Seoul Administrative Court 2013Gudan5317 ( November 15, 2013)

Seocho 2013west 1034 (O6.04)

Even if a multi-family house newly built and built by himself/herself is transferred to two persons, it shall not be deemed as a detached house.

Article 155 (15) of the former Enforcement Decree of the Income Tax Act provides that "a person acquired from one person" is merely a provision that takes a temporary two household into account, and even if he/she acquires it through construction, it shall not be deemed a single house if it is transferred to two persons

Article 155 (15) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 17825 of Dec. 30, 2002)

2013Nu5247 Revocation of Disposition of Imposing capital gains tax, etc.

MaO

Head of Central Tax Office

Seoul Administrative Court Decision 2013Gudan53175 decided November 15, 2013

August 27, 2014

September 24, 2014

1. Revocation of a judgment of the first instance;

2. The Defendant’s disposition imposing capital gains tax of KRW 106,774,400 (including additional tax) for the year 201 on the Plaintiff on December 7, 2012 shall be revoked.

3. All costs of the lawsuit shall be borne by the defendant.

1. Quotation of judgment of the first instance;

The reasoning of this court's decision is as follows, except for the dismissal of the fourth second second half of the judgment of the court of first instance as follows, and therefore, it is cited in accordance with Article 8 (2) of the Administrative Litigation Act and the main sentence of Article 420 of the Civil Procedure Act.

2. Parts in height:

B. Determination

1) Relevant statutes

According to Article 29(1) of the Addenda of the former Restriction of Special Taxation Act (amended by Act No. 6762 of Dec. 11, 2002), Article 99-3(1) of the former Restriction of Special Taxation Act (amended by Act No. 6762 of Dec. 11, 2002), the former Restriction of Special Taxation Act (amended by Act No. 6762 of the same Act; hereinafter referred to as the "former Restriction of Special Taxation Act") shall apply to the reduction or exemption of capital gains tax of the instant high-class house. In this case, the proviso of Article 99-3(1) of the former Restriction of Special Taxation Act provides that "where the relevant newly-built house corresponds to a high-class house that is excluded from the object of non-taxation of capital gains tax under subparagraph 3 of Article 89 of the Income Tax Act, the issue of whether it constitutes a high-class house of this case shall be decided by Article 89(3) of the

First, according to Article 89 subparag. 3 of the former Income Tax Act (amended by Act No. 6781 of Dec. 18, 2002) and Article 156 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 17825 of Dec. 30, 2002; hereinafter “former Enforcement Decree of the Income Tax Act”) at the time of approval for the use of the instant house, where (i) the standard market price under the Income Tax Act as a detached house is at least 4,00 square meters, i) the total floor area of the house is at least 264 square meters and exceeds 60 million won at the time of the transfer of the house and its appurtenant land, or (ii) the total actual market price at the time of the transfer of the house and its appurtenant land exceeds 60 million won, including the case where the apartment house (including the case where the apartment house is deemed to be the apartment house under the provisions of Article 15(15) of the Enforcement Decree of the Income Tax Act) and the case exceeds the actual transaction price at the house.

2) Legislative intent and interpretation of the provision of this case

The provision of this case was newly established on December 30, 1995 by Presidential Decree No. 14860 on December 30, 195. The purpose of this case is, in principle, multi-unit houses, but considering that it falls under multi-unit houses, and is being constructed for the stabilization of the housing of the homeless, and in order to maintain equity with the non-taxation for a house when transferring part of a general detached house while leasing it, it is intended to treat a multi-unit house as a single house and give tax benefits by treating it as a single house in certain cases. In other words, if a multi-unit house is not sold separately after holding it for a certain period and is transferred to one person collectively, it is non-taxable as one house for one household, such as in the case of a single house, and if a person who has existing one house newly acquires a multi-unit house from one person, it is non-taxable if he transfers the existing house within a certain period (No. 9, No. 6).

Therefore, the phrase “acquisition from one person (including cases of acquisition by one person)” in the instant provision refers to a case where the provisions on temporary two houses under Article 155(1) of the former Enforcement Decree of the Income Tax Act are considered in mind, and if a multi-family house is to be acquired from one person thereafter, it cannot be interpreted that it would be regarded as a unconditional detached house regardless of the type of transfer if it is subsequently transferred the multi-family house. If such, even if a multi-family house is acquired from one person and then transferred the multi-family house to several persons, it would result in unreasonable consequences that should be treated as a single house when considering non-taxation of capital gains tax. In such a case, if a multi-family house is transferred to one person on a single unit of sale, it would be treated as both substantially different types of housing supply, and it would be contrary to the legislative intent of Article 99-3(1) of the former Restriction of Special Taxation Act, which activate the supply of a house (see, e.g., Supreme Court Decision 2010Du6878, Oct. 25, 2012).

3) Whether the instant housing constitutes detached housing

First of all, the instant case concerns not the matter that satisfies the requirements for the above temporary two houses, but whether the relevant newly-built house constitutes a high-class house. Therefore, it cannot be the standard for determining whether the instant house acquired from one person in determining whether it constitutes a single house under the instant provisions.

Next, in the case of the instant housing, even if the Plaintiff transferred the instant housing to OO and KimO, it does not constitute a “cases of transfer to one person”, and thus, it cannot be deemed a single house due to the lack of requirements under the instant provision.

In regard to this, the Defendant alleged to the effect that the Plaintiff transferred the instant house to two persons who are the couple of the instant land by means of a single sale unit to the above two persons who are the couple of the instant land. However, the assignee cannot be deemed to have transferred the instant house to one person merely because it is a marital relationship, and there is no other evidence to acknowledge it. Rather, according to the testimony of OO witness of the court, the above assignee is recognized as the co-ownership of the instant house. The Defendant’s above assertion is without merit.

4) Sub-committee

Ultimately, the instant house cannot be seen as a detached house as stipulated in the instant provision, and should be seen as a multi-family house in consideration of whether it constitutes a high-class house. However, there is no evidence to acknowledge that the instant house among the partitioned parts of the instant house satisfies the exclusive use area and the actual transaction price standard under Article 156 subparagraph 2 of the former Enforcement Decree of the Income Tax Act, and the instant house cannot be deemed a high-class house. The instant disposition on a different premise is unlawful

3. Conclusion

The plaintiff's claim of this case is reasonable, and the judgment of the first instance court different from this conclusion is revoked, and the disposition of this case is revoked.