Seocho 2010west 1329 ( October 28, 2010)

A newly-built house owned by a reconstruction association at the time of transferring a house, and is not one house for one household.

When transferring a house, a member of a reconstruction association owns a newly-built house as a member of the reconstruction association, and does not meet the requirements for non-taxation of one house for one household, and excluding the special long-term holding deduction for two housing owners of one household cannot be deemed as unconstitutional, which infringes

2010Gudan23180 Revocation of Disposition of Imposing capital gains tax

XX

O Head of tax office

April 27, 2011

May 25, 2011

1. The plaintiff's claim is dismissed.

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

The defendant shall revoke the disposition of imposition of capital gains tax of KRW 251,972,975 to the plaintiff on January 8, 2010.

1. Details of the disposition;

A. On April 27, 198, the Plaintiff acquired the x apartment 000 Dong-dong Seoul XX apartment 000 (hereinafter referred to as the “instant housing”) and on April 7, 2001, the Plaintiff acquired the 00 O apartment complex 00 O-dong O-dong O-dong 00 (hereinafter referred to as the “re-building house”).

B. After that, when a reconstruction project is carried out for a reconstruction house, the plaintiff was selected as an occupant of 00 AA apartment 00 000 dong, Seoul OOO-dong, OO-dong, 000 dong, which is scheduled to be constructed for reconstruction by investing the reconstruction house in the reconstruction association, and the newly-built house was completed on August 24, 2007 and completed the registration of preservation of ownership on the newly-built house on October 19, 207 after obtaining approval for use on August 24, 2007.

C. The Plaintiff transferred the instant house on May 19, 2008, but did not file a report on the income tax on the double income tax.

D. When the Plaintiff transfers the instant house, the Defendant deemed that the Plaintiff owned a newly-built house and did not meet the requirements for non-taxation for one household, and rendered the instant disposition imposing capital gains tax of KRW 251,972,975 on the Plaintiff on January 8, 2010.

[Ground of recognition] Facts without dispute, entry of Eul's evidence 1 to 5 (including additional number), the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

(1) Article 89-15(2) of the General Rules of the Income Tax Act provides that “When the owner of one house for one household has damaged old house that he purchased to newly construct another house and owns it in the state of a site, it shall be deemed as one house for one household if the former house falls under the provisions of Article 154(1) of the Decree.” Paragraph (3) provides that “where a new house is built in the case of paragraph (2), it shall be deemed as one house for one household only if the previous house is transferred within one year from the date of completion of the construction of the house.” Since the Plaintiff’s acquisition of the reconstruction house is for the purpose of moving out old house, it shall be deemed as two houses temporary houses for acquiring the substitute house, it shall be deemed as one house for one household under the General Rules of the Income Tax Act, and the instant disposition otherwise reported is unlawful.

(2) The method of calculating the current capital gains does not consider the increase of natural value due to the growth of the national economy, and thus infringes on the fundamental rights of the people, such as the right to property and the right to happiness. In particular, since the two housing owners per household did not recognize the special long-term holding deduction, and thus the property right is extremely infringed on, the instant disposition based thereon is unlawful.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

(1) As to the assertion that the case constitutes one house for one household

Article 89 of the former Income Tax Act (amended by Act No. 9897 of Dec. 31, 2009) and Article 155 (1) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 21138 of Nov. 28, 2008; hereinafter referred to as the "Enforcement Decree") provide to the purport that, where one household having one house in Korea temporarily becomes two houses by acquiring another house before transferring the said house, it shall be deemed as one house for one household, and thus, if it transfers the previous house within one year from the date of acquiring another house, it shall be deemed as one house for one household, and thus, it shall not be subject to capital gains tax.

However, even if a member of a reconstruction association provided an existing house or building site to the association and acquired a newly-built house in accordance with the project plan, it is not considered to acquire a house separate from the existing house, and therefore, it cannot be viewed as a case where one household who owns one house in Korea temporarily becomes two houses by acquiring another house before transferring the house (see, e.g., Supreme Court Decision 2007Du8973, Sept. 25, 2008). Thus, even in the case of the plaintiff, the acquisition of a newly-built house does not constitute a case where the plaintiff temporarily becomes two houses under Article 155 (1) of the Enforcement Decree, and there is no legal basis to regard that the transfer of the plaintiff's house in this case constitutes a transfer of one house for one household.

In addition, even if the general rules of the Income Tax Act provides that the Plaintiff shall be deemed as one house for one household in the case of the same case as the Plaintiff, the general rules of the Income Tax Act only regulates the inside of administrative agencies, not the laws that have effect between the State and the public, and thus, the court or the general individual has no legal binding power, and thus, the transfer of the Plaintiff’s house of this case cannot be deemed as one house for one household based on the general

(2) On the assertion that the method of calculating capital gains is unconstitutional

If a special long-term holding deduction is excluded as alleged by the Plaintiff, if the holding period is for a long-term period and a certain price increase occurs in the long-term, there is no substantial capital gains, but the transfer income tax may be borne due to the occurrence of the nominal capital gains. However, since the economic effect of price increase is the same to all income earners, the increase in real estate price due to price increase cannot be recorded only as a result of the increase in the taxpayer's taxable capacity, as well as other income, it cannot be viewed as unconstitutional because it is a transfer income tax on nominal income. The transfer income tax is imposed only on part of the tax base amount due to the application of a single tax rate of 50% called 50% as the special long-term holding deduction is excluded. Considering the purpose of legislation to restrain the ownership of housing by two or more houses or more per household, it cannot be deemed unconstitutional that it infringes on the Plaintiff's fundamental rights, such as property rights (see Constitutional Court Decision 200Hun-Ba68, Feb. 6, 2010).

(3) Therefore, the instant disposition is lawful, and all of the Plaintiff’s arguments are without merit.

3. Conclusion

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