Cho High Court Decision 2010Du3102 (Law No. 109, 2011)

Reduction or exemption of capital gains tax on a newly-built house acquired and transferred within five years;

In the case of reduction or exemption of capital gains tax on the purchaser of a newly-built house, such reduction or exemption shall be considered to be limited to the income accruing from the acquisition of a newly-built house and transfer thereof within five years, and it shall not be interpreted extensively by the income accruing from the

Article 99-3 of the Restriction of Special Taxation Act

2011Gu 27363 Disposition rejecting a request for correction

IsaA

head of Sung Dong Tax Office

February 17, 2012

March 9, 2012

1. The plaintiff's claim is dismissed.

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

The defendant's rejection disposition against the plaintiff on June 11, 2010 against the plaintiff of 48.09,260 won of transfer income tax of 2007 shall be revoked.

1. Details of the disposition;

A. On October 5, 1999, the Plaintiff reported and paid KRW 111,764,770 of capital gains tax after transferring on December 14, 2007 the newly-built house at the same place asCC apartment 000 00 dong 000 (hereinafter referred to as “instant newly-built house”) which was acquired as a result of reconstruction of the Seocho-gu Seoul OOdong 000-0 B apartment OB apartment (hereinafter referred to as “instant old house”).

B. On March 8, 2010, the Plaintiff transferred the newly-built house of this case within five years from the date of acquisition (the date of approval for use inspection) on December 14, 2004 (the date of approval) and filed a request for correction after deducting the special tax for rural development imposed at the time of tax abatement or exemption under the Act from KRW 111,764,70, which is the total tax amount to be paid, since it constitutes the subject of full exemption of capital gains tax under Article 99-3(1) of the former Restriction of Special Taxation Act (amended by Act No. 9272, Dec. 26, 2008; hereinafter “Act”).

(C) On June 11, 2010, the Defendant: (a) obtained approval for use after the expiration of the acquisition period stipulated in Article 9-3(1) of the Act ( May 23, 2001 - June 30, 2003); (b) received down payment by directly concluding a sales contract for the remaining houses within the said acquisition period; (c) under the premise that the Plaintiff’s transfer of a newly-built house within five years after its acquisition is exempted from capital gains tax; (d) on the income accrued from its transfer within five years after its acquisition, only the amount of 7 years after its acquisition of the newly-built house shall be exempted from capital gains tax; (e) by calculating the remaining amount of 5 years from the acquisition date of the newly-built house under Article 9-3(1) of the Enforcement Decree of the Restriction of Special Taxation Act (the date of approval for use); and (e) by calculating the amount of capital gains tax for the newly-built house under Article 9-3(5) of the former Enforcement Decree of the Restriction of Special Taxation Act by 250 years before its acquisition date; (the remaining amount of capital gains tax for 3084.

E. In calculating the above total capital gains, the Defendant calculated pursuant to Article 166(2)1 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 1120618, Feb. 22, 2008; hereinafter “Enforcement Decree of the Income Tax Act”) in accordance with Article 166(2)1 of the former Enforcement Decree.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 5, 8, Eul evidence Nos. 1 and 2 (including above numbers), the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

The rejection disposition of this case is unlawful for the following reasons.

(1) In cases where capital gains to be reduced or exempted by applying Article 40(1) of the Enforcement Decree shall be calculated by applying mutatis mutandis the provisions of Article 40(1) of the Enforcement Decree, the transfer income tax shall not be calculated by applying mutatis mutandis the provisions of Article 40(1) of the Enforcement Decree, since the Plaintiff transferred the newly-built house within five years from the date of acquisition thereof.

② Even if it is not so, the Defendant applied the formula of Article 40(1) of the Enforcement Decree to the 'standard market price at the time of acquisition of the old house' as the ‘standard market price at the time of acquisition of the newly-built house at the time of acquisition of the unit of the unit of the unit of the unit of the unit of the unit of the company, and the Plaintiff’s share of KRW 233,864,000 paid to acquire the newly-built house at the time of acquisition of the unit of the

③ Even if such assertion is rejected, the transfer income tax on the transfer of newly-built house that is exempted under Article 99-3(1) of the Act is the transfer income tax accruing from the transfer of the newly-built house for the period from December 16, 2000 to December 17, 2007, which is the date of the transfer of the newly-built house in this case, which is the date of the re-built house in this case’s approval. In the case of a general purchaser, it is reasonable to reduce or exempt the transfer income tax on the transfer income from the date of approval for re-built project (not the date of acquisition of the newly-built house) to acquire the “right to acquire the real estate” to acquire the “right to acquire the real estate from the date of the date of acquisition of the newly-built house to the date of transfer of the newly-built house in this case’s agreement

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

(1) As to the Plaintiff’s assertion (1)

In cases where a newly-built house is transferred within five years after it was acquired by acquiring the old house and the newly-built house is transferred within five years after it was acquired by the housing reconstruction project, such reduction or exemption shall be deemed to be limited to "income accruing from the acquisition of the newly-built house within five years" in light of the entire text of the above provision, and it shall not be interpreted to expand income accruing from the transfer of the newly-built house from the acquisition of the old house to the transfer of the newly-built house. In addition, Article 40(1) of the Enforcement Decree of the Act applies mutatis mutandis to the defendant's assertion to reasonably calculate capital gains tax in consideration of the legislative intent of Article 99-3(1) of the Act and Article 99-3(2) of the Enforcement Decree of the Enforcement Decree of the Act, which is the delegated provision thereof. The above argument by the plaintiff shall not be applied mutatis mutandis to Article 40(1) of the Enforcement Decree on the ground that Article 40(1) of the Enforcement Decree of the Act is not applicable to the area naturally scheduled to be expanded.

(2) As to the Plaintiff’s assertion

In calculating the total amount of capital gains, the Defendant applied Article 166(2)1 of the Enforcement Decree of the Income Tax Act in calculating the total amount of capital gains. According to such provisions, the liquidation money paid by the Plaintiff for the acquisition of a newly-built house is evaluated as actual necessary expenses in the process of calculating the total amount of capital gains, and according to the aforementioned evidence, the Defendant’s calculation method also appears to have been carried out. The Defendant’s application of Article 40(1) of the Enforcement Decree in calculating the amount of capital gains subject to reduction and exemption, which is generated from the date of acquisition of a newly-built house to the time of transfer, constitutes a method of converting the total amount of capital gains subject to deduction by using the standard market price, and thus

(3) As to the Plaintiff’s assertion, the Plaintiff’s health room

In this case, the subject of reduction or exemption under Article 99-3(1) of the Act is capital gains tax on the transfer income accrued from the date of acquisition of a newly-built house to the date of acquisition of a newly-built house. The date of acquisition of a newly-built house shall be deemed to be the date of approval for use inspection. However, if capital gains are reduced or exempted from the date of approval for a project plan, the reduction or exemption of capital gains accrued from the date earlier than the date of acquisition of a newly-built house to the date prior to the date of acquisition of a newly-built house would result in the reduction or exemption of capital gains accrued from the date earlier than the date of acquisition of a newly-built house. Since there is no unit of ownership before conversion into a newly-built house, it is difficult

3. Conclusion

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