Appellate Court 2015No1086 (No. 26, 2016)

The burden of proof of transfer of one house for one household is for the taxpayer, and the part other than the building of this case is difficult to be regarded as a house where residential function is maintained.

Unless there are special circumstances, the taxpayer bears the burden of proof regarding the fact that the ownership of one house per household is a transfer of one house, and the other part of the building of this case, other than the house of this case, cannot be seen as a house where the residential function is maintained, and it is difficult to recognize the part of the claim for extension of the house. The conversion price, the necessary expenses

Article 89 (Non-Taxable Transfer Income Tax)

Article 97 (Calculation of Necessary Expenses in Transfer Income Tax)

2016Gudan18289 Revocation of Disposition of Imposing capital gains tax

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○ Head of tax office

August 23, 2017

September 27, 2017

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 KRW 000 (including additional tax for negligent return, KRW 000, and KRW 000 for additional tax for negligent return) for the year 2010 against the Plaintiff on January 0, 200 shall be revoked.

1. Details of the disposition;

A. As to ○○○○○-dong, ○○○○○-dong, and the 1st and third floors above above underground, [public injury: Class I neighborhood living facilities (retail stores), Class II neighborhood living facilities (general restaurants), 1st floor, 000 square meters above ground, 2nd floor above ground, and 3th floor above ground] (hereinafter “instant real estate”, the registration of ownership transfer was completed in the name of AAAA, the former spouse of the Plaintiff on the ground of sale on October 0, 1984. On October 0, 2006, the registration of ownership transfer was completed in the Plaintiff’s name on the ground of property division.

B. On October 0, 2010, the Plaintiff transferred the instant real estate to KRW 000, and filed a preliminary return on the tax base of capital gains following the transfer of the instant real estate to the Defendant on October 0, 2010. At the time of the transfer of the instant real estate, the Plaintiff filed a non-taxation report on capital gains tax under the premise that the total floor area of the instant real estate portion at the time of the transfer of the instant real estate exceeds that of the non-housing portion, pursuant to Article 89(1)3 of the former Income Tax Act (amended by Act No. 10175, Mar. 22, 2010; hereinafter the same shall apply) and Article 154(3) main sentence of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 22391, Sept. 20, 2010; hereinafter the same shall apply).

C. As a result of an investigation of capital gains tax on the Plaintiff around October 2014, the Defendant concluded that the total floor area of the housing portion of the instant building at the time of transfer of the instant real estate is only 00 square meters with the third floor above the ground. On the premise that the total floor area of the housing portion of the instant building is smaller than the total floor area of the instant building, the transfer of non-real estate portion out of the instant real estate constitutes subject to taxation pursuant to the proviso of Article 154(3) of the former Enforcement Decree of the Income Tax Act, and on the premise that the transfer of non-housing portion constitutes subject to taxation pursuant to the proviso of Article 154(3) of the former Enforcement Decree of the Income Tax Act, the Defendant calculated capital gains tax (including additional tax of 00 won, additional tax of 00 won, acquisition value of 00 won, and other necessary expenses, 000 won, special deduction amount of long-term holding, and capital gains tax, hereinafter referred to as the “instant disposition”).

D. The Plaintiff appealed and filed an appeal with the Tax Tribunal on October 0, 2015, but the Tax Tribunal dismissed the Plaintiff’s appeal on October 0, 2016.

2. Whether the disposition is lawful;

A. The plaintiff's assertion

1) The following points should be considered in calculating each area of housing and non-housing of the instant building. Thus, since it is apparent that the total floor area of the instant building exceeds the total floor area of the non-housing part, the non-housing part of the instant building should also be viewed as the housing pursuant to the main sentence of Article 154(3) of the former Enforcement Decree of the Income Tax Act. Accordingly, the transfer of the instant real estate is exempt from taxation as a transfer of one house for one household.

A) While viewing three floors above the ground as a house, the Defendant considered only 00 square meters of the total floor area as a house according to the registered status, the actual total floor area is 00 square meters of the balcony part extended, and 00 square meters of the stairs for rooftop entry and exit, and the water tank part.

B) Although the Defendant did not regard the second floor above the ground as a house, the second floor above the ground had the structure of the house, such as cooking facilities, toilets, and school living rooms, and in fact, BB had resided after completing a move-in report at the time of the transfer of the instant real estate, and thus, the second floor above the ground should be deemed as a house.

C) Although the Defendant did not regard the first underground floor as a house, the first underground floor is merely a house since the Plaintiff actually resided in this place from October 0, 2006, and it remains a factory room since the removal on October 0, 2007 due to health problems. Thus, the first underground floor should also be deemed a house.

2) Even if not, the Defendant, when calculating gains on transfer of the portion not deemed a house among the instant real estate, violated the same principle as set forth in Article 100(1) of the Income Tax Act by making the acquisition value as the standard market price while the transfer value is based on the actual transaction value.

3) Furthermore, at the time of completing the registration of ownership transfer concerning the instant real estate, the Plaintiff disbursed KRW 000 as acquisition tax, registration tax, and other incidental expenses. Since the Plaintiff succeeded to both KRW 000 debt of the lease deposit, and KRW 000 (creditor CCC) and KRW 000 (creditorD) of each collateral security obligation of the instant real estate established with respect to the instant real estate, all of the costs incurred by the Plaintiff and the inherited debt should be deducted from the transfer margin of the instant real estate

4) On October 0, 1984, the Plaintiff acquired the instant building with the Plaintiff’s husband on title trust with the Plaintiff’s husband, and acquired it independently through the division of property on October 0, 2006, the holding year of the instant building owned by the Plaintiff should be 00 years. Therefore, in deducting the amount of special deduction for long-term holding, the deduction rate of 10 years or more per holding year should be set at the deduction rate of 00 won per annum (2,500,000 per annum x 00 years) on the premise that the holding period is 00 years.

5) The instant disposition ought to be deemed unlawful in the following respect.

A) Around 2011, the Plaintiff had already submitted all supporting materials to the head of the EE Tax Office, and the head of the EE Tax Office finally concluded the transfer income tax issue of the instant real estate, but the Defendant conducted an investigation of the transfer income tax on the Plaintiff at the expiration of not less than four years. On the other hand, the Defendant is not the higher authority of the head of the EE Tax Office, and thus the head of the EE Tax Office has already completed the transfer income tax issue of the Plaintiff. Furthermore, the Defendant erred by understanding the current status, etc. of the instant real estate as of the time of investigation rather than the time of transfer of the instant real estate.

6) In light of the fact that the Plaintiff faithfully filed a voluntary report of capital gains tax in accordance with the consultation of the public service center in the EE Tax Office, and that the Defendant again conducted a tax investigation at the time four years have passed thereafter, it should be deemed that the Plaintiff violated the principle of excessive prohibition, the principle of no taxation without law, and the principle of substantial taxation.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Determination on Claim 1

Unless there are special circumstances, a taxpayer bears the burden of proof regarding the transfer of one house for one household as a non-taxable object of capital gains tax (see, e.g., Supreme Court Decision 2005Du8443, Dec. 23, 2005).

A) First, as to whether the Defendant’s total floor area of the third floor above the instant building is 000 square meters in fact, unlike the current status in the public record, according to the photographs attached to the Plaintiff’s complaint, part of the instant building appears to have been extended. However, such circumstance alone is insufficient to recognize the fact that there are 0 square meters of balcony part extended to the instant building and 00 square meters of rooftop entrance and exit stairs and water tank part, or where there are or were 0 square meters of the entire residential area, and there is no other evidence to acknowledge it otherwise.

B) Next, we examine whether the second floor above is a house different from the current status on the public register.

Article 89 (1) 3 of the former Income Tax Act and Article 154 (3) of the former Enforcement Decree of the Income Tax Act provide that the concept of "house" should be determined by whether it actually uses as a house for other purposes regardless of the usage classification of the building or injury. In a case where it is temporarily used for other purposes, its structure, functions or facilities are suitable for residential purposes, and residential functions are maintained and managed as it is, so it can be viewed as a house for the building to be used by the principal or a third party at any time (see Supreme Court Decision 2004Du14960, Apr. 28, 2005, etc.). However, considering the above purport, "BB" prepared a certificate that it occupied the 20G residential facilities as a house for other purposes, which was located in the 20G residential facilities at the time of the transfer of the real estate, and it is also recognized that BB had been located in the 20G residential facilities at the time of the transfer of the real estate.

C) Finally, comprehensively taking account of the overall purport of the statements and arguments in Gap evidence Nos. 13 and Eul evidence Nos. 2 as to whether an underground first floor can be seen as a house different from the current status in the public register, the plaintiff can recognize the fact that the plaintiff completed the move-in report on Oct. 0, 2006 and completed the move-in report on Oct. 0, 2007. However, on the other hand, it can be recognized that the original purpose of the first floor was a neighborhood living facility, and that the first floor was a amusement room and a cartoon room was occupied on the first floor. Considering that the plaintiff himself recognized that the first floor was a public room from Oct. 0, 207 to the time of the transfer of the real estate in this case, it is difficult to see that the plaintiff's move-in report on the building in this case was actually used for other purposes than residence. Accordingly, the plaintiff's assertion in this part is not acceptable.

2) Determination on Claim 2

The Plaintiff alone acquired the real estate of this case on the ground of division of property following a divorce with the former spouse does not dispute between the parties, and the Defendant cannot confirm the actual transaction price at the time of acquisition of the real estate of this case in full view of the entries and the purport of the entire arguments as stated in Article 114 (7) of the former Income Tax Act and Article 176-2 (2) 2 and (3) 3 of the former Enforcement Decree of the Income Tax Act. It can be recognized that the acquisition price of the real estate of this case was calculated by converting the actual transaction price at the time of transfer of the real estate of this case into the standard market price at the time of transfer and the standard market price at the time of acquisition. Accordingly, the transfer margin of this case is calculated as the actual transaction price, the transfer price, and the acquisition price is calculated as the conversion price under Article 114 (7) of the former Income Tax Act. Accordingly, this part of the Plaintiff’s assertion is unacceptable.

3) Determination as to claim 3

As seen earlier, as long as the acquisition value of the real estate of this case is calculated at the conversion value, the necessary expenses deductible from the transfer margin of the real estate of this case shall be calculated as an estimated deductible amount equivalent to 3% of the standard market value of land and building pursuant to Article 97 (3) 2 of the former Income Tax Act and Article 163 (6) of the former Enforcement Decree of the Income Tax Act. Thus, even if the Plaintiff actually incurred expenses while acquiring the building of this case and paying them as alleged by the Plaintiff, it is not considered in calculating the transfer margin of the real estate of this case.

4) Determination as to claim 4

In full view of the respective descriptions and arguments in Eul evidence Nos. 1 and 2, the defendant is deemed to have owned the real estate of this case for not less than 10 years, and the defendant can be recognized to have deducted the special deduction amount for long-term possession from the gains on transfer of real estate of this case by applying 30% of the special deduction rate for long-term possession. Meanwhile, according to Article 103 (1) of the former Income Tax Act, the basic deduction for capital gains can only be allowed to deduct 2.5 million won per year for each asset, and there is no ground to view that the basic deduction for capital gains should be made in 2.5 million won per year according to the period of holding. Thus

5) Determination as to claim 5

According to Article 114 (2) of the Income Tax Act, the head of a tax office having jurisdiction over the place of tax payment may correct the transfer income tax base if any omission or error occurs in the details of the return made by the person who filed the transfer income tax base, and under Article 5 of the Income Tax Act, the resident's place of tax payment is the resident's place of tax payment. Thus, inasmuch as the defendant who had jurisdiction over the HH district at the time of the disposition of this case determined that there is an error in the details of the return made by the plaintiff to the head of the EE tax office, the transfer income tax base may be corrected at any time during the period of national tax assessment (the transfer income tax shall not be deemed to have been terminated to the purport that the EE head of the EE tax office receives the return made by the plaintiff as a tax item of the transfer income tax assessment method and will no longer deal with the issue of imposing the transfer income tax on the plaintiff, and there is no authority to do so to the head of the EEE tax office. On the other hand, there is no ground to view that part of the plaintiff's assertion.

6) Determination as to claim 6

As seen earlier, inasmuch as the Defendant, who had jurisdiction over HH district at the time of the instant disposition, was found to have an error in the details of the return of capital gains tax that the Plaintiff had filed with the head of EE tax office, the transfer income tax base may be corrected at any time within the period of national tax assessment. Therefore, even if considering the circumstances asserted by the Plaintiff, the additional tax portion among the instant disposition cannot be deemed to have violated the excessive prohibition principle, the no-

Therefore, we cannot accept the plaintiff's partial assertion.

D. Sub-committee

The instant disposition is lawful.

4. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.