Government decides value of real estate
In the case you own a real estate in Japan as of 1st January, you need to pay property tax to city hall or Tokyo Government.
Government assess value of real estate (In this page, assumed that Government assessed value of your land is 1 million yen) and based on 1 million yen, it will bill property tax every year.
How does Japanese government assess your real estate in Japan ?
Assessed value of real estate differs depending on location (it may be center of Tokyo or rural area), size (wide land or small land), structure of house(wooden house, concrete house), age of building (brand new or old house).
For example, in the case of this land, assessed value for 1 square meter is 1,300 yen.
This land is located in rural area.
In the case of this land in Minato-ku, Tokyo (this is very center of Tokyo), assessed value for 1 square meter is 950,000 yen. (facebook)
Calculation of property tax
Assessed value of real estate x 1.4％ (property tax rate) = Property tax.
So, 1 million yen x 1.4% = 14000 yen.
This is your property tax.
Reduction of property tax
In the case you own land for residential purpose, amount of its property tax can be reduced.
So, in the case there is a house on your land, amount of property tax is reduced.
If land area is 200㎡ or less, 1 million yen × 1/6 = 166,666 yen is assessed value of your land.
So, 166,666 yen x 1.4% = 2300 yen.
This is amount of property tax.
Demolition of house and increase of property tax
If you demolish a house on your land, you can not use this 1/6 Reduction.
So, amount of your property tax should be increased.