Tax in Japan
See what Japan's tax rules do to your property portfolio.
What Freeholt models for property, income and retirement in Japan, and what it does not.
Free to start. No card. Rules reviewed 2 July 2026.
Modelled here
- Tax on rental income
- Capital gains on a sale
- Duty on purchase
- Annual property or land tax
- Income tax beyond the rent
- Dividends, interest and share sales
JPY · Rates as at 2 July 2026 · Rates editable in Settings · Estimates, not advice
Rental profit is taxed at progressive national rates plus ~10% inhabitant tax; non residents face 20.42% withholding on gross (refundable by filing on net). Sale gains: 39.63% within 5 years, 20.315% after. Watch the inheritance tax (10 to 55%). After 10 years of residence it reaches worldwide assets.
How rental income is taxed in Japan
For a resident owner: Progressive rates from 5% to 45%, stacked on other income in this country. The top rate of 45% applies above ¥40,000,000. For an owner living abroad and renting this out: Tax is withheld at source at 20.42% of the gross rent, before any costs.
Interest and losses
Mortgage interest is deductible against the rent. A rental loss can reduce other income in the same year.
Capital gains on a sale
Gains are taxed at a flat 0%. 10.21% of the SALE PRICE is withheld at settlement from a non resident seller. It is a credit against the bill, not an extra tax, but it is cash the seller does not get on the day.
Annual property tax while holding
About 1% a year on the property value.
What it costs to buy
About 4% of the price on purchase. Acquisition tax ~3 to 4% plus registration/licence tax; NO foreign buyer surcharge and no ownership restrictions.
Can a foreign buyer purchase here?
Foreign buyers can generally buy residential property here. No restrictions on foreign buyers and no foreign surcharge (screening applies only near designated security sites). From 1 Apr 2026 FEFTA requires all non resident buyers to report acquisitions within 20 days. A reporting duty, not a restriction.
Buying here from abroad
The rules a foreign or non resident buyer meets here, as at 23 October 2026. Each line links to the official page it comes from, which is the one to rely on as these rules change. Estimates for planning, not advice.
- A buyer paying a non resident for land or buildings in Japan generally withholds 10.21% of the price and pays it to the tax office. Official source
- No withholding on the price applies where it is JPY 100 million or less and an individual buys the home for their own or a relative's residence. Official source
- Rent paid to a non resident for land or a building in Japan carries 20.42% withholding, except where an individual rents it for their own or a relative's residence. Official source
- A non resident who acquires real property in Japan reports the acquisition to the Minister of Finance through the Bank of Japan within 20 days. Official source
Residents of Japan with property abroad
A resident of Japan is taxed on rent and sale gains from property abroad under the same rules as property in Japan, with a credit for the tax paid where the property is. The credit stops at Japan's own tax on that income, so the total is broadly the higher of the two countries' charges. A special regime for people who have just moved to Japan applies in Freeholt's figures only when it is chosen on the tax residence.
Income tax in Japan, beyond the rent
Progressive, up to 45%. The bands run Up to 1,950,000 at 5%; 1,950,000 to 3,300,000 at 10%; 3,300,000 to 6,950,000 at 20%; 6,950,000 to 9,000,000 at 23%; 9,000,000 to 18,000,000 at 33%; 18,000,000 to 40,000,000 at 40%; Above 40,000,000 at 45%. Rental profit joins this ladder. Figures in JPY, as verified 29 August 2026.
Dividends, interest and share sales
How Japan taxes investment income. For dividends: Flat 20.315%. For interest: Flat 20.315%. For share sale gains: Flat 20.315%. Tax free accounts worth knowing about: NISA つみたて投資枠 (Tsumitate/accumulation frame), NISA 成長投資枠 (Growth frame). Up to 1,200,000 a year can be paid into NISA つみたて投資枠 (Tsumitate/accumulation frame), and up to 2,400,000 a year can be paid into NISA 成長投資枠 (Growth frame). That is a limit on what goes IN, not an allowance against the tax.
Worth knowing about tax in Japan
Japan's 20.315% already contains both the reconstruction surtax and the local tax, so nothing is added on top here. Even though the income tax figure alongside it leaves both out.
How Freeholt models Japan
Every rate above is priced from Freeholt's own table for Japan and runs through the whole projection: rental income, a modelled sale and the annual holding costs all use the same figures. They are also defaults that can be edited in Settings, so a position that differs, or a rate that changes before we catch it, can be corrected and the projection reprices around it.
What running this property costs
In Japan this covers the fixed asset and city planning taxes (~1.7% of assessed value), building management/repair reserve fees (kanrihi/shūzen tsumitatekin), insurance and ~5% management.
How borrowing works here
Long terms (up to 35 years) at low rates for residents; non resident financing is scarce, so foreign buyers often pay cash.
What actually happened here
This country's own record, one year at a time. Nothing on this page is borrowed from another country. Move across a chart to read a year.
A city measure, not the whole country.
A city measure, not the whole country.
Recent rule changes in Japan
- Inheritance tax 10 to 55%: foreign nationals resident 10+ of the last 15 years are taxed on WORLDWIDE assets; Japan situs assets are always in scope. Plan ahead.
- 2027-01-01 The FY2026 reform adds a 1% Special Defence Income Tax and cuts the reconstruction surtax from 2.1% to 1.1% (extended to 2047), so the combined surtax and the 20.315% / 39.63% sale rates do not change.
- A government panel recommended (2 Oct 2026) a permit for buying land within about 1,000 metres of key security facilities or on border islands, for any buyer; an amendment was planned for the extraordinary Diet session.(proposed only, never priced into your figures)
What Freeholt models here
- ModelledTax on rental income
- Resident and non resident rates, with interest and losses treated under the local rule.
- ModelledCapital gains on a sale
- Priced in the year of the sale under the rules of that year.
- ModelledDuty on purchase
- One off, on the way in, at the scale in force.
- ModelledAnnual property or land tax
- Charged every year the property is held.
- ModelledIncome tax beyond the rent
- Salary and other income, stacked with the rent.
- ModelledDividends, interest and share sales
- Investment income and gains, with the local allowances.
- Not yetRetirement savings
- Not modelled for this country yet.
- Not yetInheritance and what happens on death
- Not modelled for this country yet.
What Freeholt does not model here
- Inheritance and estate tax
- Treaty relief between this country and the owner's country of residence
What the figures above leave out (12)
- Japan's 2.1% reconstruction surtax is not included. The real bill is a little higher.
- Japan's ~10% local inhabitant tax is not included. The real bill is higher.
- Japan's employment income deduction is not applied. Wages should be given already net of it, or the tax is overstated by the whole deduction. At least ¥740,000 of income charged that should not have been.
- Japan's ¥620,000 basic deduction steps down to nothing above ¥23,500,000 of income, and that step down is not applied: the full deduction is granted at every income. Above ¥23,500,000 the tax is understated, by up to ¥279,000.
- Japan's per capita inhabitant levy, a fixed cash charge of roughly ¥5,000 a year on top of the 10% inhabitant tax, is not included, so the real bill is higher by a flat amount that bites proportionally hardest on a low income.
- Only Japan's basic deduction is taken off. The social insurance premium deduction, spouse and dependant deductions, the mortgage credit and the blue return deduction are all left out because no figure for them was sourced, and every one of them reduces tax; so for anyone entitled to any of them, the tax is overstated.
- Japan's basic deduction is ¥620,000 here, but for 2026 and 2027 the law adds a temporary top up that rises and falls with income: a further ¥420,000 up to ¥1,320,000 of income and ¥50,000 between ¥4,890,000 and ¥6,550,000, nothing in between or above. Neither top up is applied, so in those two bands the tax is overstated, by up to ¥21,000 and ¥10,000 respectively, and is unaffected elsewhere.
- A non resident's Japanese salary is charged a flat, final 20.42% withholding rather than this ladder, which was built for a non resident letting property. Against that flat rate the ladder understates a non resident employee's tax below roughly ¥13.8 million of income and overstates it above.
- The 20.315% here is a resident's rate. A non resident pays 15.315% on listed share dividends and designated interest, the national part only with no 5% local component, so for a non resident every receipt is overstated by exactly 5 percentage points: ¥50,000 on a ¥1,000,000 dividend.
- The 20.315% here is for listed shares. Dividends on unlisted shares, or paid to a substantial shareholder, are taxed differently: a non resident pays a final 20.42%, and a resident's are aggregated into the progressive income ladder at rates that can run far above 20.315%. So for either holder this is understated, slightly for a non resident and by much more for a resident.
- NISA's ¥18,000,000 lifetime cap on tax free holdings is not enforced; only the two annual frames are named. Nothing is exempted automatically here, so the figures are unaffected today, but anyone treating holdings as sheltered on the strength of the annual limits alone would understate their tax once past the lifetime cap.
- Within NISA's ¥18,000,000 lifetime cap, at most ¥12,000,000 may sit in the Growth frame, and that sub cap is not enforced. Nothing is exempted automatically here, so the figures are unaffected today, but anyone treating Growth frame holdings as sheltered beyond ¥12,000,000 would understate their tax.
Coverage deepens country by country. Every figure is an estimate, not advice.
Compare with another country
Each page is built from the same table the app runs on, so the figures line up side by side.
Compare Japan with another country — rent, gains, annual tax and duty, side by side.
Questions people ask
- Does Freeholt model Japan property tax?
- Yes. Rental income tax, capital gains on a sale, duty on purchase and annual property or land tax are priced from Freeholt's own rate table for Japan. Any rate or threshold can be corrected in Settings so the whole projection reprices. Every figure is an estimate, not advice.
- How is rental income from Japan taxed if I live somewhere else?
- Tax is withheld at source at 20.42% of the gross rent, before any costs. Tax may also be due in the country of residence, with credit for what was paid here. Estimates only, not advice.
- What are the Japan figures as at?
- The rate table for Japan was last reviewed on 2 July 2026. Freeholt date stamps every country rather than implying all of them were checked on the same day. Estimates only, not advice.
Model a property in Japan alongside everything else you own: see the year your portfolio starts paying you back.