Offer should be made ‘subject to home loan approval’, if buyer intends to obtain financing
Make an offer to purchase
Sign your Letter of Offer
Your Offer should be made ‘subject to home loan approval’, if you intend to obtain financing
You will need to confirm the price and contract date with the seller
You will need to pay 10% deposit of the purchase price in cash, usually within 1 to 3 days from the date of Offer
You will need to prepare:
A copy of your NRIC and passport
A Letter of Affidavit, certified by Notary Public
Optionally, you can arrange for financing
Interest rates and terms vary from bank to bank
A real estate transaction specialist from Japan will deliver and explain the Contract/Sale and Purchase Agreement and Important Matters to you in Singapore
It is required by law for a real estate transaction specialist to sign, stamp and orally perform the Explanation of Important Matters
You should only enter into Sale and Purchase Agreement (SPA) if you agree to the terms and the Explanation of Important Matters
You can grant Power of Attorney to a representative to sign the contract on your behalf in Japan
If you have arranged for financing, enter into a home loan agreement with a bank at this stage
You will need to pay the balance purchase price
You can do a telegraphic transfer of the balance 90% of purchase price and closing costs to the seller or instruct your bank to disburse the funds
The Judicial Scrivener will register your ownership of the property on the settlement date
You can collect the key at this stage or a representative can collect the key on your behalf
The Judicial Scrivener will collect title deed, usually 10 business days from the settlement date
Taxes & Costs
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.
Stamp Duty Tax Rate
¥50 million or less
¥100 million or less
¥500 million or less
¥1 billion or less
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.
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
¥30 million or less
¥50 million or less
¥100 million or less
¥200 million or less
¥300 million or less
¥600 million or less
More than ¥600 million
Landlord & Tenancy
You have to pay Income Tax on rental income generated by letting Japanese properties. Operating costs, loan interest and building depreciation can be deducted in calculating net taxable income. Rental income is subject to a Withholding Tax of 20.4% before it can be sent out of Japan to your home country unless you are leasing your property to a family member. Management Fees are typically around 5% of a property’s rental price. Letting Fees are equivalent to the price of one or two months’ rent. For a fee, some letting and management agents offer guaranteed rental schemes, which guarantee a rental income for five years.
Income Tax Rate
¥1,000 - ¥1,950,000
¥1,951,000 - ¥3,300,000
¥3,301,000 - ¥6,950,000
¥6,951,000 - ¥9,000,000
¥9,001,000 - ¥18,000,000
¥18,001,000 - ¥40,000,000
More than ¥40,001,000
Japanese Yen (JPY)
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