[Judgment of the court below]

Head of Seocho Tax Office

October 14, 2011

1. All of the plaintiff's claims are dismissed.

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

The Defendant imposed capital gains tax on the Plaintiff on June 8, 2010 38,085,970 won for the year 2008 (11,59,030 won + 1,770,90 won + 3,628,960 won + 21,127,080 won for the year 2009 + 28,284,070 won for the year 209 (29,404,450 won + 18,879,620 won) (hereinafter “instant imposition disposition of capital gains tax”), and the imposition disposition of capital gains tax for the Plaintiff on August 1, 2010 (hereinafter “each imposition disposition of capital gains tax for each of the instant case”), each disposition imposing comprehensive real estate tax for the year 2005, 4,165,650 won for the Plaintiff, 206, 128,207, 2008, 206, 2008.

1. Details of the disposition;

The following facts are either disputed between the parties, or acknowledged in full view of the purport of the whole pleadings in the descriptions of Gap evidence 1-6, Gap evidence 1-2, Eul evidence 3-1-4, Gap evidence 4, and 5:

A. On November 3, 1973, the Plaintiff acquired a detached house on the ground of Yongsan-gu Seoul ( Address omitted) Yongsan-gu (hereinafter “the previous house”).

B. As the previous house of this case was destroyed, on April 4, 2003, the Plaintiff newly constructed each house listed in paragraphs (1) through (8) of the attached list of real estate (hereinafter referred to as “each newly-built house of this case” in sequence, and collectively referred to as “each newly-built house of this case”) on the ground, and registered the preservation of ownership on April 22 of the same year.

C. On June 30, 2003, the Plaintiff: (a) leased the instant newly-built house to a third party; (b) leased each of the instant newly-built house on each date indicated in the first lease date and the first lease date column; (c) on October 21, 2003, the location of the office of tax office having jurisdiction over the location of Yongsan-gu in Yongsan-gu in Seoul; (d) registered the type of business as “business type: Real estate, item: Housing lease; and (e) registered the rental business with the head of Seocho-gu Seoul Metropolitan Government head of the Gu under Article 6 of the Rental Housing Act on November 9, 2005.

D. On July 9, 2008, the Plaintiff, along with the transfer of the newly-built house of this case to Nonparty 4, transferred each of the newly-built house of this case in sequential order on the date indicated in the column for the first lease date and transfer date in the separate sheet on the transfer date. On the other hand, from the date of acquisition of the previous house of this case to April 4, 2003, the transfer income amount accrued from April 4, 2003 to the date five years have elapsed since the acquisition date of each of the newly-built house of this case, was deducted from the income amount subject to the transfer income tax pursuant to Article 9-3(1) of the former Restriction of Special Taxation Act (amended by Act No. 9921, Jan. 1, 2010; hereinafter “former Restriction of Special Taxation”),

E. However, the Defendant, on June 8, 2010, deemed that the transfer income accrued from the acquisition date of the previous house of this case until April 3, 2003, which is the day before the acquisition date of each newly-built house of this case, is not the amount deducted from the income amount subject to the transfer income tax, and issued each disposition imposing the transfer income tax

F. Meanwhile, on August 1, 2010, the Plaintiff filed an application with the Defendant for exclusion of summing-up of the instant newly-built house on the ground that each of the instant newly-built house constitutes a constructed rental house under Article 3(1)1 of the former Enforcement Decree of the Gross Real Estate Tax Act (amended by Presidential Decree No. 21293, Feb. 4, 2009; hereinafter “former Enforcement Decree of the Gross Real Estate Tax Act”) or an existing rental house under Article 3(1)3 of the former Enforcement Decree of the Gross Real Estate Tax Act. However, on the ground that each of the instant newly-built house did not meet the requirements for exclusion of summing-up of the rental house under Article 3(1)3 of the former Enforcement Decree of the Gros

2. Whether each of the dispositions of this case is legitimate

A. The plaintiff's assertion

1) Disposition imposing each of the instant capital gains tax

The legislative intent of the provisions governing the special taxation of capital gains tax on the acquirer of newly-built house is to increase the diffusion of newly-built house, and to activate the construction and real estate competition by raising demand for newly-built house. In the case where a resident acquires a newly-built house and transfers it within five years, it is reasonable to impose capital gains tax only on the transfer income accrued after five years from the acquisition date of a newly-built house. The special taxation of capital gains tax on the acquisitor of a newly-built house is applicable mutatis mutandis to the calculation of the transfer income amount generated for five years from the acquisition date of a newly-built house. However, in light of the fact that the person who acquired the real estate subject to restructuring transfers it after five years from the acquisition date of the newly-built house, it is reasonable to deduct capital gains tax only on the transfer income accrued after five years from the acquisition date of the newly-built house, and thus, it is unlawful to impose capital gains tax on the Defendant’s other premise.

2) Disposition imposing comprehensive real estate holding tax in the instant case

When interpreting the provisions of relevant Acts and subordinate statutes, such as the Gross Real Estate Tax Act, the starting date of the compulsory lease period of five years, which is stipulated in Article 3(1)3(b) of the Enforcement Decree of the Gross Real Estate Tax Act, is not the date when the lease business operator is registered under Article 6 of the Rental Housing Act, since the date when the business operator of the lease business was registered, and the Plaintiff acquired each newly-built house of this case on April 4, 2003, registered the business as a rental business on October 21, 2003, and transferred each newly-built house of this case in sequential order after renting each of the newly-built house of this case for five years or more, it is evident that each of the newly-built houses of this case falls under the exclusion of the aggregate rental house stipulated in Article 8(2)1 of the Gross Real Estate Tax Act, and Article 3(1)3 of the Enforcement Decree of the former Gross Real Estate Tax Act. Accordingly, each of the instant dispositions by the Defendant on different premise

B. Relevant statutes

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

C. Determination

1) The imposition disposition of each of the instant capital gains tax

Article 9-3 of the Restriction of Special Taxation Act provides that “where a resident transfers a newly-built house at the expiration of five years from the date of acquisition of the newly-built house, the transfer income accrued for five years from the date of acquisition of the newly-built house shall be subtracted from the taxable amount of transfer income tax.” The above provision explicitly provides that the amount deducted from the taxable amount of the newly-built house shall be the transfer income amount generated for five years from the date of acquisition of the newly-built house, and that it shall not be interpreted that the transfer income amount generated before the date of acquisition is deducted from the taxable amount of the newly-built house, and that it shall not be interpreted that the transfer income amount generated before the date of acquisition of the newly-built house would be deducted from the taxable amount of the newly-built house, in light of the purpose of legislation of the former Special Act, and that the transfer income amount generated within five years from the date of acquisition of the newly-built house shall not be viewed as the transfer income amount generated before the date of acquisition of the newly-built house.”

2) Each disposition of comprehensive real estate holding tax in the instant case

In light of the following circumstances, even if a business operator or a rental house was registered before being registered as a rental business operator under Article 6 of the Rental Housing Act, the period shall not be deemed to be included in the mandatory rental period of five years as stipulated in Article 3(1)3 (b) of the former Enforcement Decree of the Gross Real Estate Tax Act, and as seen earlier, insofar as the Plaintiff registered as a rental business operator under Article 6 of the Rental Housing Act to the head of Seocho-gu Office on November 9, 2005, it is apparent that the lease period of each newly-built house of this case after the Plaintiff’s registration as a rental business operator does not reach the mandatory rental period of five years. Accordingly, each newly-built house of this case cannot be deemed to constitute a rental house excluded from the mandatory rental period of five years. Thus, the Plaintiff’s aforementioned assertion is without merit.

A) Article 8 (2) of the Gross Real Estate Tax Act provides that “Housing prescribed by the Presidential Decree in consideration of the rental period, number of houses, price, size, etc. as rental housing under the provisions of subparagraph 1 of Article 2 of the Rental Housing Act or multi-household rental housing prescribed by the Presidential Decree” shall be excluded from aggregate rental housing subject to comprehensive real estate holding tax. Article 3 of the former Enforcement Decree of the Gross Real Estate Tax Act provides that “Housing prescribed by the Presidential Decree” under the provisions of subparagraph 4 of Article 2 of the Rental Housing Act means a rental business operator under the provisions of subparagraph 4 of Article 168 of the Income Tax Act or Article 111 of the Corporate Tax Act who has registered a rental business as of the base date for taxation shall be clearly defined as housing falling under any of the following subparagraphs and shall be excluded from aggregate rental housing under the provisions of subparagraph 2 of the Rental Housing Act, which is established before January 5, 2005, and shall not be construed as housing subject to the provisions of subparagraph 3 of the said Article as housing for more than 30 million won.

B) On the other hand, any person who intends to lease a house of more than a certain number prescribed by the Presidential Decree may file an application for registration of a rental business operator with the head of a Si/Gun/Gu, and if he/she is registered as a rental business operator, he/she shall be subject to various tax benefits, such as non-taxation of the comprehensive real estate holding tax, restrictions on the sale of rental housing (Article 16 of the Rental Housing Act), the terms and conditions of lease (Article 20 of the Rental Housing Act), and the compulsory use of standard rental contract (Article 32 of the same Act), and shall be subject to administrative fines or criminal punishment if he/she violates the Rental Housing Act. As such, when he/she is registered as a rental business operator under the Rental Housing Act, he/she shall be subject to various tax benefits and regulations prescribed under the relevant Acts and subordinate statutes at the same time. Thus, the registration of a rental business operator shall not be deemed a simple need for registration of a rental business operator, but it shall be interpreted that the lease period without registration of a rental business operator has been completed by the expiration of comprehensive real estate holding tax separately from the tax base date.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.

[Attachment]

Judges Kim Hong-do (Presiding Judge)