Cho High Court Decision 2010Du2975 ( November 17, 2010)

Transferable house shall be subject to the application of the special long-term holding deduction rate of 30/100;

The disposition rejecting a request for correction on the ground that it is legitimate to make a preliminary return by applying the special long-term holding deduction rate of 30/100 because two houses were more owned at the time of the transfer of the house.

2011-gu 1637, 201-gu 201

XX Kim

O Head of tax office

May 20, 2011

June 17, 201

1. The plaintiff's claim is dismissed.

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

The defendant's rejection disposition against the plaintiff on February 5, 2010 is revoked. The defendant's application for correction of capital gains tax (retail 215,493,152 won as 45,538,956 won) is revoked.

1. Details of the disposition;

A. On February 11, 1980, the Plaintiff acquired a house with a size of 349 square meters and above ground (hereinafter “instant house”) in Seoul XX-dong 46-1 site, and transferred it to KRW 1,365,00,000 on August 25, 2009, and paid KRW 215,493,150 of the transfer income tax for the year 2009, after making a preliminary return of the capital gains tax base on the same day. On January 13, 2010, the Plaintiff filed a claim for correction with the purport that the amount exceeding 45,538,956 of the transfer income tax paid after making a preliminary return should be refunded.

B. On February 5, 2010, the Defendant rejected the Plaintiff’s claim for correction on the ground that it was legitimate to file a preliminary return by applying the special long-term holding deduction rate of 30/100 of the main sentence of Article 95(2) of the Income Tax Act, on the grounds that the Plaintiff was taking more attention of two bonds other than the instant house at the time of the said transfer (hereinafter “instant refusal disposition”).

[Ground of recognition] Unsatisfy, Gap evidence 1, 2, and Gap evidence 2

2. Whether the disposition is lawful;

A. The plaintiff's assertion

At the time of the transfer of the instant house, the Plaintiff owned the house located in Seopo-si and Thai-gun located in Seopo-si. However, Seopo-si housing and Taepo-Gun housing are all located in areas other than the Seoul Metropolitan area and Metropolitan City, and thus, since the total standard market price of the relevant house and its appurtenant land does not exceed 300 million won, it is not industry in calculating the number of houses pursuant to Article 167-3 (1) 1 of the Enforcement Decree of the Income Tax Act. Therefore, the instant house is deemed as one house for one household under other provisions" as stipulated in Article 159-2 of the Enforcement Decree

As such, the transfer income tax should be determined based on the special long-term holding deduction rate of 80/100 applied to one house for one household, in which the proviso of Article 95(2) of the Income Tax Act applies to the transfer of the instant house. On a different premise, the Defendant’s refusal disposition of this case is unlawful.

(b) Related Acts and subordinate statutes: To be recorded in attached Form;

C. Determination

Comprehensively taking account of relevant Acts and subordinate statutes, ① Housing falling under Article 167-3 (1) 1 of the former Enforcement Decree of the Income Tax Act is not to be included in calculating the number of houses, and it is presumed that the premise is in determining whether it constitutes “housing falling under three or more houses for one household as prescribed by the Presidential Decree” under the provisions of Article 104 (1) 2-3 of the former Income Tax Act (property to which the heavy tax rate of 60/100 applies), namely, “one household possessing three or more houses in Korea” is not to be included in the number of houses in determining whether it is “one house for one household possessing three or more houses in Korea.” ② In Article 159-2 of the same Enforcement Decree of the same Act, “Housing deemed as one house for one household under other provisions” is to be applied with the long-term possession special deduction rate applicable to one house for one household, but Article 167-3 (1) 1 of the Enforcement Decree of the same Act cannot be deemed to be legitimate as it does not correspond to Article 165 of the same Act.

3. Conclusion

Thus, the plaintiff's claim is dismissed as it is without merit.