National Tax Service Review and Transfer 2011-0038 (Law No. 23, 2011)

An officetel held at the time of the transfer of a detached house shall be a building actually used for a residence and corresponding to the house.

In light of the fact that no real estate rental business registration has been made after the acquisition of an officetel and the inside is installed with laundry, singing, singing, etc., and at the time the lessee works for a company near the officetel and resided in the officetel, etc., the lessee is a house which is actually used for residence.

Article 89 of the Income Tax Act

Article 154 of the Enforcement Decree of Income Tax Act

2011Gudan26773 Revocation of Disposition of Imposing capital gains tax

XX

Head of Seocho Tax Office

June 8, 2012

July 6, 2012

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 000 against the Plaintiff on November 5, 2010 is revoked.

1. Details of the disposition;

A. The Plaintiff acquired on July 16, 1986, transferred 000-23 detached houses of the Seoul XX-dong 000-23 to Nonparty UA in 00 won on October 12, 2009.

B. On May 12, 2009, the Plaintiff was holding at the time of transfer of the said detached house after acquiring the Seoul XX-dong 000 XX 1203, and the Plaintiff deemed the said detached house as temporary one household’s two houses, and applied the tax exemption for 000 won or less in the transfer value, and reported and paid 000 won of the transfer income tax for the excess amount of 000 won on December 31, 2009 by calculating the transfer income amount.

"C. The defendant, after conducting a field investigation of capital gains tax on September 10, 2010, determined that the plaintiff's spouse's MW 146-0 Otel 111 (hereinafter "Otel 36.89m2") owned by GoB was used as a house at the time of the transfer of the above detached house, and that the plaintiff had three houses for one household at the time of the transfer of the above detached house and did not meet the requirements for non-taxation for one household at the time of the transfer of the above detached house, and denied the plaintiff's contents of the report and notified the correction as adding capital gains tax on November 5, 2010 to KRW 00, and notified the correction as adding capital gains tax on November 5, 2010." [Grounds for recognition], there is no dispute, Gap's evidence 1 through 4, Eul's evidence 1 and 4, Eul evidence 1 and 4 (including each of the above natural disasters) and the purport of the whole pleadings, as a whole.

2. Whether the disposition is lawful;

A. Summary of the plaintiff's assertion

Considering the structure, function and facility area of the instant officetel, lessee’s resident registration, Acts and subordinate statutes applicable to rental agreements, and details of payment of property tax, etc., the instant officetel at the time of the transfer of the said officetel cannot be deemed as constituting a house because it is not a building actually offered for residence, and thus, the instant disposition by the Defendant on a different premise is unlawful.

B. Determination

In relation to the requirements for non-taxation on one house for one household under the Income Tax Act, where a transferor of a house owns another building, whether the other building constitutes one house shall be determined by whether the actual purpose of use is a building actually offered for residence regardless of the usage classification of the injury to the building. Even if the building is temporarily used for other purpose than a residence, such structure, function, or facility is in a state suitable for residence as its original residential purpose, and its residential function is maintained and managed as it is, and thus, it shall be deemed a house for a building in which the principal or a third party can use for a house (see Supreme Court Decision 2004Du14960, Apr. 28, 2005).

In light of the above legal principles, officetels is a general business facility, and it is a building that enables accommodation in some of the subdivisions in sale or lease (see attached Table 1 subparagraph 14 (b) of the Enforcement Decree of the Building Act). However, if the main purpose of use is not business, it is a building that is actually used for residence and is actually used for residence, and is a house related to the requirements for non-taxation of one house for one household.

In the case of this case, in full view of the following circumstances: there is no dispute between the parties, or in full view of the evidence as mentioned above, Gap evidence Nos. 8, Eul evidence Nos. 2, 3, and 5 (including several numbers), and witness YangCC's witness testimony, the following circumstances, which can be added to the whole purport of the pleadings, are deemed as housing as a building that is actually being used for residence at the time of the transfer of the above detached house, and there is a lack of counter-proof, and there is no other counter-proof. Accordingly, the plaintiff's assertion is without merit, and the defendant's disposition of this case is legitimate.

① The Plaintiff’s spouse high-B acquired the instant officetel on January 3, 2007, and no real estate lease has been registered until now.

② At the time of the transfer of the instant officetel, the lessee of the instant officetel at the time of the said detached house transfer is a newD (term of lease: March 21, 2009; March 11, 2010); the lessee immediately before that is a English private teaching institute called BB (term of lease: February 18, 2008; February 17, 2009); and the lessee immediately after that is the E (the lease term: March 12, 2010 - the date of the on-site investigation of capital gains tax as of September 10, 2010).

③ At the time of conducting on-site verification of the instant officetel, the instant officetel was installed as laundry machine, ladice cream, clothes, dynasium, dynasul, etc., but at the time, EE was installed as laund, television, clothes, dynasium, dynasium, dynasium, and clothing, and it appears that the instant officetel was mainly used for residential purposes.

④ The instant BB English Institute appears to have leased the instant officetel to have been residing by foreign lecturers. At the time, the lease agreement was written stating that the air condition, air conditioners, air conditioners, gas emittingers, and laundry had already been installed, and the instant officetel was referred to as “one house” in the part of the said contract in Korean.

⑤ The contract for the lease of an officetel signed between the Plaintiff’s wife and newD states that the lease deposit is KRW 000,000, and there is no monthly rent. Thus, an officetel leased for residential purpose is often leased without monthly loan, but only the lease deposit is given and received (in the case of EE, the lease deposit is KRW 00,000 without monthly rent).

⑥ The Plaintiff’s person who actually entered into the lease contract with his wife was the NewF, the Defendant’s employee visited the new FF, and the Defendant’s employee visited the new FF, from March 21, 2009 to March 21, 2010. The term of residence period is from March 21, 2010. The special agreement provides that “The right to lease on a deposit basis was established to guarantee the deposit for a lease on a deposit basis. The director: (a) on March 21, 2010; and (b) on March 21, 2010, the new FF appears to have responded to the purport that the Defendant’s employee was actually residing at the time of questioning to the effect that the new FF did not deny

7) The YangCC of the Korea Licensed Real Estate Agent, which arranged both the Plaintiff’s wife and the said lessee for each of the respective lease agreements, was prepared on June 17, 2010 and issued to the Defendant’s employees two times on June 18, 2010. At the time, the Defendant’s employees at the time asked whether the instant officetels was leased for residential purpose and, in particular, whether the instant officetels was used for residential purpose.

(8) In the column for the special terms and conditions of the lease agreement made between the Plaintiff’s wife and newD, the lessee shall not transfer his/her resident registration (transfer report) and “other matters shall be governed by the Commercial Building Lease Protection Act and the Supreme Court precedents, but if the Plaintiff’s wife clearly intends to use the instant officetel to newD to prevent the use of it for residential purposes, the said special terms and conditions alone are insufficient, and the lessee should have stated in the contract that “the lessee shall not use it for residential purposes.” The entry in the column for the above special terms and conditions may rather be a proviso to suspect that “the lessee shall not use it for residential purposes, but shall not transfer his/her resident registration.”

9) After having been the director of the instant officetel, NewD had worked in the SS corporation located in the instant officetel near May 31, 2009, and did not comply with the summons from this court for witness attendance. The Plaintiff immediately withdrawn the request for witness due to the absence of NewD on one occasion.

(10) In the reply to the examination of the witness to which a written reason for non-appearance was attached, as stated in Gap evidence No. 6 (Verification of Facts in the name of a new document) in the written reply to the written reason for non-appearance, it was recognized that new document was residing in the instant officetel after responding to the question "I leased the instant officetel to use it as a laboratory for the preparation, etc. of a research paper" and "be leased to prepare for the admission to a graduate school, and was both residential and the preparation for the admission to a graduate school". Even if new document leased the instant officetel for the preparation for the admission to a graduate school, such as the above reply, it is difficult to view that the preparation for the admission to a graduate school was a work or business continuously engaged in the preparation for the admission to a graduate school, that is, the main purpose of use is residence.

3. Conclusion

Thus, the plaintiff's claim is dismissed as it is without merit.