Newly-built house located in Seoul Metropolitan Government is excluded from special taxation for capital gains tax.

The amended Act of Article 99-3 of the Restriction of Special Taxation Act only provides for the application of the provisions on reduction or exemption at the time of transferring a house pursuant to the former Article 99-3(1) of the Addenda to Article 29-3(1) of the Addenda to the Restriction of Special Taxation Act, and there is no transitional provision regarding whether to

Special taxation of transfer income tax on the acquisitor of Newly-built house under Article 99-3 of the Restriction of Special Taxation Act

Special cases of taxation of transfer income tax on the acquisitor of Newly-built house under Article 99-3 of the Enforcement Decree of the

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance shall be revoked. The defendant's rejection disposition against the plaintiff on July 21, 2005 against the transfer income tax of 67,45,260 won belonging to the year 2003 shall be revoked.

1. Details of the disposition;

A. On July 28, 2001, the Plaintiff entered into a contract with ○○○ Construction Reconstruction Association (hereinafter referred to as the “instant housing association”) and paid the price to which ○○○○○○○○○○○○○○○○○○○○○○○○○○○○ 101 Dong 107, 107 (hereinafter referred to as “instant newly-built house”) was supplied as a partner’s supply portion, and obtained approval for the use of the instant newly-built house on October 24, 2003.

B. However, on December 30, 2003, the Plaintiff transferred ○○○○○○○○-dong 000 ○○○ apartment 107 dong 701 (hereinafter “instant transferred house”) and paid KRW 67,45,260 as transfer income tax on February 16, 2004.

C. However, on June 2, 2005, the Plaintiff applied the special taxation on transfer income tax under Article 99-3 (1) 1 and (2) of the Restriction of Special Taxation Act (amended by Act No. 6762 of Dec. 11, 2002; hereinafter the same shall apply) to the newly-built house of this case to the Defendant on June 2, 2005, and accordingly, applied the special taxation on transfer income tax under Article 9-3 (1) 1 and (2) of the same Act, and the newly-built house of this case is excluded from the resident’s house when determining the non-taxation of the first house for one household under subparagraph 3 of Article 89 of the Income Tax Act (amended by Act No. 7837 of Dec. 31, 2005; hereinafter the same shall apply). Accordingly, the Plaintiff filed a claim for correction on the income accrued from the transfer of the transferred house of this case on the ground that the non

D. Accordingly, the Defendant rendered the instant disposition rejecting the Plaintiff’s claim for correction on July 21, 2005, on the ground that the Plaintiff’s use approval or inspection was obtained on October 24, 2003, which was the expiration of the newly-built house acquisition period, on the ground that the instant newly-built house constitutes a newly-built house built by himself as stipulated in Article 99-3(1)2 of the former Act, and thus, the Defendant could only be subject to the application of special taxation for transfer income tax only when the relevant newly-built house was approved for use or inspection for use within the newly built house acquisition period (from May 23, 2001 to June 30, 2003).

E. Meanwhile, the instant housing association and the ○○○ Construction Co., Ltd., a contractor, concluded a sales contract to supply the remaining housing remaining after supplying it to the members around November 29, 2001 and received the down payment.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 7, Eul evidence No. 1, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The parties' assertion

(1) The plaintiff asserts that although the newly-built house in this case is not subject to the special taxation of capital gains tax under Article 99-3 (1) 2 of the former Act with the approval for use after the expiration of the acquisition period of the newly-built house, if the housing association in this case concludes a sales contract with non-members and receives down payment within the newly-built house acquisition period, the newly-built house in this case shall also be deemed as a house subject to the special taxation of capital gains tax under Article 99-3 (1) 1 of the former Act and Article 99-3 (3) 2 of the Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 17829 of Dec. 30, 2002; hereinafter referred to as the "former Enforcement Decree"). Accordingly, under Article 99-3 (2) of the former Act, the newly-built house in this case should be excluded from the house owned by the resident at the time of non-taxation decision of the first generation under Article 89-3 (3) of the Income Tax Act.

(2) On this issue, the Defendant asserts that the instant newly-built house constitutes a newly-built house built by himself as stipulated in Article 99-3(1)2 of the former Act, and in this case, the instant special taxation is applied to the transfer income tax subject to the use approval or inspection within the acquisition period of the newly-built house. The instant newly-built house is not subject to the special taxation for transfer income tax after obtaining the use approval on October 24, 2004, which was after the expiration of the newly-built house acquisition period, and the instant case is not subject to the special taxation for transfer income tax under the Restriction of Special Taxation Act amended by Act No. 6762, Dec. 11, 202, as it is not subject to the former

(b) Related statutes;

Income Tax Act (amended by Act No. 7837 of Dec. 31, 2005)

Article 89 (Non-Taxable Transfer Income Tax) shall not be levied on any of the following incomes (hereinafter referred to as "transfer income tax"):

3. Income issued due to a transfer of one house for one household as prescribed by the Presidential Decree (excluding expensive houses whose prices exceed the standard prescribed by the Presidential Decree) and the appurtenant land within the area calculated by multiplying the area of land to which the building is built by the ratio as determined by region under the Presidential Decree

Gu Act

Article 99-3 (Special Taxation for Transfer Income Tax on Purchasers of Newly-Built Houses)

(1) With respect to the income accruing from transfer of a newly-built house (including land attached to a house, the total floor area of which is less than twice the total floor area of the relevant building; hereafter the same shall apply in this Article) falling under any of the following subparagraphs by a resident (excluding a housing construction business operator) within five years from the date of acquisition, the tax amount equivalent to 100/100 of the transfer income tax shall be reduced or exempted, and where the relevant newly-built house is transferred after five years have elapsed from the date of acquisition thereof, the transfer income accruing for five years from the date of acquisition of the relevant newly-built house shall be subtracted from the income amount subject to taxation of the transfer income tax:

1. In cases of newly-built house acquired from a housing developer:

A newly-built house acquired by a person who first concludes a sales contract and pays a down payment with a housing constructor during the period from May 23, 2001 to June 30, 2003 (hereafter in this Article, referred to as the “newly-built house acquisition period”): Provided, That a house that has been occupied as of the date of a sales contract under the Housing Construction Promotion Act or an redevelopment association under the Urban Redevelopment Act, and that has a fact falling under the causes prescribed by the Presidential Decree, shall be excluded from

2. Where a newly-built house (including a house acquired by a housing association under the Housing Construction Promotion Act or a member as prescribed by the Presidential Decree through an redevelopment association under the Urban Redevelopment Act);

A newly-built house that has obtained approval or inspection for use (including approval for temporary use) within the newly-built house acquisition period

(2) In applying subparagraph 3 of Article 89 of the Income Tax Act, a newly-built house subjected to paragraph (1) shall not be considered a house owned by the relevant resident.

Restriction of Special Taxation Act (amended by Act No. 6762 of Dec. 11, 2002)

(1) With respect to the income accruing from the transfer of a newly-built house (including land attached to the relevant house, which is less than twice the total floor area of the relevant building; hereafter in this Article, the same shall apply) falling under any of the following subparagraphs located in an area other than the area prescribed by the Presidential Decree, in which a resident (excluding a housing construction business operator) increases or is likely to increase rapidly in real estate prices in consideration of a national consumer price inflation rate and a rising rate of national house trade prices, within five years from the date of its acquisition, the tax amount equivalent to 100/100 of transfer income tax shall be reduced or exempted, and where the relevant newly-built house is transferred after five years from the date of its acquisition, the transfer income accruing for five years from the date of acquisition shall be subtracted from its income amount subject

Addenda No. 6762, Dec. 11, 2002>

Article 1 (Enforcement Date) This Act shall enter into force on January 1, 2003.

Article 29 (Transition Measures for Special Taxation of Transfer Income Tax on Purchasers of Newly-Built Houses)

(1) Where a newly-built house, which was concluded with a housing constructor for the first time before this Act enters into force under the previous provisions of Article 9 (1) or 99-3 (1), has been paid a down payment, or which was approved for use or inspection for use (including approval for temporary use) has been granted after this Act enters into force, the previous provisions shall apply to the calculation of the income amount subject to the abatement or exemption of transfer income tax and the object of taxation of transfer income tax, notwithstanding the amended provisions of Article 99 (1) or 99-3 (1). In this case, the declass standard of a newly-built house at

Enforcement Decree of the Gu

Article 99-3 (Special Taxation for Transfer Income Tax on Purchasers of Newly-Built Houses)

(3) The term "housing prescribed by Presidential Decree" in Article 99-3 (1) 1 of the Act means the housing falling under any of the following subparagraphs:

1. A house which a housing association under the Housing Construction Promotion Act or an redevelopment cooperative under the Urban Redevelopment Act (hereafter in this Article, referred to as the “housing association, etc.”) acquires by a person who concludes a direct sales contract and pays the down payment with a housing association, etc. within the new house acquisition period under Article 99-3 (1) 1 of the Act (hereafter in this Article, referred to as the “new house acquisition period”) and remaining after supplying it to its members; and

2. A house acquired by a member (referring to a member as of the date of authorization of management and disposal plans under Article 34 of the Urban Redevelopment Act, or the date of approval of a business plan under Article 33 of the Housing Construction Promotion Act; hereafter in this Article, the same shall apply) from a housing association, etc., for which an approval for use or inspection for use has been obtained after the expiration of the new house acquisition period: Provided, That it shall be limited to the case where a housing association, etc. directly concludes a sales contract with a person other than a member

Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 17829, Dec. 30, 2002)

Article 99-3 (Special Taxation for Transfer Income Tax on Purchasers of Newly-Built Houses)

(1) The term "area prescribed by Presidential Decree" in the main sentence of Article 99-3 (1) of the Act means the powder, day, square village, mountain village, middle-dong and new urban area designated and publicly notified as a prearranged area for housing site development under Article 3 of the Housing Site Development Promotion Act.

Addenda No. 17829, Dec. 30, 2002

Article 1 (Enforcement Date) This Decree shall enter into force on January 1, 2003.

C. Determination

As seen in the above relevant laws, the former Act and the former Enforcement Decree were amended by the Presidential Decree No. 6762 of December 11, 2002 and the Presidential Decree No. 17829 of December 30, 2002, respectively, and the newly-built house located in Seoul Special Metropolitan City was excluded from the subject of special taxation for capital gains tax as prescribed in Article 99-3 of the Restriction of Special Taxation Act from January 1, 2003. As recognized earlier, the newly-built house in this case is located in Seoul Special Metropolitan City, and the transferred house in this case was transferred on December 30, 203. Thus, if the Plaintiff’s request in this case is received, the former Act should first be applied to this case.

However, prior to the enforcement of Article 29(1) of the Addenda, the above amended Act only stipulates that the previous provisions shall apply to the exemption of transfer income tax and the calculation of income amount subject to transfer income tax in the case of transferring a newly-built house that has been approved for use or inspected for use as a newly-built house from a housing constructor pursuant to the former provisions of Article 99-3(1) of the former Act prior to the enforcement of the same Act, and there is no transitional provision on whether the newly-built house should be excluded from the housing owned by the resident in the case of non-taxation determination of one house for one household under Article 89(3) of the Income Tax Act by transferring another house that is not a newly-built house as in this case, i.e., whether the special taxation under Article 99-3(2) of the Restriction of Special Taxation Act is applied

Thus, this case’s old law cannot be deemed as being applied on the ground of Article 29(1) of the Addenda to the above amended Act, and there is no other ground to apply the old law in this case. Thus, even if the newly-built house of this case is subject to special taxation of capital gains tax under the interpretation of the former Act and the Enforcement Decree, the Plaintiff’s claim of this case premised on the application of the former Act cannot be accepted

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and the judgment of the court of first instance is just, and the plaintiff's appeal is dismissed. It is so decided as per Disposition.

[Supreme Court Decision 2007Du15124, Oct. 12, 2008]

The appeal is dismissed.

The costs of appeal are assessed against the Plaintiff.

The appeal is examined.

Article 9-3 (1) of the former Restriction of Special Taxation Act (amended by Act No. 6762 of Dec. 11, 2002; hereinafter referred to as the "former Act") provides that the tax amount equivalent to 100/100 of the transfer income tax shall be reduced or exempted for the income accruing from the acquisition of a newly-built house (No. 1) and its newly-built house (No. 2) constructed by a resident within five years from the acquisition date, but the amended provisions of Article 9-3 (1) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 9 of Dec. 30, 2002) stipulate that the transfer income tax shall be reduced or exempted for the first time by December 11, 202 (hereinafter referred to as the "New-built house Act") and the provisions of Article 99-3 (3) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Act No. 17829 of Dec. 30, 2002).

Since transfer income tax is a taxation requirement for transfer and is subject to transfer gains, whether transfer assets meet the requirements for taxation and exemption or reduction shall be determined on the basis of the time of transfer (see, e.g., Supreme Court Decision 2002Du10780, Jun. 24, 2004) and insofar as there is no clear provision that the previous provision is retroactively applied under the Addenda to the amended Act, the scope of the previous provision shall not be extended and interpreted without permission in the interpretation of the supplementary provision, which is a transitional provision (see, e.g., Supreme Court Decision 95Nu825, Aug. 22, 1995) and each of the above provisions (see, e.g., Supreme Court Decision 29(1) of the Addenda to the amended Act, it is difficult to see that Article 29(1) of the former Act includes another house that is not a newly-built house subject to transfer income tax exemption or exemption under

In the same purport, even though the newly-built house in this case is a newly-built house under Article 99-3 (1) of the former Act, the transfer of the newly-built house in this case, which is another house owned by the plaintiff, not the newly-built house in this case, cannot be applied Article 99-3 (1) of the former Act, and the transfer of this case, which is located in Seoul Special Metropolitan City, does not constitute a newly-built house excluded from the number of houses owned by one household under the regulations on the exception of one house for one household, is justifiable, and there is no error of law such as misunderstanding legal principles as to the reduction and exemption of transfer income tax

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.