Whether it constitutes a special taxation for capital gains tax on a newly-built house acquisitor

As a member, the apartment was transferred within five years after the acquisition of the apartment, and the approval for temporary use was obtained after the expiration of the new house acquisition period, but the remaining apartment is sold in general during the period of acquisition of the newly-built house and the down payment was received,

Article 99-3 of the Restriction of Special Taxation Act / [Special Cases of Taxation of Transfer Income Tax on Newly-Built Houses Purchasers]

[Seoul High Court Decision 2006Nu28590, May 29, 2007]

The defendant's appeal is dismissed.

1. Purport of claim

The defendant's rejection of an application for correction regarding KRW 123,874,913 of the transfer income tax belonging to the year 2004 against the plaintiff on December 16, 2004 is revoked.

2. Purport of appeal

The judgment of the first instance is revoked. The plaintiff's claim is dismissed.

This court's reasoning is the same as the judgment of the court of first instance, and thus, it is citing it in accordance with the main text of Article 8 (2) of the Administrative Litigation Act Article 420 of the Civil Procedure Act.

Therefore, the decision of the first instance court as to this conclusion is justifiable, and the defendant's appeal is dismissed as it is without merit. It is so decided as per Disposition.

[Seoul Administrative Court 2006Gudan630, Nov. 06]

1. The defendant's disposition rejecting an application for rectification regarding KRW 123,874,913 of the transfer income tax belonging to the year 2004 against the plaintiff on December 16, 2004 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. The Plaintiff owned ○○○○○ apartment unit ○○○○-dong, ○○○○○ apartment unit ○○○○, ○○○○-dong unit ○○○ apartment unit ○○, and when a reconstruction project was implemented, the Plaintiff invested in the instant apartment building reconstruction association (hereinafter “the instant apartment building association”). On November 24, 200, the instant association entered into a new apartment building construction agreement with the approval of the project plan under Article 33(1) of the former Housing Construction Promotion Act (wholly amended by Act No. 6916, May 29, 200) on February 21, 2001, and selected ○○○ (hereinafter “the instant reconstruction apartment”) that planned to construct the Plaintiff on November 20, 201 as an occupant of the instant apartment building (hereinafter “the instant reconstruction apartment”), and supplied the instant apartment building to the members of the instant general apartment unit ○○-dong unit ○○ (hereinafter “the instant reconstruction apartment”) from November 27, 2002 to January 13, 2002.

B. On March 3, 2004, the Plaintiff transferred the apartment of this case to 810,000,000 won, followed by the preliminary return of the capital gains tax base on May 21, 2004, and paid KRW 123,874,913 to the Plaintiff on May 25, 2004.

C. Although the Plaintiff obtained a provisional use approval on October 31, 2003 after the expiration of the new house acquisition period from May 23, 2001 to June 30, 2003 under Article 99-3 (1) 1 of the former Restriction of Special Taxation Act (amended by Act No. 6762 of Dec. 11, 2002; hereinafter the same) the key apartment of this case, which the Plaintiff acquired as a member of the instant association, was sold in general to persons other than the association members and received a down payment from November 27, 2002, from November 29, 2002, the Plaintiff filed a claim for correction of the remaining apartment after the completion of the new house acquisition period from May 23, 2001 to June 30, 2003 to the new house acquisition period from June 31, 2003, the Plaintiff filed a claim for correction of the transfer income tax for the acquisition of new house under Article 99-3 (1) of the former Restriction of Special Taxation Act.

D. On October 31, 2003, the approval for provisional use of the apartment in the issue of this case was passed for the new acquisition period, and thus, the defendant rejected the plaintiff's request for correction on December 16, 2004 on the ground that the transfer income of the apartment in this case does not fall under the special taxation for transfer income tax under Article 99-3 (1) of the former Restriction of Special Taxation Act (hereinafter "disposition in this case").

[Ground of recognition] Facts without any dispute, and described in Gap 1 or 6 evidence

2. Whether the disposition is lawful;

A. The plaintiff's assertion

Article 99-3 (1) 1 of the former Restriction of Special Taxation Act and Article 99-3 (3) 2 of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 18044, Jun. 30, 2003; hereinafter the same) provide that the transfer income tax shall be fully reduced on income accruing from the transfer of a house within five years from the date of acquisition by a housing association under the Housing Construction Promotion Act or an redevelopment cooperative under the Urban Redevelopment Act (hereinafter referred to as the “housing Association, etc.”). Even if a housing association, etc. acquires a house from a housing association, etc. after the expiration of the new acquisition period (including approval for temporary use), the transfer of the house is unlawful even if the housing association, etc. has directly concluded a sales contract for the remaining house (hereinafter referred to as the “ residual house”) with a person other than the association members and received the down payment, the transfer of the apartment house at issue in this case is in violation of the special taxation of transfer income tax under Article 9-3 (1) 1 of the former Restriction of Special Taxation Act.

(b) Related statutes;

Attachment 'Related Acts and subordinate statutes' shall be as shown.

C. Determination

Article 99-3 (1) of the Restriction of Special Taxation Act provides that a resident shall reduce or exempt a tax amount equivalent to 100/100 of his transfer income tax on any income accruing from the transfer of a newly-built house falling under any of the following subparagraphs within five years from the date of its acquisition: Provided, That this shall not apply to the case where the newly-built house concerned falls under a high-class house excluded from the object of non-taxation of transfer income tax under subparagraph 3 of Article 89 of the Income Tax Act. Article 99-3 (3) of the Enforcement Decree of the Restriction of Special Taxation Act provides that a newly-built house (including a house prescribed by the Presidential Decree, which is acquired through a housing association, etc.) acquired by entering into a sales contract with a housing association, etc. for the first time during the newly-built house acquisition period under subparagraph 1, and Article 99-3 (3) of the Enforcement Decree of the Restriction of Special Taxation Act provides that a person who has concluded a sales contract with a housing association, etc. and paid the down payment within the newly-built house acquisition period under subparagraph 96 of the Act.

In addition, Article 99-3 (1) of the former Restriction of Special Taxation Act was amended by Act No. 6762 on December 11, 2002, but Article 29 (1) of the Addenda of the amended Act is a transitional measure. In case where a newly-built house for the first time entered into a sales contract with a housing developer and is transferred after the enforcement of this Act, the previous provisions shall apply to the calculation of the income amount subject to abatement or exemption of transfer income tax and transfer income tax, notwithstanding Article 9-3 (1) of the former Enforcement Decree of the Income Tax Act. In this case, the high-class house standard at the time of payment of the down payment shall be applied, and the high-class house standard at the time of the conclusion of the sales contract and the down payment shall be applied from 156 subparagraph 2 of the former Enforcement Decree of the Income Tax Act (amended by Act No. 6781, Dec. 18, 202; hereinafter the same shall apply) which provides for the criteria for non-taxation of transfer income tax pursuant to delegation of the previous apartment house.

However, the Plaintiff acquired the instant apartment as a member of the instant association and transferred it on March 3, 2004 within five years from the date of acquisition, and the instant association obtained approval for temporary use on October 31, 2003 for the instant reconstruction apartment after the expiration of the new house acquisition period, but received a public sale of the remaining 20 households of the reconstruction apartment during the period from November 27, 2002 to November 29, 2002 and received the down payment during the period from November 29, 2002. According to the evidence evidence evidence No. 18, it is recognized that the exclusive use area of the instant apartment is 121.48 square meters, and since there is no counter-proof, the issue of this case, which does not fall under the high-class house excluded from the object of non-taxation of capital gains tax pursuant to Article 99-3 (1) 1 of the former Restriction of Special Taxation Act, Article 9-3 (3) 9 of the former Enforcement Decree of the Restriction of Special Taxation Act, constitutes the transfer Income Tax under Article 9-3 (1).

Ultimately, the instant apartment constitutes a newly-built house built by itself under Article 99-3(1)2 of the former Restriction of Special Taxation Act, on the premise that the instant apartment constitutes a newly-built house under Article 99-3(1)2 of the former Restriction of Special Taxation Act, and thus, the instant disposition that deemed that the transfer income of the instant apartment does not constitute a special taxation for transfer income tax is unlawful.

The Defendant asserted that the instant apartment is located in Seoul, and the actual transaction price at the time of its transfer falls under a high-priced house that is excluded from the subject of non-taxation on capital gains tax, and thus, the instant disposition is lawful. However, the instant apartment is based on the premise that the law applicable to the instant apartment is Article 99-3(1) of the former Restriction of Special Taxation Act, not Article 99-3(1) of the former Restriction of Special Taxation Act, but Article 99-3(1) of the Restriction of Special Taxation Act amended by Act No. 6762 on December 11, 20

3. Conclusion

Thus, the plaintiff's claim of this case is justified.

Related Acts and subordinate statutes

Restriction of Special Taxation

Transfer income tax on the acquisitor of a newly-built house under Article 99-3:

(1) With respect to the income accruing from transfer of a newly-built house (including a land attached to a house, the total floor area of which is less than twice the total floor area of the building concerned; hereafter in this Article, the same shall apply) falling under any of the following subparagraphs by a resident (excluding a housing construction business operator) within five years from the date of its acquisition, the tax amount equivalent to 100/100 of the transfer income tax shall be reduced or exempted, and where the relevant newly-built house is transferred after the lapse of five years from the date of its acquisition, the transfer income accruing for five years from the date of its acquisition shall be subtracted from his income amount subject to the transfer income tax: Provided, That this shall not apply to the case where the relevant newly-built house falls under the expensive house excluded from the object of non-taxation of the transfer income tax

1. In cases of newly-built house acquired from a housing developer:

A newly-built house (including a house acquired through a housing association under the Housing Act or a maintenance and improvement project association under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents, which is prescribed by the Presidential Decree) acquired by a person who first concludes a sales contract and pays a down payment within the period from May 23, 2001 to June 30, 2003 (hereafter in this Article, referred to as the “newly-built house acquisition period”): Provided, That a house that has been occupied as of the date

2. Cases of newly-built house (including a house acquired by a housing association under the Housing Act or a cooperative for maintenance and improvement projects under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents

A newly-built house that has obtained approval or inspection for use (including approval for temporary use) within the newly-built house acquisition period

Addenda to the Restriction of Special Taxation Act (Law No. 6762 on December 11, 2002)

The enforcement date of Article 1 shall enter into force on January 1, 2003 (the proviso omitted).

Article II General Application Cases

(2) The amended provisions of this Act concerning capital gains tax shall apply to the first transfer after the enforcement of this Act.

Article 29 Transitional Measures for Special Taxation of Transfer Income Tax on Purchasers of Newly-built Houses

(1) In case where a newly-built house, which was entered into a first sale contract with a housing constructor pursuant to the previous provisions of Article 9 (1) or 99-3 (1) before this Act enters into force, has been paid a down payment, or has been approved for use or has been used for use (including a provisional use approval) as a newly-built house built by it, is transferred after this Act enters into force, the previous provisions shall apply to the calculation of the income amount subject to the abatement or exemption of transfer income tax and the object of taxation of transfer income tax, notwithstanding the amended provisions of Article 99 (1) or 99-3 (1). In

(2) Where a newly-built house under Article 99-3 (1) 2 commences its construction work for the relevant newly-built house before this Act enters into force, and has obtained the approval for use or inspection for use (including the approval for temporary use) before June 30, 2003, the previous provisions shall, notwithstanding the amended provisions of Article 99-3 (1), be applied.

Article 30 (Transitional Measures for Special Taxation of Value-Added Tax on Gold Metals)

In applying the amended provisions of Article 106-3, the tax invoice which a general taxable person of value-added tax receives after being supplied with gold bullion before this Act enters into force may be deducted as an input tax amount by applying Article 17 of the Value-Added Tax Act mutatis mutandis notwithstanding the amended provisions of paragraph (3) of the same

Enforcement Decree of the Restriction of Special Taxation

Article 99-3 (Special Taxation for Transfer Income Tax on Purchasers of Newly-Built Houses)

(3) For the purpose of Article 99-3 (1) 1 of the Act, the term “house as prescribed by the Presidential Decree” means a house falling under any of the following subparagraphs (amended by the Presidential Decree No. 18044, Jun. 30, 2003):

1. A house remaining after a housing association under the Housing Construction Promotion Act or an redevelopment cooperative under the Urban Redevelopment Act (hereafter in this Article, referred to as the “housing association, etc.”) supplies to its members (hereafter in this Article, referred to as the “ residual house”), which is acquired by a person who concludes a direct sales contract and pays the down payment with a housing association, etc. within the new house acquisition period under Article 9-3 (1) 1 of the Act (hereafter in this Article

2. A house acquired by a member (referring to a member as of the date of authorization of a management and disposal plan under Article 34 of the Urban Redevelopment Act, or the date of approval of a business plan under Article 33 of the Housing Construction Promotion Act; hereafter in this subparagraph, the same shall apply) from a housing association, etc., for which an approval for use or inspection for use is obtained at the expiration of the new house acquisition period: Provided, That it shall be limited to cases where a housing association, etc. has received the down payment by directly concluding a sales contract for the remaining

Income Tax Act

Article 89 No income tax on capital gains (hereinafter referred to as “capital gains tax”) shall be levied on the following incomes (Act No. 6781, Dec. 18, 2002):

(amended)

1. Income accruing from a disposition by an adjudication of bankruptcy;

2. Income accruing from the exchange, separation, or integration of farmland falling under such cases as prescribed by the Presidential Decree;

3. Income accruing from transfer of such one house for one household as prescribed by the Presidential Decree (excluding expensive houses whose prices exceed the standard prescribed by the Presidential Decree) and the appurtenant land within the area calculated by multiplying the area of the land on which the building is built by the ratio as determined by region under the Presidential Decree (hereafter in this Article, referred to as the “land annexed to the house”);

Enforcement Decree of the Income Tax

For the purpose of subparagraph 3 of Article 89 of the Act, the term “high-class houses in excess of the standard prescribed by the Presidential Decree” means the houses falling under one of the following subparagraphs and the land appurtenant thereto (amended by the Presidential Decree No. 17825, Dec. 30, 2002):

2. An apartment house (including a multi-family house, but excluding the case deemed to be a detached house under the provisions of Article 155 (15)) whose exclusive area (including the area of an underground part used for exclusive residence) of the house is not less than 149 square meters and whose actual transaction price at the time of transfer exceeds 600