Acquisition Cost
A Real Estate Acquisition Tax is paid by the buyer every time land or buildings are transferred in Japan. This is payable on land or a property’s ‘tax value’. This value is assessed by the National Tax Agency and is typically much less than the purchase price and market valuation for condo purchases in Tokyo and Osaka. The basic rate of Real Estate Acquisition Tax is 4% of assessed ‘tax value’, but until 31st March 2018, land and residential buildings are being taxed at a reduced rate of 3%.
A Registration Tax is also payable when you register your ownership of land and buildings, or other legal interests such as mortgages, with the Japanese government. For mortgages, this is calculated at 0.4% of the loan amount. Stamp Duty must also be paid, according to the purchase price laid out in the Purchase and Sales Agreement.
| Property Value |
Stamp Duty Tax Rate |
| ¥50 million or less |
¥10,000 |
| ¥100 million or less |
¥30,000 |
| ¥500 million or less |
¥60,000 |
| ¥1 billion or less |
¥160,000 |
Holding Cost
A Fixed Asset Tax and City Planning Tax are imposed on property owners every year on 1st January. These must be paid to Japanese city authorities, even if you are a foreign owner living outside of Japan. The fixed asset rate is 1.4% of a property’s assessed ‘tax value’. The city planning tax rate is 0.3% of the ‘tax value’. International investors should hire an English-speaking Japanese accounting firm to assist with making these payments. Service Charges typically range from ¥350 - ¥600 per square metre, depending on the building and its facilities.
Disposal Cost
Even non-residents have to pay Capital Gains Tax on gains made from the sale of Japanese property. If the property is held for more than five years, Capital Gains Tax is payable at a 15.3% rate from the following year. Otherwise, the rate is 30.6% of the net gains of the sale. A Withholding Tax of 10.2% may also be applied. Japanese Inheritance Tax must be paid by the recipients of the property, rather than the owner’s estate. A loan balance, a basic deductible of ¥30 million, and an additional deductible of ¥6 million per statutory heir (spouse or child) can reduce this tax burden. Brokerage and Legal Fees associated with property disposals are usually 3% of the sale price, plus ¥60,000.
| Tax Value after Deductions |
Inheritance Tax Rate |
| ¥10 million or less |
10% |
| ¥30 million or less |
15% |
| ¥50 million or less |
20% |
| ¥100 million or less |
30% |
| ¥200 million or less |
40% |
| ¥300 million or less |
45% |
| ¥600 million or less |
50% |
| More than ¥600 million |
55% |
