service, prior to the authoritative interpretation in 2002, construed as a newly acquired house at the time of completion, is not deemed a house newly acquired at the time of completion, and that the term “re-building” is not deemed an extension of the existing house” as it is deemed to be an extension of the existing house. However, according to the existing regulations of the National Tax Service, there was a case where two houses for one household already purchased one house after reconstruction and completion of construction, which constitute two houses temporarily at the time of completion, and thus becomes exempt from taxation. It is difficult to view that the Plaintiff’s new established rules are contrary to the legislative intent of Article 155(1) of the Enforcement Decree of the Income Tax Act, i.e., the date of acquisition of another house before and after the transfer of the house, and thus, it is unreasonable to impose capital gains tax on the newly established apartment house from 100 years to 30 years retroactively from the date of acquisition of the previous house (see Supreme Court Decision 201Du1308, etc.).

2. Conclusion

Therefore, the judgment of the court of first instance is legitimate, and the plaintiff's appeal is dismissed as it is without merit. It is so decided as per Disposition.

[Seoul Administrative Court 2006Gudan716 (2007.09)]

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

A. On August 21, 1979, the Plaintiff acquired and owned ○○○○○-dong, ○○○○○-dong, ○○○○○-dong, ○○○○ apartment (hereinafter “instant reconstruction apartment”) and upon the implementation of a reconstruction project on the instant reconstruction apartment, the Plaintiff was selected as the occupant of ○○-dong, ○○-dong, ○○○○-dong, ○○○○○○-dong, ○○○○○-dong, ○○○○○-dong, ○○○○○○○○ (hereinafter “instant apartment”), which will be expected to be constructed for reconstruction, and obtained approval for the use of the instant apartment on January 7, 2005.

B. On the other hand, on December 20, 1984, the Plaintiff acquired and owned ○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○ apartment (hereinafter “former apartment”) and transferred the previous apartment on March 15, 2005, which was within one year from January 7, 2005, on the date of approval for the use of the instant apartment in question, and paid KRW 102,616,800, the tax amount on April 8, 2005, after filing a preliminary return on the tax base of capital gains tax on the transfer income tax of the previous apartment.

C. On March 15, 2005, the Plaintiff transferred the previous apartment of this case within one year from the date of approval for use of the apartment of this case, the Plaintiff asserted that the transfer of the previous apartment of this case constitutes a temporary transfer of two houses for one household under Article 155(1) of the Enforcement Decree of the Income Tax Act, and that the transfer income tax is subject to non-taxation of transfer income tax. On June 9, 2005, the Plaintiff filed a claim for correction of KRW 102,616,800, which belongs to the capital gains tax paid to the Defendant for the year 2005.

D. As to this, the Defendant rejected the Plaintiff’s request for correction on July 5, 2005 (hereinafter referred to as the “disposition of this case”) on the ground that even if the Plaintiff had approved the use of the instant apartment on January 7, 2005, and transferred the previous apartment on March 15, 2005, not more than one year thereafter, one household having one house in the Republic of Korea under Article 155(1) of the Enforcement Decree of the Income Tax Act cannot be deemed to constitute “cases of temporary two houses by acquiring another house before transferring the said house,” on the ground that the Plaintiff’s request for correction cannot be deemed to constitute “cases of temporary two houses by acquiring another house before transferring the said house.”

[Ground of recognition] Facts that there is no dispute

2. Whether the disposition is lawful;

A. The plaintiff's assertion

First, in light of the fact that an apartment is reconstructed only in the case of the reconstruction, but it is impossible to reside without a building, the Plaintiff shall be deemed to have acquired the instant apartment on January 7, 2005 after reconstruction of the instant apartment and obtaining approval for use. Therefore, the transfer of the instant apartment constitutes a temporary transfer of two houses for one household under Article 155 (1) of the Enforcement Decree of the Income Tax Act, notwithstanding that the transfer of the instant apartment constitutes a temporary transfer of two houses, the instant disposition reported differently is unlawful.

Second, even if the Plaintiff cannot be deemed to have acquired the instant apartment on January 7, 2005, the Plaintiff was residing in the previous apartment in the instant apartment due to the reconstruction of the instant apartment, so even though the transfer income during the period of residence should be exempted from taxation, the instant disposition that was otherwise reported is unlawful.

(b) Related statutes;

The entries in the attached Table-related statutes are as follows.

C. Determination

(1) As to the first argument

The purpose of Article 155 (1) of the Income Tax Act is that if one household who owns one house in Korea comes to temporarily possess two houses by acquiring another house before transferring the house, the transfer income tax is not imposed on the transfer of one house for one household if it transfers the previous house within one year from the date of acquiring another house.

However, as seen earlier, if the Plaintiff acquired and owned the instant reconstruction apartment on August 21, 1979, and invested it in the reconstruction association and was selected as the occupant of the instant apartment in return for its investment, even though the Plaintiff obtained approval for the use of the instant apartment on January 7, 2005, which owned the previous apartment on March 15, 2005, and less than one year thereafter, transferred the previous apartment on March 15, 2005, it cannot be deemed that the Plaintiff acquired the instant apartment that is separate from the instant reconstruction apartment, which is an existing apartment (see, e.g., Supreme Court Decisions 98Du13508, Dec. 8, 1998; 97Nu10918, Jun. 9, 1998); and it cannot be deemed that it constitutes a case where one household possessing one house in Korea under Article 155 (1) of the Enforcement Decree of the Income Tax Act, and thus becomes a new apartment before acquiring it temporarily.

Therefore, the above argument is without merit.

(2) As to the second argument

Since the plaintiff resided in the previous apartment of this case due to the reconstruction of the apartment of this case, it is argued that capital gains during the period of the above residence should be exempted from taxation. However, there is no law that provides for non-taxation as alleged by the plaintiff. Therefore, the above assertion is without merit.

3. Conclusion

Thus, the plaintiff's claim is without merit.

Related Acts and subordinate statutes

Income Tax Act

Article 89. Non-taxable Transfer Income

No income tax on transfer income (hereinafter referred to as “transfer income tax”) shall be levied on the following incomes (amended by Act No. 7837 of December 31, 2005):

1. Income accruing from a disposition by an adjudication of bankruptcy;

2. Income accruing from the exchange, separation, or integration of farmland falling under such cases as prescribed by the Presidential Decree;

3. Income accruing from a transfer of one house for one household as prescribed by the Presidential Decree (excluding expensive houses whose prices exceed the standard prescribed by the Presidential Decree) and the appurtenant land within the area calculated by multiplying the area of land to which the building is fixed by the ratio as determined by region under the Presidential Decree;

4. Income accruing from substituted land for farmland falling under such cases as prescribed by the Presidential Decree.

Enforcement Decree of the Income Tax

§ 154. Scope of housing for one household

(1) The term “one house for one household as prescribed by the Presidential Decree” in Article 89 (1) 3 of the Act means the case where a household comprised by a resident and his spouse together with the family members living together with the same address or same place of residence (hereinafter referred to as a “one household”) in Korea as of the date of transfer, and where the relevant house is held for not less than 3 years (in the case of a house located in a subdivision, day, mountain village, mountain village, mountain village, mountain village, or new urban area designated and publicly notified as a planned area for housing site development under Article 3 of the Housing Site Development Promotion Act, the relevant house shall be held for not less than 3 years and the period of residence during that retention is not less than 2 years). (hereinafter referred to as “not later than December 31, 2005”).

§ 155. Special case of housing for one household:

(1) Where one household having one house in Korea comes to possess two houses temporarily by acquiring another house (including the case where it acquires by constructing a new house by itself) before transferring the relevant house, if it transfers the previous house within one year (including the case where unable to transfer within one year, and which falls under the causes as determined by the Ordinance of the Ministry of Finance and Economy) from the date of acquiring another house, it shall be considered to be one house for one household, and be subject to the provisions of Article 154 (1) (hereinafter