Daughter-in-Law Cared for Father-in-Law After Husband's Death, But Denied Tax Deduction: Why?

The Constitutional Court has ruled that the former Inheritance and Gift Tax Act, which excludes daughters-in-law or sons-in-law who lived with their deceased spouse's parents after their spouse's death from receiving the "inherited co-residence housing tax deduction," is constitutional.

According to the legal community, the Constitutional Court issued a unanimous constitutional ruling on September 17 in a constitutional complaint filed by a person identified as A regarding a specific clause of Article 23-2, Paragraph 1, Item 1 of the former Inheritance and Gift Tax Act.

A had lived together with her husband and her father-in-law at the father-in-law's house starting in 1998.

Even after her husband passed away in 2014, she continued to live in the same house. When her father-in-law died in 2017, she inherited the house through an agreement on the division of inherited property.

A filed and paid her inheritance tax by applying the inherited co-residence housing deduction, but the tax authorities notified her of an increased inheritance tax assessment, stating that she did not qualify for the tax deduction.

Article 23-2, Paragraph 1, Item 1 of the former Inheritance and Gift Tax Act allowed a certain amount to be deducted from the taxable value of an inheritance "if an heir who has lived together in the same house with the decedent for 10 years or more inherits that house."

This meant that daughters-in-law or sons-in-law who lived with their spouse's parents after their spouse's death, like A, were excluded from the tax deduction eligibility.

In response, A filed a lawsuit seeking the cancellation of the tax imposition. During the appellate trial, she applied for a constitutional review motion arguing that the relevant tax law provision was unconstitutional, but it was dismissed. She then directly filed a constitutional complaint in December 2021.

Following approximately five years of deliberation, the Constitutional Court ruled it constitutional, stating that "it does not violate the principle of tax equality."

The Constitutional Court explained, "The inherited co-residence housing tax deduction is a system that grants tax benefits to heirs who meet certain conditions in order to protect the continuity and stability of the heirs' residential life," adding, "It cannot be considered that its scope must necessarily coincide with the general scope of heirs stipulated in the Civil Act or the Inheritance and Gift Tax Act."

(Photo: Yonhap News)
※ Please note: This article was translated by AI and may contain errors.