Constitutional Court Upholds Exclusion of Daughters-in-Law and Sons-in-Law from Cohabitation Housing Inheritance Tax Deductions

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

According to the legal community, the Constitutional Court issued a unanimous decision on September 17 finding the relevant provision—Article 23-2, Paragraph 1, Item 1 of the former Inheritance Tax and Gift Tax Act—constitutional in a constitutional complaint filed by an individual identified as A.

A had been living with her husband and her father-in-law at the father-in-law's house since 1998.

After her husband passed away in 2014, she continued to live in the same house until her father-in-law passed away in 2017, at which point she inherited the house through an agreement on the division of inherited property.

A filed her inheritance tax return and paid taxes by applying the cohabitation housing inheritance deduction. However, tax authorities notified her of an increased inheritance tax assessment, stating that she did not qualify for the inheritance deduction.

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

This meant that daughters-in-law and sons-in-law like A, who lived with their spouse's parents after their spouse passed away, were excluded from the inheritance deduction.

In response, A filed a lawsuit to cancel the tax disposition. 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 review, the Constitutional Court ruled the provision constitutional, stating that it "does not violate the principle of tax equality."

The Constitutional Court explained, "The cohabitation housing inheritance deduction is a system that grants tax benefits to heirs who meet certain requirements in order to protect the continuity and stability of the heirs' residential life. It cannot be seen that its scope must strictly match the general scope of heirs stipulated in the Civil Act or the Inheritance Tax and Gift Tax Act."

(Photo: Yonhap News)
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