Supreme Court rules housing subscription rights count from contract date

The Supreme Court ruled that apartment allocation rights should be counted as acquired from the date of the sales contract rather than the lottery selection date when calculating capital gains tax surcharges.

Under the former Income Tax Act, a household is subject to higher tax rates if it holds three or more residential units, including subscription rights, in an adjustment target zone. The court stated this heavy taxation aims to suppress speculative ownership of multiple properties and stabilize housing prices.

The court determined that a subscription right constitutes a status obtained through a supply contract under the Housing Act. Winning a lottery merely grants the eligibility to sign a contract, but does not confirm acquisition of the right itself, as winners may fail to finalize the deal within the prescribed period or voluntarily withdraw before signing.

Local tax regulations already treat the contract date as the acquisition point for determining acquisition tax surcharges. Since both taxes rely on the number of homes held by a household to decide surcharge applicability, the court said this interpretation should extend to income tax cases lacking explicit statutory definitions.

Judges dismissed the reliance on internal National Tax Service guidelines that previously used the lottery date for certain transfers, stating such administrative rules do not bind courts or taxpayers. The ruling was delivered March 12 in a case concerning the cancellation of a capital gains tax adjustment refusal.