Scheduled Demolition Houses in Redevelopment Areas, Court Rules "Not Subject to Comprehensive Real Estate Tax"

The court ruled that houses demolished or scheduled for demolition in redevelopment maintenance zones are not subject to comprehensive real estate tax.

The Administrative Court of Seoul, Administrative Division 5 (Presiding Judge Kim Sun-yeol) partially ruled in favor of plaintiff A Trust Company in a lawsuit filed against the Seoul Samsung Tax Office seeking cancellation of the comprehensive real estate tax imposition. The court ordered the cancellation of approximately 720 million KRW of the imposed tax.

The tax authorities imposed about 620 million KRW in comprehensive real estate tax and about 120 million KRW in special rural tax on Company A in 2020. They determined and notified a tax amount of approximately 746 million KRW by summing the publicly announced housing prices of houses held by Company A as of the tax base date, June 1, 2020, in a 49,076㎡ area in Yongin-si, Gyeonggi Province, where a housing redevelopment project was underway.

Company A filed objections and appeals with the tax authorities and the Tax Tribunal the following year, but after all were dismissed, it filed an administrative lawsuit.

In the trial, Company A argued, "Except for some, the houses had already been disconnected from electricity and water supply at the time of the comprehensive real estate tax imposition and had no property value, and all were demolished by the end of 2020," adding, "They are buildings or houses subject to demolition orders or demolition compensation contracts under the Local Tax Act and thus are exempt from property tax and comprehensive real estate tax."

The court ruled in favor of Company A. The court stated, "Each house in this case was planned to be demolished within the relevant year of the property tax base date, and demolition compensation contracts were concluded, so it is reasonable to consider them as houses subject to demolition compensation contracts, and therefore property tax on the houses cannot be imposed, nor are they subject to comprehensive real estate tax."

The court further stated, "The comprehensive real estate tax and special rural tax should be calculated only on the parts excluding the houses," and "The portion exceeding about 13 million KRW in comprehensive real estate tax and about 2.6 million KRW in special rural tax is canceled."

This content was produced with the assistance of AI translation services.