2015west0724 (2015.04.02)

Reduction or exemption of newly-built house shall not apply because it falls under a high-priced house at the time of transfer

Since a multi-family house is considered to be a detached house when it is transferred by a single sale unit, a newly-built house is not subject to the application.

Transfer income tax on the acquisitor of Newly-built houses under Article 99-3 of the Restriction of Special Taxation Act

2015Gudan56833 Revocation of Disposition of Imposing capital gains tax

KimA

O Head of tax office

National Rotations

October 30, 2015

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The Defendant’s disposition of imposition of KRW 75,635,040 on November 17, 2014 against the Plaintiff was revoked.

1. Facts of recognition;

A. The Plaintiff newly built a multi-family house located in the OOOOO (hereinafter in this case) on January 29, 2002 and transferred the apartment house to BB on March 14, 2014 in KRW 1.267 billion, the instant multi-family house to BB on March 14, 2014 was deemed to be subject to the special taxation for capital gains tax on the acquisitor of a newly-built house under Article 99-3 of the Restriction of Special Taxation Act, and was granted a preliminary return by applying the tax reduction and exemption.

B. On November 17, 2014, the Defendant deemed the instant multi-family house as a single detached house and excluded the reduction or exemption of capital gains tax, and determined and notified the Plaintiff of capital gains tax of KRW 75,635,040 for the year 2014.

C. The Plaintiff appealed and filed an appeal on December 8, 2014, but was dismissed on April 2, 2015.

D. Meanwhile, the total floor area of the instant multi-family house is 464.69 square meters, and the standard market price at the time of transfer is 490 million won.

[Ground of recognition] Facts without dispute, Gap 3 through 5, 8 through 11, Eul 1 through 3, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) According to Article 167-3(2) of the Enforcement Decree of the Income Tax Act, a multi-family house may be deemed as one house only when a resident selects. The plaintiff did not choose as one house, and a multi-family house is not a sectionalized registration by the partitioned part. Thus, the main text of Article 155(15) of the Enforcement Decree of the Income Tax Act is unreasonable, and Article 156 of the Enforcement Decree of the Income Tax Act does not include a high-class house as a house for ordinary people, and Article 156 of the Enforcement Decree of the Income Tax Act does not include a high-class house in the scope of a high-class house, thereby extending the room for inclusion of a multi-family house in the scope of a high-class house in the scope of a high-class house, which goes beyond the delegated legislative scope of the parent law, the instant disposition that

B. Determination

1) Relevant legal principles

According to Article 29(1) of the Addenda of the former Restriction of Special Taxation Act (amended by Act No. 6762 of Dec. 11, 2002), where a newly-built house built by himself/herself prior to the enforcement date of the Act (amended by Act No. 6762 of Jan. 1, 2003) is transferred after the enforcement date of the Act, the previous provisions shall apply to the reduction

As seen earlier, the Plaintiff’s approval for use after newly building the instant multi-family house on January 29, 2002 was granted. Therefore, whether to reduce or exempt the transfer income tax of the instant house should be governed by the former Restriction of Special Taxation Act (amended by Act No. 6762, Dec. 11, 2002; hereinafter the same shall apply).

Article 99-3 (1) of the former Restriction of Special Taxation Act provides that the tax amount equivalent to 100/100 of transfer income tax shall be reduced or exempted on any income accruing from the transfer of newly-built house by a resident within five years from the date of its acquisition, and the proviso provides that the same shall not apply to the cases where the newly-built house is a declass house which is excluded from the object of non-taxation of transfer income tax

Meanwhile, Article 89 subparag. 3 of the former Income Tax Act (amended by Act No. 6781, Dec. 18, 2002; hereinafter the same) provides that one house for one household (excluding high-class houses whose total floor area, value, facilities, etc. exceed the standard prescribed by the Presidential Decree) as prescribed by the Presidential Decree and a certain land appurtenant thereto shall not be subject to capital gains tax. The former Enforcement Decree of the Income Tax Act, upon delegation, provides for the concept of one house for one household under Article 154(1) of the Act, and Article 155(15) of the former Enforcement Decree of the Income Tax Act provides that, in applying Article 155(15) of the same Act and Article 154(1) of the same Act, where a multi-family house is not sold to one person for each household, it shall be deemed as a single house and it shall be included in the scope of a high-class house under Article 89 subparag. 3 of the former Income Tax Act, in other words, a high-class house under Article 89 subparag. 165 million won or more than its actual market value.

In full view of these relevant provisions, where a multi-family house is newly built and transferred to one person as a unit of sale and purchase without selling it by each household, whether the house constitutes a high-class house under Article 89 subparag. 3 of the former Income Tax Act shall be determined by deeming it as a single house. Therefore, if the standard market price of such newly-built house is at least 40 million won and the total floor area of the house is at least 264m2 and exceeds 60 million won at the time of transfer of the house and its appurtenant land, the house constitutes a high-class house under Article 89 subparag. 3 of the former Income Tax Act and is excluded from capital gains tax reduction or exemption under the proviso to Article 99-3(1) of the former Restriction of Special Taxation Act (see Supreme Court Decision 2010Du6878, Oct. 2

2) Determination

According to the above facts, the Plaintiff newly constructed the instant multi-family house and transferred it to one person for sale without selling it by household. The standard market price is at least 40 million won, and the total floor area of the house is at least 264 square meters and the total amount of the actual transaction price at the time of transfer of the house and its appurtenant land exceeds 600 million won. Thus, the instant multi-family house constitutes a high-class house under Article 89 subparagraph 3 of the former Income Tax Act and is excluded from capital gains tax reduction or exemption pursuant to the proviso of Article 99-3 (1) of the former Restriction

Therefore, the instant disposition that excluded the application of the main provision of Article 99-3 (1) of the former Restriction of Special Taxation Act to the transfer of the instant multi-family house is lawful.

3. Conclusion

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