The period before the date of change is excluded from special long-term holding deduction in case a multi-family person transfers a part of a house to neighborhood living facilities.

In case of onerous donation after the purpose of use of real estate corresponding to two or more houses for one household has been changed into neighborhood living facilities, the retention period which is the basis for calculating the special deduction amount for long-term possession is limited to the period from the date of use change of neighborhood living facilities to the date of sharing

2012 old-gu 26961 Disposition rejecting a request for correction

United Nations AAA

Samsung Head of Samsung Tax Office

March 27, 2013

April 24, 2013

1. The plaintiff's claim is dismissed.

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

The Defendant’s rejection of correction of the capital gains tax in the year 2011 against the Plaintiff on March 20, 2012 shall be revoked.

1. Grounds for the disposition

A. On January 15, 1983, the Plaintiff acquired a building for housing use on the ground in Gangnam-gu Seoul OO00 and 534.4 square meters on December 29, 1986, and changed the use of the above building to a neighborhood living facility on August 2005, and donated the above land and buildings (hereinafter collectively referred to as the "real estate in this case") on the charge to children and BOO on October 4, 201. At that time, COOO, a member of the Plaintiff, had one apartment house in Gangnam-gu, Seoul, and COOO owned one house in farming and fishing village located in Chungcheongnam-gun, Seoul, and the Plaintiff applied the special deduction for long-term possession of 10% of the total amount of the gift in this case to the Defendant on December 31, 201, and the amount calculated by applying the special deduction for long-term possession of 10% of the total amount of the gift in this case to the Defendant.

C. On January 26, 2012, and regarding the reporting and payment of capital gains tax to the Defendant, the Plaintiff has a long-term possession privilege.

By changing and applying the separate deduction rate to 30%, a request for correction was made to reduce the transfer income tax to 000 won, and the defendant rejected it on March 20, 2012 (hereinafter "the disposition of this case").

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

[Reasons for Recognition] The non-sured facts, Gap, Eul through 4, six, and the whole purport of the pleading

2. Whether the instant disposition is lawful

A. The parties' assertion

(1) The Plaintiff: (a) the Plaintiff owned the instant real estate for at least ten years from December 29, 1986 (the date of acquisition of the part of the building among the instant real estate) to October 4, 201 (the date of donation with a charge); (b) the Defendant determined the special long-term holding deduction amount for calculating capital gains tax on the donation with a charge; and (c) Article 95(2) [Attachment 1] of the former Income Tax Act (amended by Act No. 11146, Jan. 1, 2012; hereinafter “ Income Tax Act”) Article 95(2) [Attachment 1] of the former Income Tax Act (amended by Act No. 11146, Jan. 1, 2012; hereinafter “the Income Tax Act”). Accordingly, the instant disposition taken on a different premise should be instituted on the ground that it was unlawful

(2) The Defendant: The instant real estate prior to the change of use constitutes two or more houses for one household and was not subject to the special long-term holding deduction (Article 95(2), Article 104(1)4, and Article 6 of the Income Tax Act), and the period of retention, which is the basis for calculating the special long-term holding deduction amount, should be the period during which the instant real estate was used as a neighborhood living facility, and the period of retention, which is the basis for calculating the special long-term holding deduction amount, should be October 4, 201, which is the date of donation due to the change of use, from August 2005, the date of using the instant real estate as a neighborhood living facility. Therefore, it is reasonable to make the Plaintiff’s first return and payment calculated by applying 181/10 of the deduction rate corresponding to the “from six years to less than seven years” in the main sentence of Article 95(2) of the Income Tax Act [Attachment 1]

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

"The special long-term holding deduction system is a system to induce sound investment behavior or behavior by granting long-term holding benefits, and the Income Tax Act excludes special long-term holding deduction for multi-family housing owners, and if the owner of multi-family housing has transferred a part of the house to neighborhood living facilities before the date of change of use, it would be subject to higher deduction rate as long as the house has been held for a long-term period before the date of change of use, and in this case, it goes against the legislative intent of the Income Tax Act excluding special long-term holding deduction for multi-family housing owners, and in this case, it can be deemed that there was a circumstance to allow and read long-term holding for the real estate only from the time of change of use to neighborhood living facilities, and according to Article 95 (1) of the Income Tax Act, it is determined at the amount after deducting necessary expenses from the transfer value, and it is reasonable to interpret the special long-term holding deduction for the real estate from the date of acquisition of the real estate in this case to the date of change of use.

Then, the plaintiff's claim of this case is dismissed for reasons.