Buying property in Japan as a foreigner

4% of the assessed value of the land or building acquired, the standard rate set in the Local Tax Act (article 73 15); the tax is imposed on a person who acquires land or buildings by purchase, gift, exchange or construction, whether an individual or a corporation.

3% of the assessed value for housing and for land acquired from 1 April 2008 to 31 March 2027; the rate for a non residential building is 4%.

The taxable value of housing land and land treated as housing land is half of the land's assessed value (the fixed assets ledger value) for acquisitions up to 31 March 2027; a deduction of 12,000,000 yen per dwelling applies to a newly built home meeting the floor area requirement, and no tax is due where the taxable value is under 100,000 yen for land or 120,000 yen for a purchased building.

2% of the assessed value (the fixed assets ledger value) as the statutory rate, reduced to 1.5% for registrations received up to 31 March 2029.

2% of the assessed value; an individual who buys a home for own residence with a floor area of at least 50 square metres and registers within one year can use 0.3% for registrations up to 31 March 2027.

A fixed amount by the contract price stated in the contract, reduced for contracts made from 1 April 2014 to 31 March 2027: for example 1,000 yen above 1 million and up to 5 million yen, 5,000 yen above 5 million and up to 10 million yen, 10,000 yen above 10 million and up to 50 million yen, 30,000 yen above 50 million and up to 100 million yen, 60,000 yen above 100 million and up to 500 million yen. Where the contract states the consumption tax separately, that tax is left out of the stated amount.

A transfer of land, including rights over land such as leasehold, is a non taxable transaction for consumption tax.

1.4% of the standard taxable value less reductions; small scale residential land up to 200 square metres per dwelling unit uses one sixth of assessed value as the base, other residential land one third (Tokyo guide). In the 23 wards of Tokyo it is collected by the Metropolitan Government.

• Rent from Japanese real estate is Japan source income taxed by aggregate taxation whether or not there is a permanent establishment.
• A Japanese company or other payer withholds 20.42 percent of the rent (20 percent income tax under Income Tax Act article 213 plus 2.1 percent reconstruction special income tax on that tax; from 2027 the rate also includes defence special income tax).
• No withholding applies when an individual rents a house or land as a home for themselves or relatives.
• The withheld amount is settled in the final return, and a treaty with the owner's country of residence may reduce or exempt it if the form is lodged before payment.

Final return to the tax office between 16 February and 15 March of the following year; the non resident appoints a tax representative who lives in Japan and files a declaration naming that person.

• The sale of land, land rights or buildings in Japan is Japan source income subject to aggregate taxation whether or not there is a permanent establishment, and a final return is required.
• Gains are taxed as separate transfer income: for land and buildings held more than five years on 1 January of the sale year, 15 percent income tax (plus 5 percent resident tax where it applies); for five years or less, 30 percent (plus 9 percent resident tax).
• Reconstruction special income tax of 2.1 percent of the income tax is added for 2013 to 2037.
• The base is the sale price less acquisition cost (the building depreciated) and sale costs, less any special deduction; where the actual cost is unknown or under 5 percent of the price, 5 percent of the price may be used.

• 10.21 percent of the price withheld by the buyer (income tax and reconstruction special income tax); no withholding when the price is 100 million yen or less and the buyer is an individual acquiring it as a home for themselves or relatives.
• From 2027 the rate also includes defence special income tax.
• The seller files a final return.

A special deduction of up to 30 million yen from the gain applies on the sale of a home the seller lived in (or lived in within the last three years), regardless of holding period, subject to conditions on use, repeat claims and relationship with the buyer (National Tax Agency answer 3302). A reduced long term rate for sales of a home held more than ten years is described on National Tax Agency answer 3305.

• Inheritance tax applies to the value above a basic exemption of 30 million yen plus 6 million yen per statutory heir (National Tax Agency answer 4152).
• The tax is computed by splitting the taxable estate by statutory shares and applying progressive rates to each share: 10 percent up to 10 million yen, 15 percent to 30 million (deduction 0.5 million), 20 percent to 50 million (2 million), 30 percent to 100 million (7 million), 40 percent to 200 million (17 million), 45 percent to 300 million (27 million), 50 percent to 600 million (42 million) and 55 percent above (72 million) (answer 4155).
• The return and payment are due within ten months from the day after the death was notified.
• An heir with a Japanese address is taxed on all assets acquired.
• An heir without a Japanese address is taxed on worldwide assets in the cases set out in National Tax Agency answer 4138, which depend on the citizenship and address history of the heir and the decedent; otherwise only Japanese property is taxed.
• Gifts are added back to the estate: gifts within three years of death for deaths until 31 December 2026, gifts from 1 January 2024 for deaths 1 January 2027 to 31 December 2030, and gifts within seven years from 1 January 2031.
• Gift tax (calendar year basis) applies after a basic deduction of 1.1 million yen; general rates 10 percent up to 2 million yen of the remainder, 15 percent to 3 million, 20 percent to 4 million, 30 percent to 6 million, 40 percent to 10 million, 45 percent to 15 million, 50 percent to 30 million and 55 percent above; special rates apply to gifts from a parent or grandparent to an adult aged 18 or over, from 10 percent up to 2 million yen to 55 percent above 45 million yen (answer 4408).

Annual income of at least 10 million yen at application; stay limited to six months with no extension and no residence card; six months must pass before reapplying; nationals of visa exempt countries that also have a tax convention with Japan; private medical insurance of at least 10 million yen.

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