Early High Court Decision 2011J 0739 ( October 28, 2011)

Where one household owns two houses and one house is converted into an association member's relocation right, the previous house shall not be subject to special cases of non-taxation.

Where one household owns two houses and one house from among them is converted into an association member's relocation right, it cannot be called cases where one household temporarily holds one house and one association member's relocation right for the purpose of realizing an association member's relocation right, such as alternative acquisition or residence, etc. in the possession of only one house, and therefore, the special cases concerning non-taxation on the previous house cannot be applied.

Article 89 of the Income Tax Act

Article 156-2 of the Enforcement Decree of Income Tax Act

2011Guhap10219 (202.03)

Song AA

Head of Central Tax Office

January 6, 2012

February 3, 2012

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 January 27, 201 (the plaintiff's February 7, 2011 seems to be erroneous) is revoked.

1. Details of the disposition;

A. On May 26, 1983, the Plaintiff acquired an OOdong 000-000 square meters, and a single house of 60.83 square meters on its own (hereinafter “the previous house”) located around that time from that time to December 2, 2009.

B. On the other hand, on September 26, 2003, the Plaintiff acquired OO apartment No. 000,000 O apartment, 000,000 (hereinafter “the reconstruction apartment in this case”) and on November 4, 2002, the reconstruction project was conducted pursuant to the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (hereinafter “Domination Act”) with respect to the said apartment, and obtained authorization for the establishment of partnership on November 4, 2002.

C. After that, the reconstruction pre-building apartment of this case was selected as the occupant of the reconstruction apartment (hereinafter referred to as "the occupation right of this case") on December 28, 2006, the authorization of the project implementation plan on May 16, 2005, the authorization of the management and disposal plan on December 28, 2006, and the pre-public notice on May 11, 2007, after the authorization of the commencement of the business and the authorization of November 23, 2009. The plaintiff was selected as the occupant of the reconstruction apartment (hereinafter referred to as "the occupation right of this case") in accordance with the authorization of the management and disposal plan on December 28, 2006. The plaintiff was selected as the occupant of the reconstruction apartment of this case on December 28, 2006, OOOO apartment of 000 Dong 0000 (hereinafter referred to as "the reconstruction apartment of this case") under the name of the plaintiff on Sep. 3, 2010>

D. On May 7, 2009, the Plaintiff transferred the previous house to the PP seafarer, a foundation, the purchase price of which was KRW 400 million, and on May 26, 2009, the Plaintiff made a preliminary return on the tax base of capital gains tax that the transfer of the previous house to the Defendant constitutes one tax-free object for one household.

E. Around September 2010, the Defendant notified the Plaintiff of filing a revised return and payment of capital gains tax by October 8, 2010 on the ground that the Plaintiff possessed the association member's relocation right of the instant case included in the number of houses at the time of transfer of the instant previous house and does not constitute the subject of non-taxation for one household. On October 8, 2010, the Plaintiff paid capital gains tax by filing a revised return and payment on October 12, 2010.

F. After that, on December 14, 2010, the Plaintiff filed a request with the Defendant for a reimbursement of KRW 107,038,910 for the transfer income tax reported and paid for the reason that the ownership right of the instant rebuilding right is not included in the number of houses, since the Plaintiff obtained authorization for the re-building project implementation on May 16, 2005 with respect to the instant re-building apartment.

G. However, on January 27, 2011, the Defendant rejected an application for rectification against the Plaintiff on the ground that the Plaintiff was entitled to move in on September 28, 2006 under Article 48 of the Do Government Act at the time of the transfer of the previous house in this case under Article 89(2) of the former Income Tax Act (amended by Act No. 9897, Dec. 31, 2009; hereinafter the same) and Article 12(1) of the Addenda of the former Income Tax Act (hereinafter the “instant rejection disposition”).

H. The Plaintiff filed an appeal with the Tax Tribunal on April 28, 201 against the instant rejection disposition, but was dismissed on April 28, 201.

[Reasons for Recognition] In without dispute, Gap evidence 1-2, Gap evidence 2, Gap evidence 3-1-2, Gap evidence 4, 5, 6, 9, Eul evidence 1-2, Eul evidence 1-2, Eul evidence 2, the fact inquiry results of this court's inquiry into the king market, the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

In cases where the requirements under each subparagraph of Article 156-2 (4) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 22034, Feb. 18, 2010; hereinafter the same) are met, one household possessing one house in Korea shall be deemed to possess one house and one association member's relocation right temporarily by acquiring one house and one association member's relocation right temporarily before transferring the house. ① The Plaintiff's husband and wife is the one who acquires and owns the previous house in this case. ② The Plaintiff's ownership of the apartment before transferring the house in this case was temporarily owned one house and one association member's relocation right temporarily by acquiring the ownership right of the instant association member before acquiring the reconstruction apartment in the administrative disposition plan of Dec. 28, 2006. ③ After the reconstruction apartment in this case was completed, the Plaintiff transferred the previous house in this case within 2 years from the date of acquisition, and the premise that the Plaintiff's rejection disposition of the instant house and the association member's relocation right of this case were not applied to the reconstruction apartment in this case.

B. Relevant statutes

The entry in the attached Form is as specified in the relevant statutes.

C. Determination

(1) Article 89(2) main text of the Income Tax Act newly established upon the amendment by Act No. 7837 of Dec. 31, 2005 provides that where one household possesses the association member's relocation right acquired due to the authorization of a management and disposal plan under the Housing and Do Government Act and transfers the relevant house, the special case of non-taxation for one house for one household prescribed in paragraph (1) shall not be applicable (where two houses thereafter are converted into the association member's occupancy right, and one house and one association member's relocation right comes to own one house and one association member's relocation right after the conversion into the association member's occupancy right, there was a problem of applying non-taxation for one house for one household depending on what of the houses and one association member's relocation right first). Article 12(1) of the Addenda of the Income Tax Act provides that the aforementioned amended provisions also apply from the portion of non-taxation approval for the house redevelopment project or the house reconstruction project under the Do Government Act, even if 10th of 200 houses thereafter are transferred pursuant to 16.

(2) However, Article 89 (2) of the former Income Tax Act provides that "one house for one household shall be exempted from capital gains tax exceptionally in the purport that one household acquires one house and one association member's relocation right temporarily for the purpose of protecting the ownership of one house and one association member's relocation right temporarily for the purpose of maintaining balance with the non-taxation provisions on the capital gains tax for two houses temporarily acquired by one household and one association member's relocation right for the purpose of acquiring one house temporarily under the former Enforcement Decree of the Income Tax Act." In other words, the proviso of Article 89 (2) of the former Income Tax Act provides that "the same shall not apply to cases prescribed by the Presidential Decree for the purpose of residing in the period of implementing the housing reconstruction project or the housing redevelopment project under the Do government Act," and Article 156-2 (4) of the former Enforcement Decree of the Income Tax Act (hereinafter referred to as "the provisions of this case") which provides that "one house for the purpose of acquiring one house temporarily within 2 years before the date of acquiring the house by transferring the previous house within 1 year."

(3) The plaintiff married 1 households possessed two houses, including the previous house in this case and the apartment before reconstruction of this case, and possessed one house and one association member's relocation right as the apartment before reconstruction of this case was converted into the approval plan for the reconstruction of Do Government Act on December 28, 2006, which was after January 1, 2006. On November 23, 2009, the reconstruction apartment of this case was completed and the plaintiff married 1 and 1 association member's relocation right was occupied in the above apartment for 2 years or more until the date of the acquisition of the association member's relocation right in this case, and the transfer of the previous house within 2 years after the completion of 10 houses before reconstruction of this case cannot be applied to the case where 10 houses and 1 association member's relocation right of this case were transferred within 2 years after the date of acquisition of the association member's relocation right of this case under the proviso of Article 2 of the Income Tax Act, and it cannot be applied to the case where 16 houses and 1 association member's relocation right of this case were temporarily owned with the previous house for 14 houses.

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.