National Tax Service Review and Transfer 2010-0134 (Law No. 14, 2010)

It is not necessarily required to reside with the spouse in the requirement of one house for one household.

In order to constitute one house for one household exempt from capital gains tax, a resident or his/her spouse shall meet the requirements for possession and residence, and it shall not be deemed that the resident has to reside together with his/her spouse, but shall not be deemed to correspond to one house for one household.

It is the same as the internalCC attachment.

2010Gudan19907 Revocation of Disposition of Imposing capital gains tax

XX

O Head of tax office

April 12, 2011

may 3, 2011

1. The Defendant’s imposition of capital gains tax of KRW 21,567,880 against the Plaintiff on February 23, 2010 shall be revoked.

2. The costs of the lawsuit are assessed against the defendant.

The same shall apply to the order.

1. Details of the disposition;

A. On March 28, 1997, the Plaintiff acquired and possessed 000 dong 0000 dong 0000 (hereinafter referred to as “in-house 2007”) the apartment of the Seoul XX-gu, Seoul, and did not report the transfer income tax after transferring the housing at issue on April 3, 2007.

B. Accordingly, on February 3, 2010, the Defendant decided and notified the Plaintiff of KRW 21,567,880 for the transfer income tax belonging to the year 2007 on the ground that “The Plaintiff resided in the key house, but the Plaintiff’s spouse does not fall under the requirements for non-taxation on one house for one household as he does not reside in the key house” (hereinafter “instant disposition”).

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, Eul evidence Nos. 1 to 4 (including each number), the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

Although the Plaintiff had a house at issue for at least three years, and had resided for at least two years during the retention period, it constitutes one house non-taxation requirement for one household, the instant disposition to be reported differently is unlawful.

(b) Fact of recognition;

(1) After acquiring the housing at issue on March 28, 1997, the Plaintiff resided with the housing at issue on February 21, 2003, and transferred the housing at issue on April 27, 2007, and thereafter transferred the housing at issue on September 10, 2007.

(2) From April 27, 2000, Park Dong, the spouse of the Plaintiff, was registered as a resident of the above OB L 00, and died on July 29, 2009.

(3) The wife of the Plaintiff’s person ParkBB and his children (GaoCC, Park E-E) resided in the key house, and left Canada around January 2004 and returned to Korea on January 2007.

[Ground of recognition] Evidence Nos. 2 through 4, Evidence Nos. 6 (including each number), the purport of the whole pleadings

C. Determination

(1) Whether a resident has to reside together with his spouse in one house for one household

First of all, it is necessary to determine whether a resident must reside together with his/her spouse in order to meet the requirements for residence of one household which is exempt from capital gains tax.

Article 89 (1) of the Income Tax Act provides that "one house for one household prescribed by Presidential Decree and the appurtenant land shall not be subject to capital gains tax on the income accruing from a transfer of land within the area calculated by multiplying the area on which the building is built by the ratio prescribed by Presidential Decree by region." Article 154 (1) of the Enforcement Decree of the Income Tax Act provides that "one house for one household prescribed by Presidential Decree" shall be defined as "one house for one household comprised of a resident and his/her spouse together with his/her family members living together with the same address and the same place of residence at the same place of residence" as of the date of transfer and has one house in Korea for three years or more (in cases of a house located in the Seoul Special Metropolitan City, Metropolitan City, Si, and Si, and Dong new urban area under Article 3 of the Housing Site Development Promotion Act, the period of possession of the house in question shall be three years or more and the period of residence shall be two years or more during the period of possession," and Article 89 (2) 2 of the Income Tax Act provides that "spouse shall be defined as one house or more in detail." (1).

In light of the aforementioned provisions, unlike the fact that a resident forms one household with his spouse in principle and requires a resident or his/her spouse to share the same livelihood at his/her uniform address or place of residence in order to form one household, the resident’s spouse does not have any restrictions other than his/her spouse to form one household, and only exceptional cases such as death or divorce of his/her spouse can constitute one household without his/her spouse. Thus, under the principle of strict interpretation of tax-related Acts, the resident’s spouse can only form one household with the fact that he/she is his/her spouse (see, e.g., Supreme Court Decision 97Nu19465, May 29, 198). In light of the fact that the resident’s spouse and one household are not taxable for the purpose of not imposing capital gains tax on the income accruing from the transfer of one house of the resident, and that the resident’s spouse and one household are not exempt from capital gains tax for the purpose of guaranteeing the stability of residential life of the resident and one household’s non-taxable housing regardless of the right to move.

(2) In light of the above facts, the health team, the Plaintiff acquired the housing at issue on March 28, 1997, and transferred it on April 27, 2007, and held it for three years or more, and had resided within the retention period of two years or more. Thus, even if the Plaintiff did not reside in the housing at issue with his spouse Park Jong-A, the Plaintiff shall meet the requirements for holding one house for one household with no capital gains tax and the requirements for residing.

D. Sub-committee

Therefore, since the Plaintiff is deemed to meet the requirements for non-taxation for one house per household, the instant disposition that was otherwise reported is unlawful.

3. Conclusion

Therefore, the plaintiff's claim of this case is justified and it is so decided as per Disposition.