Whether special taxation is applied to a partner's house acquired without approval for use within the newly-built house acquisition period

A newly-built house acquired by the Plaintiff, who is a member of a housing association, by selling it in lots, shall be determined on the date of approval for use.

Reduction or exemption of transfer income tax for the acquisitor of Newly-built houses under Article 99-3 of the Restriction of Special Taxation Act

1. The plaintiff's claim is dismissed.

2. Litigation costs shall be borne by the plaintiff.

Cheong-gu Office

The defendant's refusal to request the correction of capital gains tax of KRW 67,45,260, which reverts to the plaintiff on July 21, 2005, shall be revoked.

1. Details of the disposition;

A. On July 28, 2001, the Plaintiff entered into a contract with ○○○○ Reconstruction Association (hereinafter referred to as the “instant housing association”) to purchase a unit of the newly-built house as a member of the association, under which ○○○○○○ Housing Association (hereinafter referred to as the “instant housing association”) would sell a unit of the unit of the unit of the association 00 ○○○○○○○○○○○○ 00 00 00 00 200 200 200 200 200 200 200 200 2. 200 hereinafter referred to as “instant newly-built house”). After obtaining approval

B. However, on December 30, 2003, the Plaintiff transferred ○○○○○-dong 000,000 000 dong (hereinafter “instant transferred house”) and voluntarily paid KRW 67,455,260 as transfer income tax on February 16, 2004.

C. However, on June 2, 2005, the Plaintiff applied Article 99-3(1), (1), (1), and (2) of the Restriction of Special Taxation Act (amended by Act No. 6762 of Dec. 11, 2002; hereinafter “the Restriction of Special Taxation Act”) to the Defendant for refund of KRW 67,45,260 for the above transfer income tax paid for the reason that the transfer house of this case should be subject to Article 89(1)3 of the Income Tax Act, and the newly-built house of this case is excluded from the resident’s house at the time of determining non-taxation of one house for one household. Thus, the Plaintiff filed a claim for correction on the ground that the transfer house of this case should be subject to non-taxation provisions for one house for one household under Article 89(1)

D. Accordingly, the defendant constitutes a newly-built house built by himself under Article 99-3 (1) 2 of the Restriction of Special Taxation Act (amended by Act No. 7003 of Dec. 30, 2003), and thus, the defendant may be granted a special taxation for transfer income tax in a case where he undergoes the approval for use or inspection for use of the newly-built house during the newly-built house acquisition period (amended by May 23, 2001 to June 30, 2003). However, in the case of the newly-built house in this case, he obtained the approval for use on Oct. 24, 2003 after the newly-built house acquisition period, and thus, he rejected the plaintiff's above request on July 21, 2005.

E. Meanwhile, the instant housing association and the ○○○○○○○○○, a contractor, supplied the remaining households to its members and sold them to the general public other than its members. On November 29, 2001, the new house acquisition period, the general buyers entered into a sales contract with the instant housing association, etc. for the apartment units sold in lots and paid the down payment.

(In fact that there is no dispute, Gap 1 through 7, Eul 1, and the purport of the whole pleadings.

2. Whether the instant disposition is lawful

A. The assertion

(1) The Plaintiff asserts that even though the newly-built house in this case was approved for use after the expiration of the newly-built house acquisition period (from May 23, 2001 to June 30, 2003) under Article 99-3 (1) 2 of the Restriction of Special Taxation Act, so long as the housing association in this case concluded a sales contract for the remaining house remaining after supplying it to non-members on November 29, 2001, and received the down payment, the newly-built house in this case shall be deemed a house corresponding to the reduction under Article 99-3 (1) 1 of the Restriction of Special Taxation Act, Article 99-3 (3) 2 of the Enforcement Decree of the Restriction of Special Taxation Act, and the newly-built house in this case is not subject to reduction or exemption under Article 99-3 (1) 2 of the Restriction of Special Taxation Act, so long as the housing association in this case is not subject to exemption under Article 89-3 (1) 1 of the Income Tax Act, it shall be excluded from the transfer of another house.

(2) On this basis, the Defendant constitutes a newly-built house built by himself under Article 99-3(1)2 of the Restriction of Special Taxation Act, and thus, subject to a special taxation for transfer income tax to obtain approval for use or inspection for use (including approval for temporary use) within the acquisition period of the newly-built house (from May 23, 2001 to June 30, 203). The instant newly-built house is not subject to a special taxation for transfer income tax after being approved for use on October 24, 2003, the newly-built house after its acquisition date, and the instant newly-built house is not subject to a special taxation for transfer income tax under the main sentence of Article 99-3(1) of the Restriction of Special Taxation Act and Article 99-3(1) of the Enforcement Decree of the Restriction of Special Taxation Act, which is a special provision for transfer income tax on the acquisitor of the newly-built house under Article 99-3(

B. Relevant statutes

Restriction of Special Taxation Act (amended by Act No. 7003 of Dec. 30, 2003)

Article 99-3 (Abatement or Exemption of Transfer Income Tax for Purchasers of Newly-Built Houses)

(1) With respect to the income accruing from the transfer of a newly-built house (including land not exceeding twice the total floor area of the relevant building attached to the relevant house; hereafter the same shall apply in this Article) falling under any of the following subparagraphs located in an area other than that determined by the President, in which a resident (excluding a housing construction business operator) has increased or is likely to increase rapidly in real estate prices in consideration of the inflation rate of the national consumer price and the inflation rate of national house trade prices, within five years from the date of its acquisition, the tax amount equivalent to 100/100 of transfer income tax shall be reduced or exempted, and where the relevant newly-built house is transferred after 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 taxation of transfer income

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

A house acquired by a person who first concludes a sales contract and pays a down payment with a housing constructor during the period from May 23, 2001 to June 30, 2003 (hereafter in this Article, referred to as the “new house acquisition period”), (including any house prescribed by the Presidential Decree, which is 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): Provided, That a house that has been occupied by another person as of the date of

2. A newly-built house (including a house acquired by a housing association under the Housing Act or a cooperative for maintenance and improvement projects as prescribed by the Presidential Decree through a cooperative for maintenance and improvement projects under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents) constructed by it:

(2) In applying subparagraph 3 of Article 89 of the Income Tax Act, a newly-built house subjected to paragraph (1) shall not be considered a house owned by the relevant resident.

(3) Any person who intends to be subjected to paragraph (1) shall apply for tax abatement or exemption as prescribed by the Presidential Decree.

(4) The calculation of transfer income amount accruing for five years from the date of acquiring a newly-built house under paragraph (1) and other necessary matters shall be prescribed by Presidential Decree

Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 18207 of Dec. 30, 2003)

Article 99-3 (Abatement or Exemption of Transfer Income Tax for Purchasers of Newly-Built Houses)

(3) The term “houses prescribed by the Presidential Decree” in Article 99-3 (1) 1 of the Act means the houses falling under any of the following subparagraphs:

1. A house which is remaining after a housing association under the Housing Act or a consolidation and improvement project association under the Act on the Legislation of Urban and Residential Environment (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”), and which is acquired by a person who concludes a sales and purchase contract directly with a housing association, etc. and pays the down payment within the new house acquisition period under Article 9-3 (1) 1 of the Act

2. A house which is acquired by a member of a housing association, etc. and for which an approval for use or inspection for use has been obtained after the newly-built house acquisition period: Provided, That it shall be limited to the case where a housing association, etc. has received a down payment by directly concluding a sales contract for the remaining house (based on the first sales contract

C. Issues and determination of the instant case

(1) The key issue of the instant case is whether the instant housing association should exclude the instant newly-built house from the relevant resident’s house for one household under Article 89(1)3 of the Restriction of Special Taxation Act in applying the non-taxation provisions on the transfer income tax on one house for one household under Article 89(1)3 of the Restriction of Special Taxation Act, and Article 99-3(1)1 of the Restriction of Special Taxation Act for the newly-built house of this case, which was acquired by the instant housing association as its member’s membership, as in the case where the instant housing association concludes a general sales contract on the remaining house except for the portion of sale in lots between the non-member and the non-member within the newly-built house acquisition period under the Restriction of Special Taxation Act, and Article 99-3(1)1 of the Restriction of Special Taxation Act applies to the instant newly-built house located in Seoul area, which is subject to the application of Article 99-3(1)1 of the Restriction of Special Taxation Act.

(2) In light of the principle of no taxation without the law, the interpretation of tax laws and regulations is to be interpreted in accordance with the law, barring any special circumstance, barring any special circumstance, and it is not permissible to expand or analogically interpret it without any reasonable reason. In particular, it is also consistent with the principle of fair taxation to strictly interpret the provisions that clearly consider it as a provision of preferential treatment among the provisions of non-taxation or reduction or exemption (see, e.g., Supreme Court Decision 2003Du7392, May 28, 2004).

(3) Since Article 99-3 (1) 2 of the Restriction of Special Taxation Act provides for the benefit of purchasing a newly-built house (i.e., a newly-built house built by its member) through a housing association under Article 99-3 (1) 3 of the Enforcement Decree of the Restriction of Special Taxation Act, it shall not be a mold for the benefit of using the house or for usage inspection to the members of the housing association (i.e., a newly-built house acquired by its member) within the scope of the newly-built house under Article 9-3 (1) 1 of the Restriction of Special Taxation Act (including a newly-built house under Article 99-3 (1) 9 of the Restriction of Special Taxation Act, which is acquired by its member of the housing association within the scope of its initial purpose of acquiring the newly-built house under Article 9 of the Restriction of Special Taxation Act, and only the remaining scope of the newly-built house under Article 99-3 (2) of the Enforcement Decree of the Restriction of Special Taxation Act, for the benefit of acquiring the newly-built house by its member of the Act).

(4) Therefore, the newly-built house in this case that the Plaintiff, a member of the instant housing association, acquired by the Plaintiff’s housing association’s share in lots, shall be determined on the date of approval for use of the house under Article 99-3(1)2 of the Restriction of Special Taxation Act, and it does not constitute a house subject to Article 99-3(1)1 of the Restriction of Special Taxation Act and Article 99-3(3)2 of the Enforcement Decree of the Restriction of Special Taxation Act applicable to the case where the Plaintiff or non-members acquire a newly-built house in lots from the housing association’s member’s share in lots. Accordingly, the instant disposition in this case by the Defendant on the same premise is lawful without any need to determine on the said premise.

3. Conclusion

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

Judges Sung-○

* Note *

1) Article 99-3(1) of the Restriction of Special Taxation Act amended by Act No. 6762 on December 11, 2002 newly established a provision that excludes a newly-built house located in the "area prescribed by the Presidential Decree (Seoul, a branch, a day-to-day, a day-day, a mountain village, a mountain village, and a middle-dong city)" from the special taxation exception for the transfer income tax on the purchaser of a newly-built house.

* Note *

2) If the Restriction of Special Taxation Act applies after the amendment by Act No. 6762 of December 11, 2002, the newly-built house of this case is located in the Seoul metropolitan area, and there is no place to apply Article 99-3(1) of the Restriction of Special Taxation Act.