Situation
The client was married and, together with his wife, acquired two apartments — in 2014 and 2019. In February 2022 his wife passed away. The client duly inherited his wife's share (½ of each apartment) and, in the same year, sold both apartments to third parties: the first for 24,750,000 tenge, the second for 16,800,000 tenge. Before the sale an independent appraisal was performed — the market value of the apartments at the date of inheritance was 25,149,000 and 17,825,539 tenge respectively, meaning the sale price was below the appraised value. The tax authority artificially split the single object into "own" and "inherited" shares and considered that the inherited ½ had been owned for less than a year — from the registration of the inheritance in August 2022 to the sale. On this basis the client received two notices and was assessed IIT of 4,155,000 tenge. The client's explanations were rejected; the higher authority dismissed the complaint on formal grounds without consideration.
Our actions
We identified two independent grounds for the unlawfulness of the assessments. First: the tax authority misapplied the rule on the holding period. Under art. 331(1) of the НК РК, for property acquired during marriage as joint common ownership, when one spouse inherits the share of the other, the holding period is calculated from the date of initial registration of the joint ownership right — not from the date the inheritance is recorded. The apartments were acquired in 2014 and 2019, meaning the holding periods at the time of sale were 8 years and 3 years respectively. Capital gains are not subject to taxation (sub-clause 18) of art. 319(2) and art. 330(1) of the НК РК). This position is confirmed by an official clarification of the State Revenue Committee (КГД МФ РК). Second: even on the tax authority's position of a short holding period, there is no object of taxation. Under art. 331(6) of the НК РК, tax is charged on the positive difference between the sale price and the market value at the date of inheritance. Both apartments were sold below the appraised value — there is no capital gain, no income arose. We filed an administrative claim in the СМАС of Astana seeking reversal of both notices.
Result
The case is being processed by the specialised inter-district administrative court (СМАС) of Astana. The claim seeks reversal of the tax authority's notices.
Project team
Alibayev Yerkebulan
Director
Khassanov Yerbolat
Managing partner
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