early 2010 to 3013 ( November 10, 2010)

In applying special cases of non-taxation for one house for one household, it shall not deal differently with general housing and rental housing.

A rental house under Article 97 (2) of the former Restriction of Special Taxation Act refers only to a long-term rental house under paragraph (1) of the same Article, and in applying special cases of non-taxation for one house for one household, it cannot be deemed that the plaintiff, who is a housing lessor, should be treated differently from the general house in applying special cases of non-taxation for one house for one household. Therefore, the disposition imposed on the plaintiff, who is a

2011Guhap206 Revocation of Disposition of Imposing capital gains tax

Song-ri

○ Head of tax office

April 27, 2011

June 1, 2011

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

The Defendant’s disposition of imposition of capital gains tax of KRW 374,007,670 for the Plaintiff on September 1, 2010 shall be revoked.

1. Details of the disposition;

A. A. Around May 10, 198, the Plaintiff acquired Down 448 Da apartment 209 Dong 905 (hereinafter “instant house”) from Seoul BB-Gu CCC 448 dong 198, and resided in the instant house from around that time, and transferred the instant house to EE at KRW 1.75 billion on August 19, 2009, and on the premise that the transfer of the instant house is exempt from income tax on capital gains exceeding KRW 900 million since it constitutes a transfer of one house by one household, the Plaintiff paid capital gains tax to the Defendant for the year 2009 on September 10, 2009.

B. However, on June 4, 2008, before the transfer of the instant house, the Plaintiff, from the head of Seoul District Office on June 4, 2008, obtained a rental business registration certificate under Article 6 of the Rental Housing Act, and from the head of Gangnam District Tax Office on February 24, 2009, obtained a house rental business registration certificate, and owned a house rental house with the aggregate of five bonds (hereinafter “each house of this case”) as follows at the time of the transfer of the instant house.

C. On September 1, 2010, the Defendant: (a) owned each of the instant rental houses at the time of the transfer of the instant house; (b) deemed that the transfer income of the instant house is not subject to non-taxation under Article 89(1)3 of the former Income Tax Act (amended by Act No. 9897, Dec. 31, 2009; hereinafter “former Income Tax Act”); and (c) rendered a disposition imposing a correction of capital gains tax of KRW 374,007,670 (including additional tax) that reverts to the Plaintiff in 2009 (hereinafter “instant disposition”).

D. On September 13, 2010, the Plaintiff appealed to the Tax Tribunal, but the Tax Tribunal rendered a decision to dismiss the petition on November 10, 2010.

[Ground of recognition] Facts without dispute, Gap evidence 1 through 4, 7 through 10, Eul evidence 1 (each number number distribution), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Since rental houses are essentially distinguishable from ordinary houses, each of the instant rental houses acquired by the Plaintiff in order to run a rental house business is not included in the number of houses under Article 89(1)3 of the former Income Tax Act, and therefore, even if the Plaintiff owned each of the instant rental houses at the time of transfer of the instant house, it is clear in light of the fact that Article 97(2) of the former Restriction of Special Taxation Act (amended by Act No. 9921, Jan. 1, 2010; hereinafter the former Restriction of Special Taxation Act) provides that each of the instant rental houses, which the Plaintiff acquired in order to run a rental house business, shall not be deemed a house owned by the relevant resident.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) According to Articles 88(1) and 94(1)1 of the former Income Tax Act, income from the transfer of a building is naturally subject to capital gains tax. However, Article 89(1)3 of the former Income Tax Act provides that, if one household owns a house and transfers it, income from the transfer shall not be subject to capital gains tax if it is decided pursuant to Article 89(1)3 of the former Income Tax Act, even if one household becomes a multi-household house, it shall not be deemed as a house owned by the person liable for tax payment, and thus, it shall not be subject to capital gains tax. Accordingly, whether to impose capital gains tax on the house is subject to taxation under Article 94 of the former Income Tax Act, first of all, by examining whether the transfer of the house in question falls under Article 89(1)3 of the former Income Tax Act and then by examining whether it falls under Article 20(1)1 of the former Special Taxation Act and Article 89(1)3 of the same Act, 206 of the former Special Taxation Act (see, 2006).

2) Meanwhile, Articles 97(2) and 97-2(2) of the former Restriction of Special Taxation Act provide that in applying the non-taxation provisions for one house for one household under Article 89(1)3 of the former Income Tax Act, the "long-term rental house" under Article 97 of the Act or the "long-term rental house under Article 97-2 of the Act" shall not be deemed the house owned by the relevant national. Thus, if a rental business operator owns a purchased rental house under the Rental Housing Act, the rental house is included in the house owned under Article 89(1)3 of the former Income Tax Act (see Supreme Court Decision 2004Du11312, Apr. 13, 2006).

3) In light of relevant laws and regulations, each of the instant rental houses is a purchased rental house under Article 2 subparag. 3 of the Rental Housing Act, and it is apparent that each of the instant rental houses does not fall under the “long-term rental house” or the “long-term rental house” under Article 97 or 97-2 of the former Restriction of Special Taxation Act. Nevertheless, whether each of the instant rental houses may not be included in the number of houses under Article 89(1)3 of the former Income Tax Act is examined below.

A) First of all, as to whether the term “rental house” under Article 97(2) of the former Restriction of Special Taxation Act includes each of the instant rental houses, Article 97(1) of the former Restriction of Special Taxation Act explicitly provides that if a house falling under any of the following subparagraphs (including the land appurtenant thereto less than twice the total floor area of the relevant building) is leased for five or more years after commencement of lease on or before December 31, 2000, the relevant house (hereinafter “rental house”) shall be interpreted as the term “rental house” under the above provision as the term “rental house” under Article 97(2) of the former Restriction of Special Taxation Act, and it is not necessary to interpret the term “long-term rental house” under the same Act as the term “long-term rental house” under Article 97(2) of the former Restriction of Special Taxation Act, and it is not necessary to interpret the term “long-term rental house” under Article 97(2) of the former Restriction of Special Taxation Act as the form of legislative technology to avoid its repetition or miscellaneous.

B) Next, as a matter of course, whether each of the instant rental houses, as a matter of course, is deemed not to be included in the number of houses under Article 89(1)3 of the former Income Tax Act as a matter of course because of the difference between the rental house and the ordinary house, is difficult to view that: (a) in light of the health class; (b) in the application of the special case of non-taxation for one household, it is difficult for the person who bought several houses to operate a leasing business and the purchaser without such purpose, to view that the said person is not included in the number of houses under Article 89(1)3 of the former Income Tax Act; and (b) in the case of a rental house, it is deemed that the said rental house is not included in the number of houses under Article 89(1)3 of the former Income Tax Act (see, e.g., Supreme Court Decisions 2004Du11312, Apr. 13, 2006; 204HunBa80, Feb. 23, 2006).

4) Therefore, the transfer income of the instant housing is not subject to non-taxation special cases under Article 89(1)3 of the former Income Tax Act, and the instant disposition is lawful.

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.