2015west 3365 (2016.03.18)

One house for one household shall not be exempted for a house on the public register, even if it was used for residence from the new construction to the transfer date, and is used as a sanatorium for older persons.

One house for one household shall not be exempted for a house on the public register, even if it was used for residence from the new construction to the transfer date, and is used as a sanatorium for older persons.

Article 154(1)1 of the Enforcement Decree of the Income Tax Act

2016 old-gu 56878 Demanding the revocation of disposition imposing capital gains tax

KimA

O Head of tax office

National Rotations

June 14, 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 capital gains tax of KRW 51,213,860 (including additional tax) for the Plaintiff on January 6, 2015 shall be revoked.

1. Details of the disposition;

A. On September 20, 2006, the Plaintiff acquired an O-O-O land (hereinafter “instant land”) on the O-Myeon O-O land (hereinafter “O-O land”) and newly constructed a three-story building on the instant land (hereinafter “instant building”) on January 29, 2010, and transferred the instant building and land on December 27, 2012.

B. Since the Plaintiff’s instant building is “house”, the income accrued from the transfer of the instant building and land constitutes “transfer of one house for one household” under Article 89(1)3 of the former Income Tax Act (wholly amended by Act No. 11611, Jan. 1, 2013; hereinafter the same) and thus, did not report the transfer income tax on the ground that it constitutes “transfer of one house for one household”.

C. However, the Defendant, on January 6, 2015, concluded that the instant building was used as a sanatorium for older persons, rather than a house at the time of transfer, was not a house under the Income Tax Act, and determined and notified the Plaintiff of the transfer income tax of 51,213,860 (including additional tax) for the year 2013 by converting the acquisition value of each of the instant building and land based on the standard market price and the officially assessed individual land price.

D. On March 31, 2015, the Plaintiff filed an objection against the instant disposition, and filed an appeal with the Tax Tribunal on June 22, 2015, but the Tax Tribunal dismissed the Plaintiff’s appeal on March 18, 2016.

[Reasons for Recognition] Unsatisfy, Gap evidence 1, Eul evidence 1, and purport of the whole pleadings

A. The plaintiff's assertion

For the following reasons, the instant disposition should be revoked in whole or in part as it is unlawful.

1) The instant building is a multi-family house among the detached houses under Article 2(2)1 of the Building Act and Article 3-5 subparag. 1(c) of the Enforcement Decree of the same Act, and is designed as a residential lodging house for the neighboring workers, but it has only been used as a medical care communal living house for the aged under Article 34(1)2 of the Welfare of the Aged Act without any change of the rent demand for the neighboring workers. However, since a medical care communal living house for the aged can be built in a house pursuant to Article 55 of the Welfare of the Aged Act, the instant building should be deemed as a "house" as a "senior welfare facility with the form of a single house, which is included in a detached house under Article 3-5 subparag. 1 of the Enforcement Decree of the Building Act, since the instant building was temporarily used as a medical care and communal living house for the aged at the time of its transfer, but it is not only equipped with a residential structure and facilities, but also maintained and managed a residential function. Therefore, the instant building should be

2) Even if the instant building cannot be seen as a “house”, since the instant building was designed as a multi-family house, not only the standard construction cost is different from the neighboring facilities, but also the apartment house is publicly announced on the premise that the instant building is a house every year, the acquisition price of the instant building should be converted based on the individual housing price.

B. Determination

1) Of the “transfer of one house for one household” under Article 89(1)3 of the former Income Tax Act, “house” is a tax-exempt concept, not necessarily bound by the provisions of the construction laws and regulations, but should be determined in light of the legislative intent of the relevant tax laws (see, e.g., Supreme Court en banc Decision 92Nu15994, Aug. 24, 1993). The purport of not imposing capital gains tax on the income accrued from the transfer of one house for one household is to guarantee the stability of residential life and the freedom of residence of the people (see, e.g., Supreme Court Decision 92Nu12988, Jan. 19, 193). Ultimately, whether a certain building constitutes “house” should be determined by whether a building actually used for residential purposes is exempt from capital gains tax (see, e.g., Supreme Court Decision 2012Du24054, Mar. 27, 2014).

In light of the following facts: (a) the evidence presented by the Plaintiff alone is insufficient to recognize the fact that the instant building is a building actually being used for residence; (b) there is no other evidence to acknowledge it; (c) the building was used as a residential care facility from the time of its construction to the time of its transfer; and (d) the fact that there is a common space for the elderly's rest, meals, TV viewing, etc.; and (c) therefore, it is difficult to deem that the instant building was temporarily used for any other purpose, or that it was equipped with a residential structure, facility, or its residential function. Accordingly, the building of this case cannot be deemed as one house for one household, which is exempt from capital gains tax under Article 89 (1) 3 of the former Income Tax Act; and (d) the building of this case can not be deemed as a "one house for one household" as a non-taxation subject to capital gains tax under Article 89 (1) 3 of the former Income Tax Act; and (e) the building of this case cannot be deemed as a "one house for one household" based on all the circumstances asserted by the Plaintiff.

Therefore, the plaintiff's assertion cannot be accepted, and the disposition of this case is legitimate.

3. Conclusion

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