Kim Young-hee

The Director of the National Tax Service

August 13, 2004

Daejeon District Court Decision 2003Guhap2191 Delivered on February 4, 2004

1. The defendant's appeal is dismissed.

2. The costs of appeal are assessed against the defendant.

1. Purport of claim

The Defendant’s disposition of imposition of capital gains tax of KRW 16,014,490 against the Plaintiff on October 8, 2002 shall be revoked.

2. Purport of appeal

The judgment of the first instance is revoked. The plaintiff's claim is dismissed.

1. Details of the disposition;

The following facts are not disputed between the parties, or may be admitted by each entry in Gap evidence 1 to 9, and Eul evidence 1.

A. The Plaintiff’s husband, on April 27, 1993, acquired a 311 wood-si apartment 1003 303 dong-dong, Yangcheon-gu, Seoul (hereinafter “A house”) and on September 11, 1995, acquired a 804-2 house (the total floor area of the site 408 m2, 189 m2, 189 m2, hereinafter “B house”). Around that time, on September 6, 1995, the Plaintiff acquired a 715 m2, 4,717 m2 and resided in the above house on September 6, 1995, and the Plaintiff also resided in the above house to engage in farming on May 31, 1997.

B. Meanwhile, on March 12, 1999, prior to the death of the above white decoration, the Plaintiff acquired the building of 586 in the non-song-ri Dol 586 (hereinafter “third house”). On March 22, 199, the Plaintiff married with the above white decoration on March 22, 199. On August 14, 199, the Plaintiff inherited the above house ① and ② house upon the death of the above white decoration, and transferred the above house ③ on January 3, 2002, but did not pay the transfer income tax because the transfer margin did not occur.

C. On February 4, 2002, the Plaintiff transferred the above house to the Defendant, and on October 8, 2002, the Defendant imposed capital gains tax of KRW 16,014,490 on the Plaintiff (hereinafter “instant disposition”).

2. Whether the disposition is lawful;

A. The parties' assertion

(1) The plaintiff's assertion

The plaintiff owned only three houses at the time of commencement of inheritance, but only one house was owned by the decedent at the time of inheritance, and (1) the house acquired by the decedent and (2) the inherited house was transferred, which constitutes one house for one household under Article 155 (2) of the former Enforcement Decree of the Income Tax Act, and thus, is exempted from taxation. In addition, the plaintiff transferred the house to the plaintiff, which is ① A house of return to the farm at the time of transfer of the house, ② a house of return to the farm and a general house, which is a general house, ① It also constitutes one house for one household under Article 155 (7) of the former Enforcement Decree

(2) The defendant's assertion

The plaintiff is a third house in the same household as the above in the same household as the above white decoration and succeeds to a house ① and ② house due to the death of the above white decoration. This is not a household that owns a house under Article 155 (2) of the former Enforcement Decree of the Income Tax Act, and thus, it cannot be subject to the special exception for non-taxation under the above provision. The plaintiff is legitimate since the plaintiff did not apply the special exception for non-taxation to return to farming, since it is not a case of "the first transfer of house after the return to farming to farming to farming to farming to farming to farming" under Article 155 (11) of the former Enforcement Decree of the Income Tax Act.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

(1) Whether it falls under Article 155 (2) of the former Enforcement Decree of the Income Tax Act

The purpose of the above provision is to relieve disadvantages caused by the extinguishment of non-taxation benefits of capital gains tax due to the fact that a person who owns one house for one household and is exempted from capital gains tax becomes two houses for one household due to the reason that he/she is inherited without his/her intention or choice (see, e.g., Supreme Court Decision 92Nu15680, Feb. 9, 1993).

On the other hand, according to Article 89 subparagraph 3 of the Income Tax Act and Article 154 (1) and (2) of the former Enforcement Decree of the Income Tax Act, a resident, in principle, constitutes one household with his spouse, and as a result, a resident demands that his/her spouse share the same livelihood at the same address or domicile as the resident or his/her spouse in order to form the resident and one household, the resident’s spouse constitutes one household without any restrictions other than his/her spouse, and the resident’s spouse can form one household only in exceptional cases, such as death or divorce of his/her spouse. Thus, according to the strict interpretation of the provisions of tax law, the resident’s spouse is bound to form one household with the fact that his/her spouse is his/her spouse (see Supreme Court Decision 97Nu19465 delivered on May 29, 198).

Therefore, the plaintiff had already owned three houses as one household prior to the death of Maloon who is her husband, and it is not a case where the plaintiff was a single house for one household and became two houses for one household due to inheritance. Thus, it does not fall under Article 155 (2) of the former Enforcement Decree of the Income Tax Act.

(2) Whether it falls under Article 155 (7) of the former Enforcement Decree of the Income Tax Act

㈎ 위 규정은 도농간 교류를 촉진하여 농어촌주택에 대한 수요를 유지하고 농어촌주택의 정비를 촉진하기 위한 정책적인 목적에서, 농어촌주택과 그 외의 주택을 각각 1개씩 소유하고 있는 1세대가 일반주택을 양도하는 경우에 1개의 주택을 소유하고 있는 것으로 보아 양도소득세를 부과하지 않겠다는 취지로 보여 진다.

In other words, in the case of subparagraph 1, if a person who owns a general house acquires and resides in a rural or fishing village for the purpose of encouraging return to farming, the transfer income tax shall not be imposed on the transfer of the said general house in order to prevent the disposal of the rural or fishing village house in order to avoid disadvantages of imposition of transfer income tax by inheritance of the rural or fishing village house. In the case of subparagraph 2, even if he resides in a rural or fishing village house and moves into a rural or fishing village house without transferring the relevant rural house.

㈏ 위와 같은 구 소득세법시행령 제155조 제7항의 취지에 비추어 볼 때, 같은 조 제11항의 취지는 일반주택을 보유하던 자가 귀농을 목적으로 농어가주택을 취득한 후 종전에 보유하였던 일반주택을 양도하면서 비과세적용을 받고도 그 후 다시 다른 일반주택을 취득하여 양도하는 행위를 반복하는 경우, 그에 대하여도 계속 위 제7항을 적용하여 비과세하는 것은 위 규정의 취지에 반한다고 할 것이므로, 그러한 경우에는 계속 제7항을 적용하지는 않고, 귀농 후 양도하는 주택 중 1개의 일반주택에 한하여 비과세 혜택을 주겠다는 취지로 해석함이 상당하다고 할 것이다.

㈐ 이 사건의 경우 원고의 남편 백성훈이 일반주택인 ①주택을 보유하고 있다가 농촌주택인 ②주택을 취득하고 귀농하였으며, 원고는 일반주택인 ③주택을 취득한 후 위 백성훈과 결혼한 다음, 위 백성훈의 사망으로 ①주택과 ②주택을 상속한 후 위 ③주택을 양도한 뒤 위 ①주택을 양도하였는바, 위 ③주택은 위 백성훈의 귀농 후 다시 취득한 일반주택이고 그 양도 당시 1세대 3주택인 상태였으므로 같은 조 제7항이 적용되지 아니하여 양도소득세 과세대상이 된다고 할 것이고(다만, 원고는 양도차익이 없어서 비과세되었다), 그 후 양도한 ①주택은 귀농 전부터 보유하고 있었고, 또 양도 당시 원고는 농촌주택(②주택)과 일반주택(①주택)을 각각 1개씩 소유한 1세대이었으며, 원고는 그 전의 주택(③주택) 양도에 대하여 위 제7항의 비과세 혜택을 적용받은 바 없으므로 ①주택의 양도는 위 제7항에 의하여 비과세 대상이 된다고 할 것이다.

(3) Sub-determination

Therefore, the defendant's disposition of this case, which imposed capital gains tax, is unlawful despite that the transfer of the plaintiff's housing is exempt from capital gains tax.

3. Conclusion

Therefore, the plaintiff's claim of this case is accepted on the grounds of its reasoning, and the judgment of the court of first instance is justified on the grounds of its conclusion, and the defendant's appeal is dismissed and it is so decided as per Disposition.

Judges Kim Yong-Hun (Presiding Judge)