A multi-family house that is used for the purpose of a villa shall not be regarded as a house unless it is permanently residing.

In the Local Tax Act, the "building used for recreation, summering, play, etc. and its appurtenant land" is defined as a separate house, and the building is used as a separate house according to the actual status of the building in order to be included in a separate house.

Article 89 of the Income Tax Act

Seoul Administrative Court 2016Gudan59181

ARTICLE *

*The Director of the Tax Office

oly 17, 2017

November 24, 2017

1. The part of the Defendant’s capital gains tax of KRW 198,159,750 for the Plaintiff on April 6, 2015

The administrative disposition 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 February 11, 200, the Plaintiff acquired * Gu** Dong 204 located ** apartment 10 Dong 803 (hereinafter “instant apartment”), but transferred 2.5 billion won on May 2, 2014.

B. In filing a return of capital gains tax, the Plaintiff reported and paid capital gains tax of KRW 4,122,779 to the Defendant on July 7, 2014 on the ground that the said transfer constitutes one house for one household, which is a high-priced house under Articles 95(3) and 89(1)3 of the former Income Tax Act (amended by Act No. 12852, Dec. 23, 2014; hereinafter “former Income Tax Act”).

C. At the time of the transfer, the Defendant: (a) held the Plaintiff’s spouse at the time of the transfer of the instant apartment; (b) KRW 198,159,750 of the capital gains tax on April 1, 2015, as the Plaintiff’s spouse owned KRW 417-1 located in the R& & & R & Eup R & 417-1 located in *blue loan 103 Dong 311 (hereinafter “the instant apartment house”); and (c) thus, the transfer of the instant apartment does not constitute one house for one household; and (d) notified the Plaintiff of the correction and notification of KRW 198,159,7

D. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on June 23, 2015, but was dismissed on May 2, 2016.

Facts that there is no dispute over recognition, Gap No. 1, 2, 3, Eul No. 1, 2, and 1, and 2

Each entry, the purport of the whole pleadings, including branch numbers,

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The key house is a villa and does not correspond to the "house" under Article 89 (1) 3 (a) of the former Income Tax Act. Therefore, the instant disposition that excluded the application of one house for one household is unlawful.

B. Relevant provisions

1) Article 104-3(1)6 of the former Income Tax Act, which was enforced at the time of the transfer of apartment of this case, provides for a villa and its appurtenant land as one of the non-business land. The details are as follows.

Article 104-3 (Scope of Land for Non-business)

(1) "Land for non-business use" in Articles 96 (2) 8 and 104 (1) 8 means any of the following land during the period prescribed by Presidential Decree during which the relevant land is owned:

6. A residential building used for recreation, summering, amusement, etc. not for permanent residence (hereafter referred to as " villa" in this subparagraph) and land annexed thereto: Provided, That rural and fishing village houses and land annexed thereto located in a Eup or Myeon under Article 3 (3) and (4) of the Local Autonomy Act and meeting the scope and standards prescribed by Presidential Decree are excluded, and where the boundary of land annexed to a villa is unclear, land ten times the floor area of the building shall be deemed land annexed thereto;

2) The parts regarding the definition of a villa in the former Local Law (amended by Act No. 12602, May 20, 2014) are as follows.

Article 13 (Restriction on Acquisition, etc. Within Overconcentration Control Region)

(5) The amount of acquisition tax applicable when acquiring any of the following real estate, etc. (including cases of acquiring a portion of a villa, etc. by dividing it) shall be calculated by applying the tax rates under Articles 11 and 12 plus 400/100 of the base rate for heavy taxation. In such cases, the aforesaid provisions shall apply not only to golf courses registered as sports facility business (including cases of expanding facilities and making an alteration of such facilities; hereafter the same shall apply in this paragraph) pursuant to the Installation and Utilization of Sports Facilities Act but also to those cases where golf courses are used as de facto golf courses without registration, and if the boundary of land attached to any villa or high-class recreation center is unclear, the land equivalent to ten times the floor area of the building is deemed the land annexed thereto:

1. Villas: Residential buildings used for recreation, summering, play, etc. and not used for permanent residence, and land annexed thereto (excluding houses in agricultural and fishing villages and land annexed thereto located in Eup or Myeon under Article 3 (3) and (4) of the Local Autonomy Act and fall under scopes and standards prescribed by Presidential Decree). In such cases, the scope of and applicable standards for villas shall be prescribed by Presidential Decree;

3) Articles 95(3) and 89 subparag. 3 of the former Income Tax Act, which had been enforced at the time of the transfer of the instant apartment, provide for non-taxation for income from the transfer of one house for one household as prescribed by the Presidential Decree. However, in the case of expensive houses whose transfer value exceeds the standard prescribed by the Presidential Decree, the method of calculating gains from transfer was separately prescribed. However, in determining whether the instant apartment house falls under a separate house, no provision was provided as to whether it constitutes a separate house, and the following established rules were prescribed as to it.

[Reday 46014-1549, June 25, 1997]

- In determining one house for one household which is exempt from capital gains tax under the current Income Tax Act, the housing portion will be determined according to the actual use at the time of transfer, and if the actual use is unclear, it will be determined according to the registration on the public register.

- Buildings imposed as a villa under the provisions of the Local Tax Act shall not be deemed a house, or where they are used as a regular residence, they shall be deemed a house regardless of whether a local tax is levied.

4) Meanwhile, the Housing Act provides for the following definitions as to housing.

Article 2 (Definitions)

The terms used in this Act shall be defined as follows:

1. The term "housing" means all or part of a building with a structure wherein members of a household may carry on an independent residential life for a long time as well as the land attached thereto, and it shall be classified into detached housing and collective housing;

(c) Fact of recognition;

1) Key houses are rural areas **** Si* Eup** Ri 417-1 and 120 households, 311, and 46.7293 square meters of living rooms, 2 rooms, kitchen rooms, toilets, boiler rooms, etc.

2) On January 17, 2006, the Plaintiff completed a lease on a deposit basis on a key house, but cancelled the registration on February 13, 2008, and on January 31, 2008, the Plaintiff’s spouse Kim per cent acquired the key house of KRW 44 million on January 31, 2008.

3) The Plaintiff’s spouse Kim percent, a spouse, was transferred to a key house on January 28, 2008, but on March 10, 2008, the Plaintiff moved to Seoul Special Metropolitan City, Nowon-gu, 434-1** Building 7 floors. Since the Plaintiff moved to the above *** seven floors on March 24, 2003, the Plaintiff has been living in the above ** 7 floors on the building.

4) The Plaintiff:**** in*** in 998, * in 208, 3 in 2009, 2 in 2009, 2 in 2010, 5 in 2011, 1 in 2012, 6 in 2013, and 2 in 2014.

5) The Plaintiff and Kim % (hereinafter referred to as the “Plaintiff’s husband and wife” in the case of two names) visited Jeju-do using an aircraft while living in the 7th floor of the building, and lent a loan to those visiting Jeju-do so that they can implied in the key house. The water supply and gas use of the key house are as listed below:

Monthly

Management Expenses

Details of water use;

Gas Use Details

Quantity consumed (t)

Dues

Quantity used (m3)

Dues

2011.01

39,390

2

600

2011.02

39,330

3

1,000

2011.03

37,230

0

2011.04

39,150

4

1,120

2011.05

41,820

7

2,610

2011.06

37,040

0

0

2011.07

38,340

2

520

62

205,650

2011.08

38,280

0

4

13,000

2011.09

38,110

0

0

October 2011

38,330

0

2

6,500

November 2011

39,590

7

2,650

8

25,400

December 2011

38,540

0

0

2012.01

39,050

4

1,260

35

109,590

2012.02

38,660

2

740

30

9,780

2012.03

38,660

3

1,000

9

31,450

2012.04

39,590

3

1,020

9

31,450

2012.05

37,460

7

2,310

14

50,340

2012.06

34,600

0

10

34,940

2012.07

38,650

7

2,420

0

2012.08

38,500

3

1,190

2

6,260

2012.09

35,750

0

0

October 2012

35,360

0

0

November 2012

37,200

2

680

0

December 2012

36,870

0

0

2013.01

36,730

0

2013.02

40,430

8

2,720

2013.03

38,820

7

2,170

59

194,640

2013.04

39,810

6

2,040

28

92,370

2013.05

36,150

3

1,080

15

47,960

2013.06

35,490

1

340

10

31,260

2013.07

35,950

0

2013.08

35,450

0

2013.09

35,680

2

760

October 2013

39,390

10

3,800

6

19,250

November 2013

36,200

0

18

57,760

December 2013

36,570

0

2014.01

39,520

8

3,040

28

95,840

2014.02

37,200

2

720

39

133,500

2014.03

38,570

5

1,900

3

10,270

2014.04

38,570

0

2014.05

38,150

5

1,750

41

136,610

2014.06

37,590

0

11

34,880

2014.07

38,560

8

2,960

1

3,160

2014.08

10

30,960

2014.09

October 2014

November 2014

5

160,110

December 2014

35

94,120

6) 김%%은 2015. 3. 20. $$시장으로부터 2015. 3. 17. 현재 쟁점주택을 별장으로 사용하고 있음을 확인한다는 내용의 별장 확인서를 발급받았다.

7) There was no household that had been transferred from January 28, 2008 to March 10, 2008 after Kim percent transferred to the housing at issue.

Facts that there is no dispute with recognition, Gap evidence Nos. 4 through 52 (including Serial No. 52), Eul evidence No. 6, and the purport of the whole pleadings

D. Determination

The term "house" under the former Income Tax Act shall be determined by whether the actual purpose of use is a building actually provided for a residence. Even if a house is used for a non-residential purpose, its structure, function, or facility is in a state suitable for a residence as its original residential purpose, and its residential function is maintained and managed as it is, so at any time, it shall be deemed a house for a building that can be used for a house by the principal or a third party (see Supreme Court Decision 2004Du14960, Apr. 28, 2005). In light of the fact that the issue consists of two rooms, living rooms, bathing rooms, boiler rooms, etc., it is reasonable to view the house as a house under the former Income Tax Act.

However, since the former Income Tax Act provides for non-taxation on income from the transfer of one house for one household, and does not provide for whether it constitutes a separate house not used for regular residence in determining whether it constitutes a separate house, it cannot be immediately viewed as a house in determining whether it constitutes a non-taxation on income from the transfer of one house for one household under Article 13 (5) 1 of the former Local Tax Act, just because it falls under a separate house for one household under the separate house for one household under the former Income Tax Act. However, there is no clear dispute as to the fact that the defendant in this case does not fall under a house for one household in the case of a separate house, and as seen above, it is not enough that the defendant created and implemented a newly established rule that "a building imposed as a separate house pursuant to the Local Tax Act on June 25, 1997 shall not be deemed a house," and that the defendant's house is not subject to non-taxation under the former Income Tax Act by considering the overall purport of arguments as a whole. In other words, it is not enough that the defendant's house is not subject to be used as a house.

Therefore, Article 13 (5) 1 of the former Local Tax Act provides that "a building used for recreation, summering, play, etc. and its appurtenant land (excluding houses in rural and fishing villages and land annexed thereto)" as a separate site, which is a residential building and not used for ordinary residence. In order to fall under a villa building as referred to in a separate site, the actual status of the building is under the current status.

It is sufficient that the Plaintiff’s husband and wife had been used for a villa (see, e.g., Supreme Court Decision 94Nu8280,8297, Nov. 11, 1994). The Plaintiff’s husband and wife only resided in Seoul, and did not have been the owner of the key house. As seen earlier, the Plaintiff purchased a golf club membership in Jeju-do, and the Plaintiff purchased a house near the golf club to save accommodation expenses.

The plaintiff's argument is persuasive, and the plaintiff's husband and wife extended the issue house to the friendship in Jeju-do as a lodging house, and the Kim % excluded Kim % from the time of the disposition of this case, there is no household moving into the issue house. In light of the fact that the plaintiff's husband and wife used the issue house for the purpose of recreation, summering, play, etc., not for permanent residence, and Kim % from March 20, 2015, only after it was from March 20, 2015, **** the market issued a letter of confirmation that the plaintiff's husband and wife used the issue house as a villa on March 17, 2015, and** the case that most households use the issue house as a villa for permanent residence, it cannot be said that the issue house does not constitute a villa merely because the issue house is used as a villa.

Therefore, the defendant's disposition of this case, which reported that the transfer of apartment of this case does not constitute the transfer of one household house, is unlawful.

3. Conclusion

The plaintiff's claim is justified and it is so decided as per Disposition.