Whether the alteration of use and substantial repair after the acquisition of a house constitutes the necessary expenses of the transferred asset.

The construction cost for the change of use and large-scale repair paid after the acquisition of a house shall be the expenses paid for the improvement of the transferred asset prescribed by Article 45 (1) 2 of the Income Tax Act and Article 94 (2) 2 of the Enforcement Decree of the same Act, as necessary expenses. In calculating the transfer income tax, such expenses shall be deducted from

Article 45 (1) 2 of the Income Tax Act, Article 94 (2) 2 of the Enforcement Decree of the Income Tax Act

Supreme Court Decision 82Nu65 delivered on September 14, 1982, 82Nu386 delivered on August 23, 1983

Plaintiff

Head of Sungnam Tax Office

Seoul High Court Decision 85Gu1153 decided July 18, 1986

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

We examine the grounds of appeal.

The change of use and large-scale repair construction cost paid after acquiring a house shall be the expenses paid for the improvement of the transferred asset as prescribed by Article 45 (1) 2 of the Income Tax Act and Article 94 (2) 2 of the Enforcement Decree of the same Act. Therefore, in calculating the transfer income tax, it shall be deducted from the transfer value (see, e.g., Supreme Court Decision 82Nu65, Sept. 14, 1982; 82Nu386, Aug. 23, 1983).

In the same purport, the court below confirmed that the plaintiff acquired the real estate in this case from August 21, 1978, and December 12, 1978 with permission for large-scale repair from the competent market, and changed the 2,415,740 won of this case's house's machine base into the reinforced concrete slab roof, and completed the completion inspection until November 1, 1979, and determined that the transfer income tax and defense tax should be calculated by deducting the transfer margin of the real estate in this case from the transfer margin of the real estate in this case as improvement expenses, and there is no error in the misapprehension of legal principles as otherwise alleged.

The precedents that give rise to arguments are all different from those in this case, and thus cannot be appropriate. The arguments are groundless.

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

Justices Kim Jong-hee (Presiding Justice)