Cho Jae-2017-China 4678 ( December 29, 2017)

Only two houses for one household temporarily due to living together support, etc. under the Enforcement Decree of the Income Tax Act, which are subject to capital gains tax exemption does not deviate from delegation by the mother law.

Only two houses for one household temporarily due to living together support, etc. under the Enforcement Decree of the Income Tax Act, which are subject to capital gains tax exemption does not deviate from delegation by the mother law.

Articles 154 and 155 of the Enforcement Decree of the Income Tax Act

2018Guhap13259 Revocation of Disposition of Imposing capital gains tax

Gangwon-do Roster

○ Head of tax office

August 28, 2018

September 18, 2018

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 32,890,710 to the Plaintiff on July 11, 2017 is revoked.

1. Details of the disposition;

A. The Plaintiff’s ○○○○○-dong 137-1 and 151-23 above ground ○○○-dong 202 Dong 202 (hereinafter referred to as “the Plaintiff”).

'The housing of this case' was owned by 'the housing of this case', and 'the ○○' and 'the 'the 'the 'the 'the 'the 'the 'the '

5. The move-in report was made to the instant housing and constituted the Plaintiff and one household.

B. On April 29, 2016, the Plaintiff transferred the instant house to Ma○○○, and one household at the time of transfer.

The plaintiff and the ○○ couple, who are in common, owned a house as follows:

Owners

Location of Housing

Date of acquisition

Transfer Date

1

The instant house

September 20, 198

April 29, 2016

2

○ Heading Notes

Seoul ○○-gu ○○○-dong (Omission)

February 23, 2009

3

Gangseo-gu

Guri-si 00 ○ Dong (Omission)

may 27, 2005

C. On July 11, 2015, the Defendant: (a) determined and notified KRW 32,890,710 of the transfer income tax reverted to year 2016 on the ground that ○○ couple, who formed one household, as indicated in the foregoing attached Table, owned three houses for one household as indicated in the Plaintiff and the Plaintiff at the time of the transfer of the instant house, owned three houses for one household; and (b) was not subject to tax exemption for one household (hereinafter “instant disposition”).

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 3, 4, 5, Eul evidence Nos. 1, 3, and 4 (including each number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) Article 89 (1) 3 (b) of the former Income Tax Act (amended by Act No. 14389, Dec. 20, 2016; hereinafter referred to as "the delegation provision of this case") provides that capital gains tax shall not be imposed on "housing prescribed by Presidential Decree where one household owns two or more houses due to the care by living together, etc. before transferring one house," and intends to protect one person who is one of the two houses or more for one household temporarily due to reasons, such as the care by living together, etc. In the meantime, the purpose of legislation is to protect one person who is one of the two houses or more for one household. Meanwhile, the transfer of the instant housing is exempt from capital gains tax pursuant to the delegation provision of this case.

2) However, Article 155(4) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 27829, Feb. 3, 2017) (hereinafter referred to as “Enforcement Decree provision of this case”) provides that only two houses per household are exempt from capital gains tax due to the support of living together, etc. in conflict with the legislative intent above. Thus, the Enforcement Decree provision of this case is unlawful as it goes beyond the delegated limit of the mother law, and therefore, the disposition of this case against the Plaintiff based on the illegal Enforcement Decree provision of this case is unlawful.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) The purport of not imposing the income tax on the income accruing from the transfer of one house for one household is that the transfer of one house owned by one household in Korea is not a transfer income tax, or that the transfer of one house temporarily resided or owned for the purpose of speculation, and thus, it is intended to guarantee the stability of the residential life and the freedom of the movement of residence by failing to impose the income tax on the transfer income (see Supreme Court Decision 92Nu12988, Jan. 19, 1993).

2) As to this case, the delegation provision of this case is not a legal provision that limits the people's property rights, but a preferential provision that extends the scope of exemption from capital gains tax on one house for one household. Therefore, it is reasonable to view that the president has a broad discretion in determining non-taxation within the delegation scope of the delegation provision of this case. ② Under the literal text, the delegation provision of this case is "Housing prescribed by Presidential Decree where one household acquires two or more houses by replacing another house before transferring one house, or owns two or more houses due to inheritance, living together support, marriage, etc." and it seems to be delegated to the extent of the reason for its acquisition, not only the number of houses temporarily owned by one household, but also the scope of the reason for its acquisition. ③ In light of the legislative intent of non-taxation of capital gains tax on one house for one household, it is difficult to view that the enforcement decree of this case only limits an individual's property rights or violates the delegation provision of this case. Therefore, the Plaintiff's assertion that the delegation provision of this case does not violate the delegation provision of this case cannot be accepted.

3. Conclusion

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

Relevant statutes

(1) The former Income Tax Act (Amended by Act No. 14389, Dec. 20, 2016)

Article 89 (Non-Taxable Capital Gains)

(1) No capital gains tax (hereinafter referred to as "capital gains tax") shall be levied on the following income:

3. Income generated from transfer of any of the following houses (excluding expensive houses the value of which exceeds the standard prescribed by Presidential Decree) and land appurtenant thereto, the area of which is within the area calculated by multiplying the area of which a building is built by the multiple rates prescribed by Presidential Decree for each region (hereafter referred to as "land annexed to a house" in this Article):

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

(b) A house prescribed by Presidential Decree, where one household acquires another house by substitute prior to transferring one house, or owns two or more houses due to inheritance, living together support, marriage, etc.;

(1) The former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 27829, Feb. 3, 2017)

§ 154. Scope of “One house for one household”

(1) "Requirements prescribed by Presidential Decree" in Article 89 (1) 3 (a) of the Act means that one household has one house in the Republic of Korea as of the date of transfer, and the period of possession of the relevant house is at least two years (three years in cases of a house of a resident falling under paragraph (8) 2 at the time of acquisition): Provided, That in cases of a house located in the adjustment area under paragraph (2) at the time of acquisition, the period of possession of the relevant house is at least two years (three years in cases of a house of a resident falling under paragraph (8) 2) and the period of residence is at least two years during such period of possession: Provided, That where one household has one house in the Republic of Korea as of the date of transfer and falls under any of subparagraphs 1 through 3, the period of possession and period of residence shall not be restricted,

§ 155. Special case of “One house for one household”

(4) Where a person having one house and forming one household comes to combine the households in order to jointly live and support the lineal ascendants of 60 or more years old having one house (including the lineal ascendants of his/her spouse, and including cases where any one of the lineal ascendants is under 60 years old; hereafter the same shall apply in this Article), and consequently, one household comes to own two houses, the house first transferred within five years from the combining date shall be deemed to be one house for one household, and Article 154 (1) shall be applied at the end of the same Article.