Cho Jae-2018-Gu-3454 ( October 31, 2018)

The instant house does not constitute a inherited house or a house of return to rural communities under the special provisions on one house for one household.

Since the instant house does not correspond to an inherited house or a house of return to rural communities, which is subject to the special provisions on one house for one household, one household is excluded from non-taxation at the time of transfer of the general house, and the disposition against which capital gains tax has been imposed is lawful.

Scope of one house for one household under Article 154-1 of the former Enforcement Decree of the Income Tax Act

Special Cases concerning one house for one household under Article 155-1 of the Enforcement Decree of the former Income Tax Act

2019Guhap20411 Revocation of Disposition of Imposing capital gains tax

○ Kim

○ Head of tax office

June 20, 2019

August 22, 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 157,312,650 for the Plaintiff on January 2, 2018 shall be revoked.

1. Details of the disposition;

A. On March 24, 1999, the Plaintiff and wife Kim-○ jointly purchased ○○○○○○○○○○ apartment, ○○○○○○○○○○, ○○○○○ apartment, and ○○○○○○○ (hereinafter referred to as “instant ordinary house”). On August 22, 2016, he transferred the said ordinary house to 1,435,000,000 won and completed the registration of ownership transfer on November 24, 2016.

B. As to the transfer of the instant general housing, the Plaintiff reported and paid KRW 5,124,660 of the capital gains tax by deeming the transfer of a high-priced house which is one house for one household under Article 89(1)3 of the former Income Tax Act (wholly amended by Act No. 16104, Dec. 31, 2018; hereinafter the same shall apply) to the transfer of the instant general housing.

C. As a result of the investigation of capital gains tax on the Plaintiff, the Defendant: (a) determined that the transfer of the instant general housing does not constitute an inheritance house under Article 155(2) of the former Enforcement Decree of the Income Tax Act (wholly amended by Presidential Decree No. 27829, Feb. 3, 2017; hereinafter the same) or a return house to rural communities under Article 155(7)3 of the same Article, and thus, on January 2, 2018, the Plaintiff owned the instant general housing by inheritance from ○○○○○○○○○- Ground Housing (hereinafter referred to as “instant housing”) that was donated to ○○○○○○○○○○○, which was donated to ○○○○○, ○○○○, which was donated on April 12, 2016 (hereinafter referred to as “instant disposition”).

D. The Plaintiff dissatisfied with the instant disposition and filed an objection on March 6, 2018, but was dismissed on January 22, 2018. The Plaintiff again filed an appeal with the Tax Tribunal on July 24, 2018, but was dismissed on October 31, 2018.

[Reasons for Recognition] The facts without dispute, Gap evidence Nos. 1 through 6 (including each number; hereinafter the same shall apply), Eul evidence No. 1, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The instant house constitutes a inherited house under Article 155 (2) of the former Enforcement Decree of the Income Tax Act or a house of return to rural communities under Article 155 (7) 3 of the same Act, and thus income accrued from the transfer of the instant general house constitutes non-taxable capital gains pursuant to Article 89 (1) 3 (b) of the former Income Tax Act and Article 154 (1) of the Enforcement Decree

Therefore, the instant disposition, based on the premise that the instant house does not constitute an inherited house or a house of return to farming under Article 155 of the former Enforcement Decree of the Income Tax Act, must be revoked as unlawful.

B. Relevant statutes

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

C. Facts of recognition

The following facts may be recognized in full view of the evidence and the whole purport of the statements, images, and pleadings as stated in Gap's evidence and evidence as stated in the above-mentioned facts, or as mentioned in Gap's evidence as stated in the above-mentioned facts.

1) On July 7, 1992, the Plaintiff’s 4-nam Kim ○, etc. purchased the instant housing located on the ground of ○○○○○○-○, etc., ○○○○○○-○○○, etc., 998 square meters, 569 square meters in the same Ri ○○-○○-○, 336 square meters in the same Ri ○○-○, 336 square meters in the same Ri ○○-○, and 207 square meters in the same Ri ○○-○-○○-○○, etc. (hereinafter “instant land”).

2) On July 10, 1995, Kim○-○ resided after moving into the instant house, and died on February 14, 1996. The Plaintiff acquired the ownership of the instant land and the instant house due to a consultation division, and completed the registration of ownership transfer under the name of the Plaintiff on October 15, 1998.

3) On August 3, 1998, the Plaintiff had completed a move-in report on the instant house, and resided in the said house. However, on April 9, 1999, the Plaintiff’s wife Kim○ was killed on December 9, 2016, while living in the instant general house by transferring it to another general house.

4) On March 7, 2016, the Plaintiff completed the move-in report on the instant house on March 7, 2016, and the Plaintiff donated the instant land and the instant housing to Kim○○ on April 12, 2016.

5) On April 18, 2018, Kim○-○ registered an agricultural business entity as its business owner in accordance with the Enforcement Rule of the Act on Fostering and Supporting Agricultural and Fisheries Business Entities.

D. Determination

1) Whether the instant house is an inherited house under Article 155(2) of the former Enforcement Decree of the Income Tax Act

According to Article 155 (2) of the former Enforcement Decree of the Income Tax Act, where one household possessing one inherited house and one other house in the country respectively transfers the general house, it shall be deemed to possess one house in the country and shall be subject to the application of Article 154 (1). The above "other house" shall be limited to the house owned at the time of commencement of the inheritance or the newly-built house acquired after completion of the project by the association member's relocation right held at the time of the commencement of the inheritance. This purpose is to relieve the disadvantage that is not subject to the application of the special taxation of one house for one household by failing to impose capital gains tax on the house held before the inheritance in case where a person who is exempted from the capital gains tax by falling under the special case of one house for one household possesses two houses due to the reason of "Succession not by his/her intention

According to the above facts, the plaintiff inherited the house of this case from Kim ○ on February 14, 1996 and acquired the general house of this case on March 24, 1999. In light of the contents and purport of the above provisions, the above general house is not a house owned by the plaintiff at the time of the commencement of the above inheritance, and it does not constitute "other houses" under Article 155 (2) of the Enforcement Decree of the former Income Tax Act, and therefore, it is judged that the above provision is not subject to the application.

Therefore, this part of the Plaintiff’s assertion is without merit to further examine.

2) Whether the instant house constitutes a house returning to farming under Article 155(7)3 of the former Enforcement Decree of the Income Tax Act

In light of the principle of no taxation without law, or the requirements for tax exemption or tax exemption, the interpretation of tax laws shall be interpreted in accordance with the text of the law unless there are special circumstances. It is not permitted to expand or analogically interpret without reasonable grounds, and in particular, it accords with the principle of fair taxation to strictly interpret that the provision is clearly preferential among the requirements for tax exemption or exemption (see, e.g., Supreme Court Decision 2003Du7392, May 28, 2004).

In light of the following circumstances, the evidence revealed prior to the above facts and the purport of the entire pleadings, it is insufficient to recognize the fact that the instant house is a house of return to rural communities under Article 155 (7) 3 of the former Enforcement Decree of the Income Tax Act by only the evidence submitted by the Plaintiff, and there is no other evidence to acknowledge it. Therefore, the Plaintiff’s assertion on

A) According to Article 155(7)3 of the former Enforcement Decree of the Income Tax Act, where one household possessing one house located in the Eup or Myeon area in the Seoul Metropolitan area and one house located in the Eup or Myeon area in the Republic of Korea respectively among the houses acquired for farming or fishing purposes, transfers the ordinary house, such household shall be deemed to own one house in the Republic of Korea, and Article 154(1) of the former Enforcement Decree shall be subject to non-taxable capital gains, and Article 154(10) of the same Enforcement Decree specifically prescribes the requirements

On the other hand, the Enforcement Decree of the Income Tax Act was amended by Presidential Decree No. 26982 on February 17, 2016, and Article 155 (7) of the Income Tax Act applies only to cases where a general house is transferred within five years from the date of acquisition of the house. The proviso was added to Article 155 (10) of the Income Tax Act. Article 1 of the former Enforcement Decree of the Income Tax Act (amended by Ordinance of the Ministry of Strategy and Finance, Feb. 17, 2016) provides that "it shall be located in the annual notification prescribed by Ordinance of the Ministry of Strategy and Finance," and Article 10 of the former Enforcement Decree of the Income Tax Act provides that "The amended provisions of Article 155 (7) and Article 15 (10) of the same Act shall apply from the date of promulgation of the Decree."

In this case, as seen earlier, the Plaintiff acquired the instant house before February 17, 2016, which was the enforcement date of the above provision, and therefore, whether the instant house satisfies the requirements for return to rural communities or not shall be determined pursuant to Article 155(10) of the Enforcement Decree of the Income Tax Act before the said amendment (hereinafter “Enforcement Decree of the Income Tax Act before the said amendment”).

B) As to this, the Plaintiff asserts that Article 155 of the former Enforcement Decree of the Income Tax Act, which was applied at the time of April 12, 2016, which was donated the instant house by the Plaintiff, should be applied to the Plaintiff. However, since it is apparent in the literal sense that Article 155(7) of the former Enforcement Decree of the Income Tax Act stipulates the owner of the instant house as the “one household”, it is reasonable to determine the ownership relationship based on the “one household”. ② In light of the Plaintiff and Kim ○○ as revealed in the above recognition, the Plaintiff and Kim ○ appears to have formed one household around March 7, 2016, and ③ even if the Plaintiff donated the instant house to Kim ○○ on April 12, 2016, it is difficult to accept the Plaintiff’s aforementioned assertion in light of the fact that the ownership changes between the members constituting one household.

C) Article 155(10) of the Enforcement Decree of the Income Tax Act prior to the amendment provides that ① is to be located in the annual notification as prescribed by Ordinance of the Ministry of Strategy and Finance (Article 155(10) (Article 15), ② is not to fall under the expensive house under the provisions of Article 156 of the Ordinance of the Ministry of Strategy and Finance (Article 156); ③ the site area is not more than 660 square meters (Article 3); ④ a person who owns farmland of not less than 1,000 square meters which is acquired for the purpose of farming or fishing, acquires a house located in the relevant farmland or is to acquire a fisherman as prescribed by Ordinance of the Ministry of Strategy and Finance (Article 4); ⑤ All members of a household (including cases where a part of members of a household is not a director due to enrollment as prescribed by Ordinance of the Ministry of Strategy

Meanwhile, Article 73(1) of the former Enforcement Rule of the Income Tax Act (amended by Ordinance of the Ministry of Strategy and Finance No. 604, Mar. 10, 2017; hereinafter the same) provides that "the annual notification prescribed by Ordinance of the Ministry of Strategy and Finance under Article 155(10)1 of the Enforcement Decree of the Income Tax Act before the amendment means the place where a person who intends to engage in farming or fishing at the seat of a house of return to farming or fishing and his/her spouse (Article 71(3)1) or a lineal ascendant (Article 72(7) or 71(3) of the former Enforcement Decree of the Income Tax Act (Article 155(10)5 of the former Enforcement Decree of the Income Tax Act (amended by Ordinance of the Ministry of Strategy and Finance as of March 10, 2017; hereinafter the same shall apply) intends to have the first place of registration in the family relations register for the lineal ascendant (Article 71(1)1) or 3) of the former Enforcement Decree of the Income Tax Act.

The location of the instant house is not the first place of registration on the family relations register of the Plaintiff and his spouse, and since the Plaintiff had resided in the said house for at least five years prior to the date of acquisition of the said house, the instant house did not meet the requirements under Article 155(10)1 of the Enforcement Decree of the Income Tax Act before the amendment. Furthermore, the Plaintiff resided in the instant house until the date of transfer by Kimnam-○ on March 7, 2016 after completing the move-in report on the instant house on August 3, 1998, and the Plaintiff’s wife Kim○ resided in the instant general house on April 9, 1999, and died on December 9, 2016. Thus, it is difficult to view that the instant house did not meet the requirements under Article 155(10)5 of the Enforcement Decree of the Income Tax Act prior to the amendment to the date of acquisition of the said house as a long-term residence in Seoul, where it did not meet the requirements for medical treatment of the instant house for a period of ○○ or 2013 years.

3) Sub-determination

Therefore, it is difficult to recognize that the instant house constitutes an inherited house under Article 155 (2) of the former Enforcement Decree of the Income Tax Act or a house of return to the farm under Article 155 (7) 3 of the same Act. Thus, the Defendant’s disposition of this case, which determined that the Plaintiff’s income accrued from the transfer of the instant general house, is legitimate, and the Defendant’s disposition of this case is not subject to non-taxation capital gains under Article 89 (1) 3 (b) of the former Income Tax Act

3. Conclusion

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