Whether the loan interest can be deducted as the necessary expenses for real estate rental income;

Since the burden of personal debts for joint investment is unrelated to the real estate joint rental business itself, the real estate rental income amount shall not be included in necessary expenses.

Article 43 of the Income Tax Act / [Distribution of Income in Cases of Joint Ownership, etc.]

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance shall be revoked. On February 5, 2004, the defendant revoked all the disposition of imposition of KRW 126,458,370, global income tax for the year 2001, global income tax for the plaintiff and KRW 88,849,710, global income tax for the year 2002 (the plaintiff reduced the claim in the first instance).

The reasons for the court's explanation concerning this case are as follows. The defendant, around July 2008, 2006Hun-Ga16, 2007Hun-Ga14 (Joint) decided on May 29, 2008, based only on the amount of income belonging to the plaintiff, 126,458,370 won [13,414,630-6,956,260 won (the amount belonging to ○○ iron), 88,849,710 won (the amount belonging to ○○○), 2002 'the amount belonging to 200 million won' and 'the amount belonging to 30,000 won (the amount belonging to 133,414,630 won), 'the amount belonging to 30,000 won (the remaining amount belonging to 103,537,10-14,687,000 won) were unconstitutional. The defendant's assertion that the remaining amount belonging to 200,000.

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

[Seoul Administrative Court 2005Guhap6911 (2005.06)]

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

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

The Defendant’s disposition of imposition of global income tax of KRW 133,414,630, and global income tax of KRW 103,537,110 for the year 2001 imposed on the Plaintiff on February 5, 2004 shall be revoked in entirety.

1. Details of the disposition;

The following facts are not disputed between the parties, or can be acknowledged in full view of the purport of the whole pleadings in Gap evidence 1-1, 2, 2, 2, 3, 8-1 and 2.

A. On May 6, 1999, the Plaintiff is a person who operates a real estate rental business by purchasing a building of 1m2 and 8m2 above ground (1/5 of the Plaintiff’s share 4/5 gate file, gate file, gate, ○○○-26 large 1587.1m2 and its place on the ○○○-dong, Seoul, ○○-dong, ○○-dong, ○○○-26 large 1587m2 and its place.

B. In filing a comprehensive income tax return for the taxable year from 199 to 2002, the Plaintiff: (a) included two billion won in the name of the Plaintiff as loans from the Choung Bank on April 6, 199 (hereinafter “loan”); (b) five hundred million won (the Housing Bank at the time of the loan; hereinafter “the loan”); and (c) one billion won as loans from the Nonghyup on December 1, 2001 (hereinafter “the loan”) among the two billion won borrowed from the National Bank on December 12, 1999; and (d) included the interest paid in the amount of the real estate in the necessary expenses for each taxable year; (b) calculated the sum of the amount of the leased income of the real estate; (c) calculated the amount of the KRW 30,00,000,000,000,000 won, which was the principal income earner; and (d) reported in the amount of income of the Plaintiff, which was the Plaintiff’s income amount (the reported amount of income was the amount of KRW 57, 9,36, 29, 205, 205,536, 205,205.

C. However, the Defendant cannot be deemed as a liability of the joint venture business entity since the Plaintiff borrowed funds to invest in the place of business as a joint proprietor of the real estate leasing business. ② Some of the instant borrowings are capital expenses as construction assets, and the instant borrowings are not deemed as used for the purpose of returning the lease deposit. ③ The amount of the interest paid for each of the instant borrowings is KRW 970,38,452 (158,794,522, 279,751,764, 200, KRW 241,02, KRW 710, KRW 290, KRW 290, KRW 789, KRW 456, KRW 381, KRW 364, KRW 305, KRW 47, KRW 3081, KRW 365, KRW 47, KRW 3085, KRW 47, KRW 198, KRW 308, KRW 481, KRW 4756, KRW 3714, 2085.

D. The plaintiff was dissatisfied with the disposition of this case and filed an appeal with the National Tax Tribunal on May 8, 2004, but the National Tax Tribunal dismissed the plaintiff's appeal on December 6, 2004.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The loan of this case ① used the loan of this case as part of part of part payments in purchasing the real estate of this case. ② The loan of this case was used as remodelling costs of the real estate of this case. ③ The loan of this case was used for returning the lease deposit of this case.

Therefore, each of the instant loans is a debt used by the Plaintiff, etc. to obtain rental income in operating a real estate rental business as a joint proprietor from the instant real estate. Therefore, all of the interest paid on the relevant debt should be included in the necessary expenses of the real estate rental income, and the instant disposition of imposition that held that each of the instant loans is unrelated to the real estate rental business is unlawful.

(b) Related statutes;

Article 27 (Calculation of Necessary Expenses)

Article 33 (Non-Inclusion of Necessary Expenses)

Article 43 (Distribution of Income in Cases of Joint Ownership, etc.)

Article 55 (Calculation of Necessary Expenses for Real Estate Rental Income, etc.)

Article 75 (Calculation of Interest of Construction Funds)

(c) Fact of recognition;

The following facts are not disputed between the parties, or can be acknowledged in full view of the purport of the whole pleadings in the statements in Gap evidence 3 through 7, evidence 8-1, evidence 8-2, evidence 9-1 through 4, evidence 10, evidence 14-1, 2, evidence 15-1 through 4, evidence 16, evidence 17, evidence 2, Eul evidence 2, 3, and evidence 4.

(1) On March 6, 199, the Plaintiff, etc. entered into a sales contract with respect to the instant real estate owned by Kim ○ Sea as KRW 6.25 million (5 billion in the site, KRW 5.25 million in the building, KRW 1 billion in the building) (the Plaintiff, etc. agreed to deduct the remainder of the remainder after deducting the attempted rent from the amount of KRW 1.477 billion in the lease deposit, KRW 1 billion in the instant real estate) on the date of the contract, KRW 50 million in the intermediate payment is on the date of the contract, KRW 2.6 billion in the intermediate payment is on the date of April 6, 1999, and KRW 3.15 billion in the remainder on May 6, 199, and the Plaintiff, etc. agreed to receive the remainder after deducting the attempted rent from the remainder of the amount of KRW 1.477 billion in the lease deposit return obligation of the instant real estate.

After all, on May 11, 199, the plaintiff et al. completed each registration of ownership transfer with the plaintiff's share of 4/5 and the share of the door-to-door iron as 1/5 on the real estate of this case.

(2) The Plaintiff, etc. entered into a joint project agreement with the Plaintiff, etc. to invest the business fund in the ratio of 80% and 20% and operate the joint project in the ratio of 20%, with the principle that the business is operated externally in the joint name. However, even one person for the convenience of the project, such as the issuance of tax invoice, is considered to be a joint name, and the Plaintiff, etc. agreed to distribute all profits and losses incurred from the

(3) On May 6, 199, the Plaintiff et al. registered a joint business proprietor registration (registration number: ○○-○-○○○○○○○○○○○○○○○○○○○○○○○) with the head of a tax office having jurisdiction over the location of ○○ building; the location of the instant real estate and the type of the business.

(4) The loan-related part of this case

On April 6, 1999, the Plaintiff obtained the instant loan from the ○○○-dong Branch in Seoul, ○○-49, ○○○-dong, Seoul, ○○○-dong, ○○-49, which is owned by the Plaintiff, as a security. At the time, the Plaintiff’s loan documents are indicated as ○○-○-○○○○○○○.

In the balance sheet of the 1999 taxable year, a long-term loan of two billion won is included in the balance sheet.

(5) The part concerning the loan.

On December 21, 1999, the Plaintiff obtained a loan of 2 billion won (500 million won) from the National Bank ○○○○○○○○ Branch as security, and repaid 1.5 billion won out of the loans on March 17, 2000.

The plaintiff et al. appropriated the remodeling cost of KRW 684,839,559 in the balance sheet of the instant joint venture business, and KRW 255,384,468 in the year 200 as the building cost. The period of occurrence of remodeling cost is from October 20, 1999 to June 30, 200.

(6) The loan-related part of this case

(A) On April 14, 1994, the ○○ Bank Co., Ltd. (hereinafter “○○ Bank”) completed the registration of establishment of a neighboring mortgage on the instant real property, which was 1.5 billion won with the maximum debt amount, and 1.5 billion won with the debtor Kim○-do.

(B) On June 28, 2001, ○○○○○○ Branch, a lessee of the instant real estate, notified the Plaintiff on June 28, 2001 that ○○○○○○ Branch and a store closure agreement, the Plaintiff, etc. succeeded to from Kim○ Sea, and that the lease contract was terminated on July 28, 2001.

However, on July 2, 2001, the Plaintiff responded that the lease contract was terminated at the ○○○ Branch on July 2, 2001, since the lease contract was implicitly renewed on July 5, 2000 and its expiration date was extended to one year until July 5, 2001. Thus, as of July 5, 2001, the lease contract was terminated at the expiration of three months from the date of termination notification.

Accordingly, on July 16, 2001, the head of ○○ Bank’s ○○ Dong/Dong Integrated Branch notified the Plaintiff that the lease contract would be terminated on September 28, 2001. On November 5, 2001, the head of ○○ Bank notified the Plaintiff that on November 10, 2001, the Plaintiff would claim damages for delay if the Plaintiff et al. did not return the lease deposit by November 10, 2001 (the ○○ branch was reported on July 28, 2001).

(C) On December 1, 2001, the Plaintiff: (a) obtained the instant loan from the agricultural cooperative ○○○○○○ Branch as collateral; and (b) remitted the instant loan to ○○○○○○ Branch on the same day (the registration of the establishment of the instant real estate was revoked on the same day).

D. Determination

(1) The portion of the instant loan ①

(A) First, in light of the following: (a) whether the instant loan was used as part of the purchase fund of the instant real estate; (i) the timing of the instant loan is consistent with the date of payment of intermediate payment out of the real estate purchase price (as stated in the evidence No. 9-1, the intermediate payment was paid on the first agreed date); and (ii) the amount of the instant loan is included within the scope of intermediate payment, it appears that the instant loan was used as the payment of intermediate payment out of the purchase price of the instant real estate.

(B) Therefore, in order for the Plaintiff, etc. to conduct a joint rental business on the instant real estate as to (1) whether the interest paid on the instant loan is necessary expenses related to the instant real estate leasing business, the Plaintiff, etc. should first invest in the instant real estate in accordance with the joint venture agreement or contribute money, and purchase the instant real estate with the amount invested. Thus, even if the instant loan was used for the purpose of purchasing the instant real estate, (1) even if the loan was used for the purpose of purchasing the instant real estate, the instant loan was granted a loan equivalent to the amount of contribution that the Plaintiff, a joint business proprietor, has to invest in the joint business place in accordance with the ratio of shares agreed with the Da○ iron Co., Ltd. in order to operate the joint rental business, and (2) is a debt unrelated to the joint rental business itself, and thus, the interest paid on the instant loan cannot be included in necessary expenses for calculating the real estate rental income of the Plaintiff

The plaintiff's assertion on this part is without merit.

(2) The loan part of this case

The plaintiff asserted that he used the loan of this case as a remodeling cost of the real estate of this case and submitted Gap evidence Nos. 11, 12, and 13 as evidence. Thus, the plaintiff's statements in the evidence Nos. 11 and 12 are documents that the plaintiff et al. personally organized the particulars of the expenses incurred in remodeling the real estate of this case between October 20, 199 and June 30, 200, or are merely merely in the account books of the joint business, and the statement No. 13 as No. 13 is merely merely a specification of loan transactions of the loan of this case. The plaintiff et al. used the loan of this case as remodeling cost of the loan of this case. The plaintiff's assertion in this part is without merit.

In addition, interest on the funds disbursed as remodeling expenses shall be capital expenses, and the portion incurred before the completion of the capital as construction assets shall be appropriated as building costs. Thus, even if the loan in this case was disbursed as remodeling expenses for the real estate in this case, the interest paid until June 30, 200 among them shall not be counted as necessary expenses in this respect.

(3) The loan part of this case

(A) First, whether the instant loan was used to return the lease deposit for the instant real estate or not, and the Plaintiff is punished for dispute as to the point of termination of the lease contract with ○○ bank, the lessee of the instant real estate, at December 1, 2001, and the instant real estate was transferred to ○○ bank (the point of ○○○ bank’s consolidation) for the repayment of the lease deposit. As such, the instant loan is deemed to have been used to return the lease deposit for the instant real estate. Thus, the instant loan is used to return the lease deposit for the instant real estate.

(B) Furthermore, as seen earlier, the Plaintiff et al. shall invest funds necessary for the rental business of the instant real estate in their shares and take over KRW 1,477,00,000,000 in the amount of the lease deposit obligation of the instant real estate in purchasing the instant real estate from Kim○ Sea. The Plaintiff et al. shall take over the obligation to refund the lease deposit of the instant real estate on the outstanding payment date under the instant real estate sales contract in lieu of the remainder payment, and have completed the registration of ownership transfer on the instant real estate under the name of the Plaintiff et al., and the Plaintiff et al. shall first invest in the instant real estate in order to jointly carry out the instant real estate rental business. In light of the fact that the Plaintiff et al. shall take over the above lease deposit repayment obligation of the instant real estate, it shall be deemed that the Plaintiff et al. acquired the lease deposit repayment obligation of each of the instant real estate in their shares, other than the portion of the investment in cash, as well as the portion of the joint rental loan obligation of the Plaintiff et al.

3. Conclusion

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