Cho High-2016-Seoul Government-0410 (2016.07)

Application of the special deduction rate for long-term holding of land within five times due to extension;

Unless there was a circumstance that the Plaintiff had a separate household use the second house with the instant land since the rebuilding of the second house, the instant land should be deemed as a single house land from its original date, and it constitutes a transfer of the first house for one household, and thus, not a general long-term holding special deduction rate of 30%, but a special long-term holding special deduction rate of 80% for one house for one household should be applied.

Article 95 of the Income Tax Act (Transfer Income Amount)

Seoul Administrative Court 2016Gudan23250

AA

BB Director of the Tax Office

2017.08.30

October 25, 2017

1. The Defendant’s transfer income tax amounting to KRW 67,246,900 for the Plaintiff on November 2, 2015 (Gasan) for the year 2015 (Gasan)

The imposition of tax shall be revoked.

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

Cheong-gu Office

The same shall apply to the order.

1. Details of the disposition;

A. On August 26, 1980, the Plaintiff acquired a house of 00 Dong-dong 000, 000 large 697.5 square meters (hereinafter “instant land”) and a house on the ground, but transferred on May 18, 2015 KRW 1.95 billion.

B. On July 4, 2015, the Plaintiff calculated the amount of transfer margin and special deduction for long-term holding pursuant to Article 95(2) and (3) of the former Income Tax Act (amended by Act No. 13426, Jul. 24, 2015; hereinafter the same shall apply) and Article 160(1) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 26302, Jun. 1, 2015; hereinafter the same shall apply). In particular, in calculating the amount of special deduction for long-term holding of the instant land, the Plaintiff reported and paid transfer income tax by applying the deduction rate of at least 80% for the holding period of 10 years for one household prescribed in Article 95(2) Table 2 of the former Income Tax Act (hereinafter referred to as “ Table 2” in calculating the amount of special deduction for long-term holding of the instant land. On the other hand, Table 1 of the same paragraph is referred to as “ Table 1” only).

C. However, the Defendant: (a) on August 23, 2013, the Plaintiff newly acquired a single-story house (referring to 64.86 square meters in a settlement area; hereinafter referred to as “second-story house”) in addition to the existing second-story and the first-story house (hereinafter referred to as “one-story house”) on the instant land; (b) in calculating the special long-term holding deduction amount for the instant land, the Defendant classified the instant land into the first-class housing and the second-class housing land according to the ratio of the settled area for the first-class housing and the second-class housing, and dismissed the Plaintiff’s appeal against the Plaintiff on November 2, 2015, by applying the deduction rate of 80% for the first-generation housing holding period of 10 years or more as stipulated in Table 2; and (c) applying the deduction rate of 10 years or more for the second-class housing to the second-class housing, and (d) the Plaintiff’s appeal against the Plaintiff on November 26, 2015.

[Ground of recognition] No dispute, Gap evidence Nos. 1 through 4, Eul evidence Nos. 1, 6, and 7 (including paper numbers)

Re-appeal and the purport of the whole pleading

2. Whether the disposition is lawful;

A. The plaintiff's assertion

On the instant land, there was a separate house, other than the original one, in addition to the original one house. When the former house was worn out, the Plaintiff destroyed the former house and extended the second house, and directly used the first house and the second house. Ultimately, even though it is apparent that the transfer of the instant land was the transfer of the land attached to the first house and the second house, the Defendant calculated the special deduction amount for long-term holding as to the land attached to the second house, by dividing the instant land into the land attached to the first house and the land attached to the second house without any grounds, and by dividing it into the land attached to the second house into the land attached to the first house and the

B. Determination

1) The following circumstances, which are considered comprehensively considering the purport of Gap evidence Nos. 5, 6, and Eul evidence Nos. 4 and the purport of the entire images and pleadings, namely, "the content of the report on commencement of construction (design alteration)" is indicated as "the extension of ratification of single house on the 1st floor attached thereto": "the 64.66m2 on the 1st floor on the 1st floor;" "the 1st floor on the 00-Gu construction; the 64.86m2 and 16.30m2 on the 16th floor area; the 16.30m2 of the 16th floor area; the 16.4m26m2 in consideration of the fact that the drawing indicating the whole condition of the construction had already been indicating two buildings on the land of this case; further, the building on the 1st building on the land of this case, other than the building on the 1st floor area, appears to have existed.

Meanwhile, inasmuch as there was no circumstance that the Plaintiff had a separate household use the second house at the time of transfer with the instant land since the rebuilding of the second house, the instant land shall be deemed as the land appurtenant to one house from its original date to its original date. Ultimately, the transfer of the instant land and the instant house constitutes the transfer of one house for one household. Therefore, in calculating the special deduction for long-term possession of the instant land, it is reasonable to apply the deduction rate of 80% for the holding period of one house for one household as stipulated in Table 2, for more than 10 years.

Therefore, the plaintiff's assertion is justified.

2) In light of the Supreme Court Decisions 94Nu1654 Decided September 30, 1994; 201Du21402 Decided January 26, 2012; 2014Du3785 Decided May 29, 2014, the Defendant asserts to the effect that, where multiple houses are installed on one land, the deduction rate of Table 1 according to the holding period of the entire land, Articles 160(2) of the former Income Tax Act, Articles 160(1) and 166(6) of the Enforcement Decree of the Value-Added Tax Act, and Article 64 of the Enforcement Decree of the Value-Added Tax Act shall apply mutatis mutandis, or that, inasmuch as each of the relevant laws is a newly constructed house and another parcel of land without permission, the Defendant’s assertion that one of the two houses has been used on one of the two houses and another parcel of land without permission, and that one of the two houses has not been used on one of the two houses and another parcel of land.

3) Also, pursuant to Article 104-3(1)5 of the former Income Tax Act and Article 168-12(1) of the former Enforcement Decree of the Income Tax Act, the Defendant’s assertion that the land exceeds five times the settled area of the first house among the instant land is not eligible for special deduction for long-term holding. The second house was commenced on May 13, 2013 and transferred on May 18, 2015, and the second house was transferred on the same date does not fall under the “period exceeding one year among the land for non-business use” as stipulated in Article 104-3 of the Income Tax Act, and Article 168-6 subparag. 1(b) of the Enforcement Decree of the Income Tax Act provides that the land for non-business use cannot be seen as the “period exceeding one year among the original land for non-business use.” Thus, the Defendant’s assertion that the land for non-business use is not subject to special deduction for 20 years from the original land for non-business use.

D. Sub-committee

Therefore, the instant disposition is unlawful.

3. Conclusion

Therefore, the plaintiff's claim of this case shall be accepted for the reasons and it is so decided as per Disposition.