Whether capital gains tax on long-term rental houses is reduced or exempted.

It shall not be deemed that a new house has been built during the period from January 1, 1986 to December 31, 200, without any evidence to prove that it is a newly-built house, and that it does not constitute a case of lease for five or more years from the date of commencement of rental houses

Transfer income tax on long-term rental houses under Article 97 of the Restriction of Special Taxation Act

Capital gains tax on long-term rental houses under Article 97 of the Enforcement Rule of the Restriction of Special Taxation Act

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

Each imposition of capital gains tax of 6,50,750 won on May 7, 2006 and capital gains tax of 13,356,650 won on July 7, 2006 that the Defendant rendered to the Plaintiff shall be revoked.

1. Basic facts

A. On October 24, 200, the Plaintiff purchased a house from the head of ○○○○○○○ as a housing rental business operator and leased a purchased rental house (hereinafter referred to as “houses 1 to 6”) as shown below, the Plaintiff sold the housings 1 to 6 October 6, 2005, 2 to 3 and 4 houses on January 12, 2006, and 97 of the Restriction of Special Taxation Act (hereinafter referred to as the “Act”) and Article 97 of the Enforcement Decree of the same Act, on the ground that it constitutes the requirements for reduction or exemption of capital gains tax on the long-term rental house as stipulated in the following table, and accordingly constitutes the requirements for reduction or exemption of capital gains tax on the long-term rental house as stipulated in Article 50/100 of capital gains tax in 205 and 2006.

Housing:

No.

New Year

(Date of Acquisition)

Area of a square meter;

A lessee;

Name

Rental Period

Location

1

8.12.27

(00.4.7)

4.88

○ ○

○ ○

Above 00.6.1 up to 02.1

From December 21, 020 to October 5, 05

○○○-dong ○○ ○-○

Underground ○ Heading ○

2

98.31.9

(00.6.13)

53.55

○ ○

○ ○

○ ○

○ ○

Above 00.8.30 up to February 28, 01

Above 01.3.2 up to 03.20

From August 20 to August 30, 05

From August 31, 05 to January 5, 06

○○○-dong ○○ ○-○

Doo-story 0

3

90.10.24

(9.5.21)

69.95

○ ○

○ ○

From 00.12.5 to 02.27

From 02.5.27 up to 06.12

○○○-dong ○○ ○-○

○○ ○○ ○○

4

90.10.24

(9.5.21)

24.89

○ ○

○ ○

From February 28, 00 to February 27, 01

From October 31 to 06.012

○○○-dong ○○ ○-○

○○ ○○ Dozho ○ ○

5

87.24

(0.8.2.)

34.82

○ ○

○ ○

○ ○

○ ○

Above 00.8.20 up to October 23, 01

From October 26, 010 to March 25, 03

Above 03.7.19 up to 04.23.

From 04.10.4 to 00

○○○-dong ○○ ○-○

Underground ○ Heading ○

6

Non-verification Cost

(00.11.18)

37.00

○ ○

From November 25, 000 to March 1, 060

○○ ○ ○○ ○○ ○○ ○○

B. Accordingly, on October 6, 2005 and January 6, 2006, the Defendant: (a) received an application for reduction or exemption from the Plaintiff on the ground that the Plaintiff failed to meet the requirements for lease of at least five housing units, which are the requirements for reduction or exemption provided for in Article 97 of the Act, by transferring the above rental housing units; and (b) issued each disposition of imposition of capital gains tax of 2006 KRW 6,50,750 in May 7, 2006, and imposition of capital gains tax of 13,356,650 in July 7, 2006 (hereinafter “each disposition of this case”).

[Ground of recognition] Facts without dispute, Gap evidence 1 through 4 (including paper numbers; hereinafter the same shall apply), Eul evidence 1, 2 and 5, the purport of the whole pleadings

2. Whether each of the dispositions of this case is legitimate

A. The plaintiff's assertion

The plaintiff asserted that the plaintiff purchased the above house on November 22, 200 in the case of the six houses and purchased the above house on the same day at ○○○○○○○○○○○, ○○○○○, ○○○, and thereafter he leased it to ○○○, and his family members reside therein. Thus, even though the requirements for reduction and exemption under Article 97 of the Act were satisfied, the defendant's each disposition of this case without applying the above reduction and exemption provision is unlawful.

(b) Related statutes;

￭ 조세특례제한법 제97조 (장기임대주택에 대한 양도소득세의 감면)

(1) Where a resident as prescribed by the Presidential Decree transfers a national housing falling under any of the following subparagraphs (including the land appurtenant thereto not exceeding twice the total floor area of the relevant building) after renting it for not less than 5 years after commencing the lease on or before December 31, 2000, the tax amount equivalent to 50/100 of the transfer income tax on the income accruing from the transfer of relevant house (hereinafter referred to as the "rental house") shall be abated or exempted: Provided, That in the case of a rental house leased for not less than 5 years from among the constructed rental houses under the Rental Housing Act, a rental house leased for not less than 5 years from among the purchased rental houses under the same Act from among the purchased rental houses under the same Act, and a rental house (limited to the house not occupied at the time of acquisition) leased for not less than 5 years from acquisition and commencement of lease after January 1, 195,

1. Houses newly built between January 1, 1986 and December 31, 2000; and

2. Multi-unit houses newly built on or before December 31, 1985 that had not been occupied as of January 1, 1986.

(2) In applying Article 89 (1) 3 of the Income Tax Act, rental housing shall not be deemed a house owned by the relevant resident.

(3) Any person who intends to have the transfer income tax reduced or exempted under paragraph (1) shall file an application for reduction or exemption by reporting the matters concerning the lease of housing as prescribed by the Presidential Decree.

(4) The calculation of the rental period for a rental house referred to in paragraph (1) and other necessary matters shall be determined by Presidential Decree.

￭ 조세특례제한법 시행규칙 제97조 (장기임대주택에 대한 양도소득세의 감면)

(1) The term "resident prescribed by Presidential Decree" in the main sentence of the part other than each subparagraph of Article 97 (1) of the Act means a resident who leases not less than five rental houses.

(5) The period for lease of a rental house under Article 97 (4) of the Act (hereafter in this Article, referred to as the “period for lease of a house”) shall be calculated according to the following subparagraphs:

1. The initial date in reckoning the house lease period shall be the day on which the house lease is commenced;

4. The lease period for less than 5 houses shall not be regarded as the house lease period; and

C. Determination

(1) According to related Acts and subordinate statutes, even in cases where a housing rental business operator transfers a rental house, ① a national housing newly constructed during the period from January 1, 1986 to December 31, 200 by a resident who leases more than five rental houses, ② a national housing newly constructed during the period from December 1, 1986 to December 31, 200, ③ is subject to reduction or exemption of an amount equivalent to 50/100 of the transfer income tax only in cases where a rental business operator leases more than five years after commencing a lease before December 31, 200. Thus, it is examined whether the Plaintiff satisfies the requirements for such reduction or exemption at the time of each transfer of a house on October 6, 2005.

(2) Whether imposition of capital gains tax in 2005 is legitimate

First, in relation to the requirements of the preceding paragraph, we examine whether the Plaintiff is a resident who leases 5 or more houses at the time of transfer of 1 or more houses in October 6, 2005.

According to the statement in Gap evidence No. 5, although the registration of transfer of ownership in the name of the plaintiff was completed on November 18, 200 with respect to ○○○○○○○○○○○○○ ○○○○ ○○ ○○ ○○ ○ 257 square meters on the ground of sale and purchase on November 18, 2000, the above fact that the plaintiff purchased the above land on November 18, 200 and purchased the above land at the same time six houses, a building on the ground of the above land, which were newly constructed on or before November 18, 200, and there is no other evidence to recognize that six houses were newly constructed during the period from January 1, 1986 to December 31, 200, houses No. 6 houses do not fall under the requirements for rental houses under Article 97 of the Act.

Next, in relation to the requirements of the preceding paragraph (3), we examine whether the Plaintiff leased the housing 1 to 5 years except for the housing 6 years at the time of the transfer of the housing 1 to 6 October 2005.

According to the relevant Acts and subordinate statutes, the lease period for less than 5 houses shall not be deemed the house lease period, and as seen earlier, the Plaintiff’s lease period for less than 5 houses shall be deemed the period from December 5, 200 to 5, and as such, it may be recognized that the Plaintiff leased a house for less than 5 years from December 5, 200 to 4 years from December 5, 2000 from the date on which the lease period for the house was commenced for not less than 5 houses (excluding the period for which the house is not leased in the middle). Thus, it cannot be deemed that the Plaintiff’s transfer of a house for less than 5 houses from October 6, 200 to 5 years from the date on which the lease period for the house was commenced for more than 5 years.

Therefore, the imposition of capital gains tax in 2005 is legitimate because it fails to meet the reduction requirements of Article 97 of the Act.

(3) Whether imposition of capital gains tax in 2006 is legitimate

In relation to the requirements of Paragraph 1 (1) 1, as to whether the Plaintiff is a resident who leases 5 or more houses at the time of each transfer of 2,3, and 4 houses on January 2006, 6 houses do not meet the requirements of rental houses under Article 97 of the Act, and the first house is transferred on October 5, 2005 and has already been transferred on or before January 2006. According to the above facts of recognition, the imposition of capital gains tax for 2, 3, and 4 houses were lawful since the Plaintiff leased 4 or more houses from 2, 5 or more houses at the time of each transfer of 2, 3, and 4 houses, and did not meet the requirements of reduction and exemption under Article 97 of the Act.

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.