Seoul High-2017-0647 ( October 12, 2018)

Where the transfer value is calculated based on the standard market price by transferring land and buildings (house) collectively, the standard market price of the housing portion shall apply to the individual housing price.

Where the transfer value of land and buildings cannot be distinguished, it shall be divided according to the ratio of each standard market price, and where a building is a house, the standard market price of the housing part shall be the individual housing price, and the standard market price of each

Article 100 (Calculation of Gains on Transfer of Income Tax Act)

Article 166 of the Enforcement Decree of the Income Tax Act

2018Gudan78049 Revocation of Disposition of Levying Transfer Income Tax

○ ○

○ Head of tax office

May 15, 2019

June 19, 2019

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s disposition of imposition of capital gains tax of KRW 39,428,020 (including additional tax) for the Plaintiff on August 16, 2017 shall be revoked.

1. Details of the disposition;

A. The Plaintiff acquired the ownership of each real estate in sequential order as indicated below (hereinafter in this case, each of the above real estate refers to the real estate as listed in the blank name column below, and in case of the total of the real estate listed in Nos. 1 through 3, "each of the real estate in this case", and in case of the total of the housing site and the housing building listed in No. 1, "the housing in this case".

No.

Date of acquisition

The acquired real estate (short name)

Acquisition Value

1

October 1, 2008

Housing site 158.90 square meters (1072-70 square meters)

595,000,000

Housing buildings

2

January 5, 2011

1 Land 24.00 square meters (1072-106 square meters)

8,285,000

3

October 11, 2013

Land 2 142.00 square meters (1072-69)

571,702,300

B. On October 13, 2014, the Plaintiff transferred each of the instant real estate in a lump sum at KRW 1.477 billion (hereinafter “instant transfer”). At the time of the instant transfer, the Plaintiff did not determine the transfer value for each of the instant real estate at the time of the instant transfer.

C. Since then, the Plaintiff: (a) as indicated below [Attachment 1] statement on the calculation basis of the transfer value of each of the Plaintiff’s assets; (b) as the publicly notified land price; (c) as a building standard market price publicly notified by the Commissioner of the National Tax Service for housing buildings (hereinafter “building standard market price”); and (d) as an individually notified land price, calculated gains on transfer of each of the instant real estate in proportion to the ratio of the standard market price; and (b) as to the transfer of the instant housing, on November 13, 2014, reported that the transfer of the instant housing meets the requirements for non-taxation for one household; and (c) reported and paid capital gains tax of KRW 15,250,073 as to the transfer of the instant housing.

D. From May 8, 2017 to May 27, 2017, the Defendant conducted a tax investigation of capital gains tax on the Plaintiff, and as a result of the tax investigation, determined that the Plaintiff erred by applying the “individual housing price” as the standard market price in accordance with the Income Tax Act and subordinate statutes, even though the Plaintiff classified the housing site and the building building, and determined that the “individual publicly notified land price” and “building standard market price” as the standard market price.

E. Accordingly, on August 16, 2017, the Defendant: (a) calculated the transfer value of each real estate of this case in proportion to the ratio of the standard market price by considering the “individual housing price” as indicated below [Attachment 2]; and (b) the “individual land price” in the first and second lands as the standard market price; and (c) calculated the transfer value of each real estate of this case in proportion to the ratio of the standard market price; and (d) corrected and notified the transfer income tax of this case 39,428,023 (including additional tax).

F. The Plaintiff dissatisfied with the instant disposition and filed a request for review with the Board of Audit and Inspection on December 7, 2017. However, the Board of Audit and Inspection rendered a decision to dismiss the Plaintiff’s request for review on October 12, 2018.

Facts without dispute over the basis of recognition, Gap evidence 1 through 6, Eul evidence 1 through 3 (including each number; hereinafter the same shall apply), the purport of the whole pleadings.

2. Whether the instant disposition is lawful

A. Summary of the plaintiff's assertion

In the event that land, buildings, etc. are transferred collectively, there is an inherent limitation that the income tax law that ought to be divided in consideration of the standard market price, if the classification of the value of the land, buildings, etc. is unclear in the transfer value, shall be calculated reasonably and reflected in the value of the transferred land and buildings. However, considering the following circumstances, the "individual housing price" of the instant housing is a serious error in its calculation. Therefore, the instant disposition, which calculated the "individual housing price" by deeming the "individual housing price" as the standard market price of the instant housing, is a disposition

① Unless there are special circumstances, it is general that the total price of the housing should be assessed at a higher price than that of the land of the housing. However, the individual housing price (337,00,000) of the housing of this case publicly announced at the time of the transfer of this case is calculated at a lower price than the officially assessed individual land price of the housing site (404,877,200 won).

② The housing site and the first and second lands are adjacent thereto, and the land category is the same as that of the unit area, and the individual land price per unit area is also assessed to a level similar to that of the unit area. However, even though the area of the housing site is wider than that of the second land, the individual land price (337,000,000) calculated by adding up the housing site to the housing building on that ground is calculated to less than that of the second individual land price (369,200,000).

③ The Plaintiff acquired the instant housing at a price higher than the acquisition price of the second land at the time prior to the acquisition of the second land. The appraised value of the instant housing held by the bank at the time of the Plaintiff’s loan of each of the instant real estate as collateral (as of October 18, 2013) was higher than that of the second land.

Therefore, the defendant's disposition of this case should be revoked because it is illegal.

B. Relevant statutes

The entries in the attached Form shall be as specified in the relevant statutes.

C. Determination

1) According to Article 100(2) of the former Income Tax Act (amended by Act No. 13588, Dec. 15, 2015); Article 166(6) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 26982, Feb. 17, 2016; hereinafter the same shall apply); Article 64 subparag. 1 of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 26071, Feb. 3, 2015; hereinafter the same shall apply), where the value of land and buildings, etc. is calculated based on the actual transaction price, where the value classification of the land and buildings, etc. is unclear, the said provisions shall be calculated in proportion to the value calculated based on the standard market price as of the date of supply contract; in addition, the said provisions shall be applied not only to the general and reasonable method of calculating the acquisition price or transfer price, but also to the general and rational assets subject to taxation (see, 2016).16).

2) According to Article 99(1) of the former Income Tax Act (amended by Act No. 12852, Dec. 23, 2014); Article 100(2) of the former Income Tax Act (amended by Act No. 1358, Dec. 15, 2015); Article 166(6) of the former Enforcement Decree of the Income Tax Act; and Article 64 subparag. 1 of the former Enforcement Decree of the Value-Added Tax Act, where land and buildings are transferred en bloc, gains on transfer shall be entered separately; however, where the transfer value of land and buildings cannot be distinguished from the transfer value, gains on transfer shall be divided equally at the ratio of each standard market price; where a building is a house, the standard market price of the housing part shall be the individual housing price;

3) Article 9(1)1 of the former Income Tax Act (amended by Act No. 12852, Dec. 23, 2014); Article 9(1)1 of the former Enforcement Decree of the Income Tax Act (amended by Act No. 7579, Jul. 13, 2005) separate the land and the building parts from the standard market price; Article 7579 of the former Enforcement Decree of the Income Tax Act (amended by Act No. 7579, “land (b)”; Article 7579 of the former Enforcement Decree of the Income Tax Act (amended by Act No. 1457, Apr. 1, 2016; 2007; 3.5.0 of the former Enforcement Decree of the Income Tax Act (amended by Act No. 13796, Jan. 19, 2016; hereinafter “former Act”) provides for the method of calculating the value of the housing, which includes both multi-family housing and individual housing, according to the standard market price of the Act.

5) The Plaintiff asserted that there was a serious error in the instant individual housing price, but the subject, method, etc. of assessment are different between the assessment of the individual land price and the calculation of the individual housing price, and since the individual characteristics of each asset are reflected and assessed, it is insufficient to recognize that the circumstances alleged by the Plaintiff and the evidence submitted by the Plaintiff have been significantly unreasonable, and there is no other evidence to acknowledge otherwise

6) Therefore, the Defendant’s assertion on a different premise is without merit, and the instant disposition is lawful.

3. Conclusion

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

1) On February 17, 2015, after the transfer of this case, the housing site and land No. 1 were merged into land No. 2, and on March 18, 2015, the housing building was destroyed.