Cho High Court Decision 2016Do3640 ( December 15, 2016)

When a combined transfer of a house consisting of non-taxable houses and commercial buildings is made, the calculation method of non-taxable housing gains shall be based on the standard market price.

Where land and buildings are transferred in a lump sum, gains on transfer shall be kept separately, and where the transfer value of land and buildings cannot be distinguished from the transfer value, each standard market price ratio shall be divided, and where a building is combined, the standard market price of the housing part, the standard market price of the building part, and the standard market price of the building part shall be the individual publication price.

Article 89, 99, and 100 of the Income Tax Act, Article 154, and Article 166 of the Enforcement Decree of the Income Tax Act

2017Gudan2083 Revocation of Disposition of Imposing capital gains tax

KimA

O Head of tax office

April 19, 2017

May 17, 2017

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s disposition of imposition of capital gains tax of KRW 31,719,400 (including additional tax) for the Plaintiff on August 1, 2016 shall be revoked.

1. Details of the disposition;

A. On August 26, 2015, the Plaintiff transferred 3,180,000, in a lump sum, the transfer value of the commercial building and the building on the land and its ground (hereinafter referred to as the “instant land”) on August 26, 2015, the commercial building and the building on the land (hereinafter referred to as the “instant land”); the commercial building and the housing part; and the “the instant building,” the commercial building and the housing parts, collectively, were transferred at KRW 3,180,000.

B. After all, the Plaintiff calculated the transfer value in proportion to the officially assessed individual land price of the instant land and the publicly notified standard market price of the building of the instant building (hereinafter “building standard market price”) by dividing it in proportion to the publicly notified individual land price of the instant land and the respective gains on transfer of the instant land and the instant building. As the ratio of the total floor area of the instant housing to the total floor area of the instant building from each gains on transfer to one household, the Plaintiff deemed the gains on transfer of housing subject to non-taxation as one house for one household, and reported and paid the remainder to the Defendant on September 10, 2015 by calculating the gains on transfer of commercial buildings subject to taxation.

C. However, the Defendant calculated the land size of the instant housing by multiplying the ratio of the total floor area of the instant housing to the total floor area of the instant building by the area of the instant land, and then calculated the housing price of the instant housing by the ratio of the building standard market price of the instant housing and the individual land price of the relevant appurtenant land in proportion to the individual land price. Then, calculated the housing price of the instant housing and the instant individual land price of the instant land by the building standard market price of the instant building and the individual land price of the instant land. 3 The building standard market price of the instant commercial building and the individual land price of the instant building are the individual land public announcement base. 4. After calculating the transfer price of each of the instant housing and its appurtenant land in proportion to the ratio of each price of the instant commercial building to the ratio of the total land prices to the total land prices, the portion corresponding to the instant housing and its appurtenant land shall be deemed as one house for one household, and on August 1, 2016, the Plaintiff issued a disposition to correct and notify (including additional taxes).

D. On August 18, 2016, the Plaintiff appealed and filed an appeal for adjudication on the instant disposition with the Tax Tribunal, but the Tax Tribunal rendered a decision to dismiss the Plaintiff’s appeal on December 15, 2016.

[Reasons for Recognition] No. 1-2, Gap evidence No. 4, Eul evidence No. 3 and No. 4, and the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

Pursuant to Article 89(1)3 (a) of the Income Tax Act and Article 154(3) and (4) of the Enforcement Decree of the Income Tax Act, gains on transfer of the instant house and its appurtenant land subject to non-taxation as one house for one household shall be calculated at the ratio of the total floor area of the instant house to the total floor area of the instant building from each gains on transfer of the instant land and the instant building, and the transfer value shall not be calculated pro rata according to each standard market price of the instant house and its appurtenant land and the instant commercial building and their appurtenant land. Accordingly, the instant disposition on a different premise should be revoked

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Article 89(1)3 (a) of the former Income Tax Act (amended by Act No. 13426, Jul. 24, 2015; hereinafter the same) and Article 154(3) and (4) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 26600, Oct. 23, 2015; hereinafter the same shall apply) include one building, other than a house, as the total floor area is or is equal to the total floor area of the house other than the house and the size of the building, if the whole building is not regarded as non-taxable one house for one household, it is clear that the provision for calculating transfer margin is not a provision for calculating transfer margin. Rather, the transfer margin should be divided into the standard market price of the land and the building’s appurtenant land for the purpose of distinguishing the total land from the total land subject to non-taxation and the building’s appurtenant land from the standard market price of the land and the building’s appurtenant land for separate use.

2) In the case of the instant building, the Plaintiff asserts to the effect that the price of each of the instant land increases below the standard market price of the instant commercial building, and thus, the price of each of the instant land becomes unreasonable. However, this is based on the outcome of applying Articles 99(1) and 100(2) of the Income Tax Act, Article 166(6) of the Enforcement Decree of the Income Tax Act, and Article 64 subparag. 1 of the Enforcement Decree of the Value-Added Tax Act, which provide the method of calculating gains on transfer scheduled under the Income Tax Act, and thus, it cannot be deemed that there is a difference in the price of each of the instant land. Rather, according to the Plaintiff’s assertion, the Plaintiff did not reflect the circumstance that the instant

D. Sub-committee

Therefore, the plaintiff's above assertion cannot be accepted, and the disposition of this case is legitimate.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.

Relevant statutes

(1) The former Income Tax Act (Amended by Act No. 13426, Jul. 24, 2015)

Article 89 (Non-Taxable Capital Gains)

(1) Income tax on capital gains (hereinafter referred to as "capital gains tax") shall be imposed on the following income:

subsection (b) of this section.

3. Any of the following houses (value higher than the standard prescribed by Presidential Decree):

House shall be excluded) and the appurtenant land, the area of which the building is fixed, shall be determined by Presidential Decree for each region.

(1) The transfer of land (hereafter referred to as "land annexed to a house" in this Article) within the area calculated by multiplying the ratio by the size;

Income accruing from the income;

(a) One house for one household prescribed by Presidential Decree;

Article 99 (Computation of Standard Market Price)

(1) The guidelines under Article 96 (2), the proviso to Article 97 (1) 1 (a), Articles 100 and 114 (7).

A. The following shall apply to a family:

1. Land or buildings under Article 94 (1) 1:

(a) Individual officially assessed land price under the Public Notice of Values and Appraisal of Real Estate Act (hereinafter referred to as "individual assessed land price");

Land price is called land price: Provided, That the value of land without a publicly assessed individual land price shall be similar in neighborhood to the head of tax office having jurisdiction over

amount assessed by the method prescribed by Presidential Decree in consideration of the officially assessed individual land price of the land;

In cases of areas prescribed by Presidential Decree, where the price sharply rise, assessment shall be made according to the multiple factors.

at the same value.

(b) The price, structure, use, location, and new construction of a building (excluding the buildings falling under items (c) and (d));

The value calculated and publicly announced by the Commissioner of the National Tax Service at least once a year in consideration of year

(c) Land annexed to an officetel and commercial building is owned jointly and partitionedly owned by a building;

The office prescribed by Presidential Decree in consideration of the purpose and area of the building, the number of buildings under divided ownership, etc.

The type, size, transaction status and location of a building (including land annexed thereto) for a tele and commercial building;

The value calculated and publicly announced by the Commissioner of the National Tax Service at least once a year in consideration of land and buildings;

(d) Individual housing prices and apartment houses under the Public Notice of Values and Appraisal of Real Estate Act;

(ze) Provided, That in the case of multi-family housing prices, the Commissioner of the National Tax Service shall determine and publicly notify pursuant to the proviso to Article 17

When the apartment price exists, the price shall be followed, and the house without the individual house price and the apartment price.

The head of tax office having jurisdiction over the place of tax payment shall consider the individual housing price and apartment price in neighboring similar houses

amount appraised by the method prescribed by Presidential Decree.

§ 100. Calculation of gains on transfer)

(1) In calculating gains on transfer, the transfer value shall be the actual transaction value (the value under Article 96 (3) and Article 114).

Where the transaction example or appraisal value is applied pursuant to paragraph (7), it shall include the transaction example value, appraisal value, etc.

The acquisition price shall also be based on the actual transaction price (value under Article 97 (7) and Article 114 (7)).

D. Where the transaction example value, appraisal value and conversion value are applied, the transaction example value, appraisal value, conversion value, etc.

Pursuant to the standard market price, the acquisition value shall also be based on the standard market price when the transfer value is based on the standard market price.

(2) In applying paragraph (1), where the transfer or acquisition value is calculated based on the actual transaction price:

Where land, buildings, etc. are acquired or transferred together, they shall be separated and entered, and land and buildings;

Where the classification is unclear, the Presidential Decree shall consider the standard market price at the time of acquisition or transfer.

common acquisition value and transfer expenses shall be calculated in accordance with the manner prescribed by the Presidential Decree. In this case, the common acquisition value and transfer expenses shall be

shall be calculated in proportion to the value.

(1) The former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 26600, Oct. 23, 2015)

§ 154. Scope of one house for one household

(3) When applying Article 89 (1) 3 of the Act, a building is combined with a house and a part other than the house.

(1) In cases where a building, other than a house, exists, the entire building shall be deemed housing.

only if the total floor area of a house is less than or equal to the total floor area of a part other than a house, the part other than a house shall be a house.

shall not be considered as such.

(4) In cases falling under the proviso to paragraph (3), land appurtenant to a house shall be the total floor area of the building in total land area.

shall be calculated by multiplying the percentage taken place in the section.

Article 166 (Calculation, etc. of Gains on Transfer)

(6) In applying Article 100 (2) of the Act, where the distinction between the value of land and buildings, etc. is obscure.

The calculation method shall be calculated in accordance with Article 64 of the Enforcement Decree of the Value-Added Tax Act.

(1) The former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 26600, Oct. 23, 2015)

Article 64 (Calculation of Value of Supply of Buildings, etc. in Cases of Joint Supply of Land, Buildings, etc.)

Pursuant to the proviso to Article 29 (9) of the Act, the value of land and buildings or structures in the actual transaction price (hereafter in this Article)

Where the classification of values of buildings, etc. is unclear, etc. in accordance with the following classification:

The value of supply shall be the sum of the amounts calculated.

1. The standard market price under Article 99 of the Income Tax Act (hereafter in this Article, referred to as the "standard market price");

(2) If there is all: A distribution system in proportion to the value calculated according to the standard market price as of the date of the supply contract;

2. Amount calculated in advance: The appraised value [the time of supply under Article 28 (the time of interim payment or the long-term installment sale];

(i) the time of supply beginning in the immediately preceding taxable period to which the date of supply belongs;

By the end of the three-year period, an appraisal under subparagraph 9 of Article 2 of the Public Notice of Values and Appraisal of Real Estate Act;

Where an appraisal business operator has any appraisal value (referring to the appraisal value assessed by the appraisal business operator; hereafter the same shall apply in this Article), the

shall be the amount calculated in proportion to the proportional distribution.