Requirements for non-taxation of capital gains tax by deeming the transfer of the right to sell a rebuilding association member as a transfer of one house for one household

Article 155 (16) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 18173 of Dec. 30, 2003) which provides for special cases of non-taxation of capital gains tax on one house for one household, which limits the membership of a partnership for maintenance and improvement projects under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents to "the person who owns an existing house falling under the provisions of Article 154 (1) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 17751 of Oct. 1, 2002)" as of the date of approval of a project plan for a housing reconstruction project, is to limit the ownership of one house for one household as "the person who owns one house at the time of acquisition of ownership right at the time of approval of the housing reconstruction project" rather than to limit the ownership of a partnership for implementing the housing reconstruction project to "the person who satisfies the requirements for possession period of the existing house for three years or more as of the date of approval of the project plan."

Article 89 subparag. 3 of the former Income Tax Act (amended by Act No. 7837 of Dec. 31, 2005) (see current Article 89(1)3), Article 94(1)2 of the former Income Tax Act, Article 154(1) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 17751 of Oct. 1, 2002), Article 155(16) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 18173 of Dec. 30, 2003) (see current Article 155(17) of the former Enforcement Decree of the Income Tax Act)

Plaintiff (Law Firm Woo, Attorneys Kim Byung-jin, Counsel for the plaintiff-appellant)

Head of Namgu Tax Office

April 11, 2007

1. The Defendant’s disposition of imposition of capital gains tax of KRW 66,987,210 against the Plaintiff on November 1, 2004 shall be revoked.

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

The same shall apply to the order.

1. Details of the disposition;

The following facts are either in dispute between the parties, or in view of the whole purport of the arguments in the statements in Gap evidence Nos. 1, Eul evidence No. 1-6, Eul evidence No. 2, Eul evidence No. 3-1, 2, Eul evidence No. 5-1, and Eul evidence No. 5-2, and there are no other counter-proofs.

A. On December 15, 1990, the Plaintiff acquired and owned 755-1 Nai-ri 3 apartment (hereinafter “existing Gi-ri apartment”) (hereinafter “existing Gi-ri apartment”) in Gangnam-gu, Seoul, Gangnam-gu, Seoul, and on December 16, 1991, the Plaintiff acquired and owned the Daegu Nam-dong 1329-1 Mook (hereinafter “Mono-gu”) (hereinafter “Mono-gu”).

B. In early 2003, the owners of Ginna-ri three apartments decided to reconstruct the Ginna-ri three apartments, and formed the Ginna-ri three apartment reconstruction association (hereinafter “Ginna-ri apartment reconstruction association”), and on March 11, 2003, the Ginna-ri apartment reconstruction association obtained the right to sell the reconstruction apartment related to the existing Ginna-ri apartment from the head of Gangnam-gu Office (hereinafter “Ginna-ri apartment reconstruction association”) pursuant to Article 33(1) of the former Housing Construction Promotion Act (amended by Act No. 6841 of Dec. 30, 200; hereinafter the same). Accordingly, the Plaintiff obtained the right to sell the reconstruction apartment related to the existing Ginna-ri apartment as the owner of the existing Ginna apartment, which is the object of the reconstruction project.

C. On the other hand, on July 1, 2003, the Plaintiff transferred Taedon, and reported and paid KRW 2,323,970 of the transfer income tax on the transfer of Taedon.

D. On July 29, 2003, the Plaintiff transferred the non-party the right to purchase reconstruction village apartment units to KRW 600,000,000. At that time, the Plaintiff determined that the transfer of the right to purchase reconstruction village apartment units is deemed as one house for one household subject to non-taxation, and that the transfer income tax on the transfer of the right to purchase reconstruction village units or apartment units is not subject to non-taxation, and that the Defendant did not report and pay the transfer income tax on the transfer of the right to purchase reconstruction village units or apartment units to the non-party.

E. However, on March 11, 2003, the date of the business plan plan for the reconstruction of Giuri apartment, the Plaintiff owned two houses for one household, and the Defendant cannot be deemed as transferring one house for one household, which is subject to non-taxation for the transfer of the Plaintiff’s right to purchase reconstruction apartment units, on November 1, 2004, on the ground that the Plaintiff could not be deemed as transferring one house for one household, which is subject to non-taxation for the transfer of the Plaintiff’s right to sell reconstruction apartment units (the amount calculated by subtracting the transfer income tax amount of 2,323,970 won for the transfer of Giuri apartment units), and notified the Plaintiff of the decision of correction at that time (hereinafter “instant disposition”).

2. Whether the disposition is lawful;

A. The parties' assertion

Article 155(16) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 18173, Dec. 30, 2003; hereinafter “former Enforcement Decree”) provides that, in cases where a member of a housing reconstruction association under the former Housing Construction Promotion Act does not own any house other than the existing house as of the date of approval of the project plan, that is, where a member of the housing reconstruction association possesses one house for one household and transfers the status of being selected as an occupant through the association (hereinafter “right to purchase”) the right to acquire real estate, the transfer of the right to purchase a house shall be deemed as a transfer of one house for one household to be subject to non-taxation from capital gains tax. Accordingly, in order for the Plaintiff to be entitled to non-taxation from capital gains tax by deeming that the transfer of the right to purchase a house by one household under the above provision is deemed as a transfer of one house for one household under the above provision, the Plaintiff’s disposal of the house in question shall be deemed as having no other house than the existing apartment or apartment house as of the first apartment as of the Plaintiff at the time.

In this regard, the plaintiff asserts that " despite the fact that the transfer of the plaintiff's right to purchase reconstruction village apartment can be deemed to be a transfer of one house for one household subject to non-taxation of capital gains tax, the defendant's disposition of this case imposing capital gains tax on the transfer of the plaintiff's right to purchase reconstruction village or apartment shall be revoked in an unlawful manner."

B. Relevant statutes

It is as shown in the attached Form.

(c) Markets:

(1) Article 89 subparag. 3 of the former Enforcement Decree of the Income Tax Act (amended by Act No. 7837, Dec. 31, 2005; hereinafter the same) provides that capital gains tax shall not be imposed on the transfer of one house for one household as prescribed by the Presidential Decree. The former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 1751, Oct. 1, 2002; hereinafter the same shall apply before the amendment of the former Enforcement Decree): Provided, That the transfer of ownership of reconstruction housing units or apartment units by Presidential Decree No. 1751, Oct. 1, 202, Article 154(1) of the former Enforcement Decree of the Income Tax Act provides that the transfer of ownership of housing units by one household shall be subject to non-taxation for the transfer of housing units at the time of the amendment of the former Enforcement Decree of the Housing Act except for the requirement of “15 years or more of the amended Enforcement Decree of the Housing Act for the transfer of housing units by 15 years or more”. However, Article 15 of the former Enforcement Decree of the Housing units.

(5) In light of the purport of Article 15(1)5 of the former Enforcement Decree of the Income Tax Act, it is reasonable to view that the ownership of the house for the first five years or more is calculated as at the time of the transfer of the previous house, and that the ownership of the house for the first five years or more should be determined as at the time of the transfer of the house for the first five years or more (see Supreme Court Decision 97Nu20816, Jul. 10, 198). (2) Article 154(1) of the former Enforcement Decree of the Income Tax Act provides that the ownership of the house for the first five years or more shall be determined as at the time of the transfer of the house for the first five years or more, and that the ownership of the house for the first five years or more shall be determined as at the time of the transfer of the house for the first five years or more by applying the provisions of Article 15(16) of the former Enforcement Decree of the Housing Tax Act to the title of the new house for the first five years or more.

Therefore, in order for the above special cases to be applied to the transfer of the right to parcel out by a partner, the retention period of the existing house as of the date of the approval of the project plan shall be at least three years, and ② the requirement that there is no other house as of the date of the transfer shall be satisfied, and there shall not be no other house except

(3) However, as seen earlier, although the Plaintiff had owned the Daeok apartment at the time of acquiring the right to sell the reconstruction dog, namely, at the time of acquiring the right to sell the reconstruction dog or Ri apartment, it had already been transferred before transferring the right to sell the reconstruction dog or Ri apartment, and did not own any other house except the right to sell the reconstruction dog or Ri apartment at the time of transferring the right to sell the reconstruction dog or Ri apartment, and the Plaintiff already owned the existing Nari apartment as of the date of acquiring the right to sell the reconstruction dog or Ri apartment as of the approval date of the project plan, so the transfer of the Plaintiff’s right to sell the reconstruction dog or Ri apartment is unlawful, notwithstanding the Plaintiff’s legal fiction of non-taxation of the transfer income tax under “one house for one household” under Article 89 subparag. 3 of the former Income Tax Act, Article 154(1) of the former Enforcement Decree of the former Enforcement Decree of the Act, and Article 155(16) of the former Enforcement Decree of the former Enforcement Decree of the Act.

3. Conclusion

Therefore, the plaintiff's claim of this case seeking revocation on the ground that the disposition of this case is unlawful is reasonable, and it is so decided as per Disposition.

Judges Lee Jae-dae (Presiding Judge)