Cho Jae-2013-Seoul Government-1355 (27 May 2013)

A newly-built house under the Building Act shall not be considered to have acquired a house separate from the old house.

Since the acquisition of a newly-built house under the Building Act cannot be deemed to have acquired a house separate from the old house, the plaintiff's assertion that only the acquisition of a newly-built house became a "temporary two house owner" is without merit.

Article 89 of the Income Tax Act

2013Gudan17414 Revocation of Disposition of Imposing capital gains tax

EO

OO Head of the tax office

5, 2014

2014.03.05

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposition of capital gains tax of KRW 133,920,510 against the Plaintiff on September 10, 2012 is revoked.

1. Details of the disposition;

A. On January 17, 1998, the Plaintiff’s wife received the donation of OOOOO-dong 47 OO apartment B 303 (hereinafter “former house”). The reconstruction under the Building Act was conducted for the old house, and on July 22, 2008, the above OOO-dong 47 O apartment 401 Dong 1404 (hereinafter “newly-built house”).

B. On the other hand, the plaintiff on January 15, 2004, 61 OOOOB 1204 (hereinafter "OOOOB ")

After acquiring a building house (hereinafter referred to as "house"), on March 23, 2009, it transferred it, and reported that there is no transfer income tax to be paid on the premise that it falls under the non-taxation requirement for one household.

C. On September 1, 2012, the Defendant issued a correction and notification of KRW 133,920,510 of the transfer income tax for the year 2009 on the premise that the Plaintiff did not meet the requirements for non-taxation on the transfer of the instant house (hereinafter “instant disposition”).

D. The Plaintiff had completed the pre-trial procedure.

[Ground of recognition] Facts without dispute, Gap 1, 2, Eul 1, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

For the following reasons, the instant disposition should be revoked as it is unlawful.

(1) Since the Plaintiff transferred the instant house within two years from the date of acquisition of the newly-built house, the Plaintiff is deemed to be the former Income Tax Act (amended by Act No. 9897 of Dec. 31, 2009; hereinafter referred to as the “Act”).

C) Pursuant to Article 89(1)3 of the Act, Articles 155(1) and 154(1) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 22034, Feb. 18, 2010; hereinafter referred to as the “Enforcement Decree”), a “temporary two house owner” is exempt from capital gains tax.

(2) The Plaintiff acquired the instant housing to reside during the implementation period of the housing reconstruction project, and thus, the instant housing constitutes “alternative housing” under the proviso of Article 89(2) of the Act and Article 156-2(2) and (5) of the Enforcement Decree thereof, and thus, is exempt from capital gains tax.

(b) Related statutes;

Attached Form is as shown in the attached Form.

C. Determination

(1) The purport of Article 155(1) of the Enforcement Decree is that where one household possessing one house in Korea temporarily becomes two houses by acquiring another house before transferring the said house, the transfer income tax shall not be imposed on the transfer of one house for one household if it transfers the previous house within one year from the date of acquiring another house. Even if a reconstruction association’s member provided the relevant association with an existing house or site and provided it in accordance with its business plan, it is not deemed that a new house has been acquired separately from the existing house, and thus, the household possessing one house in Korea cannot be deemed to constitute “where one household temporarily becomes two houses by acquiring another house before transferring the said house” (see, e.g., Supreme Court Decision 2007Du8973, Sept. 25, 2008).

Therefore, since the acquisition of newly-built house cannot be deemed to have acquired a house separate from the old house, this part of the Plaintiff’s assertion that only the acquisition of a newly-built house was a “temporary two house owner” is without merit.

(2) Under the principle of no taxation without law, or under the principle of no taxation without law, the interpretation of tax laws and regulations shall be interpreted in accordance with the law, barring special circumstances, and it shall not be permitted to expand or analogically interpret without reasonable grounds (see, e.g., Supreme Court Decision 2002Du6781, May 27, 2004).

Article 89 (2) (main sentence) of the Act provides that capital gains tax shall be imposed in principle on "where one household owns a house for residence during the implementation period of a reconstruction project under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (limited to the case where it is acquired as a member of a maintenance and improvement project association implementing a housing reconstruction project or a housing redevelopment project under the same Act, including the land appurtenant thereto; hereinafter the same shall apply) and transfers the house." Article 89 (2) (main sentence) of the Act provides that capital gains tax shall not be imposed on "where it acquires a house for residence during the implementation period of a reconstruction project under the Building Act or a housing redevelopment project under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents." Thus, in the case of this case, there is no room to apply the proviso to Article 89 (2) of the Act and Article 156-2 (2) and (5) of the Enforcement Decree of the Act, and there is no reasonable ground to interpret the proviso to Article 56-2 (2) of the Act or the proviso to the Act.

(3) The instant disposition is lawful.

3. Conclusion

The plaintiff's claim is dismissed on the ground that it is without merit.