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How to make real estate income tax filing in Japan

Real Estate Tax filing is necessary in Japan

In the case you (individual) rent out your real estate and receive rental fee, you will have Real Estate income.

Then you need to submit Real Estate income tax filing and pay income tax and resident tax etc. in Japan.

1) What will happen if you do not submit tax return ?

If you do not pay income tax by due date, you need to pay overdue tax.

If the amount of income tax is 1 million yen, the amount of overdue tax is 73,000 yen per one year generally.

If you do not pay income tax within two month from deadline, overdue tax rate is 14.6%.

In the case you hire a real estate company to manage your real estate, if tax office conducts tax investigation, it may collect your information from the company and finds that you have not filed tax return.

Calculation sheet of income, expense of real estate investment in Japan ➡”

Due date of submission of tax return

2)  Duration of submission of tax return

You need to submit tax filing during 16th February to 15th March every year generally and need to pay income tax during this period, too.

3)  Blue file tax return

In the case you apply for blue file tax return, you can apply for income deduction of 100,000 yen.

In the case you prepare accounting book and keep receipts etc. and obtain approval from tax office, you can become blue return taxpayer. ( You need to submit application paper by due date ).

4)  Scale of your Real Estate investment

In the case the number of your real estate is less than five ( in the case of detached house ), you can not pay salary to a person to manage your Real Estate ( Real Estate investment business ) and reduce taxable income amount.

Regarding business tax and real estate in Japan ➡”

Advantage of investment in detached house ➡”

5) Carry forwarded loss in Real Estate investment

Assumed that your Real Estate investment shows loss of 100,000 yen in 2017, you can carry forward the loss for next three years.

Sample of tax filing papers

6) In order to submit blue return tax filing, application paper of tax filing and blue return financial statement are required as below.

7)  In this paper, you need to fill in amount received ( excluding deposit) and deductible expenses ( ex. depreciation cost ).

8)  Calculation of depreciation cost
Assumed that you have purchased a real estate of 15 million yen ( price for building is 10 million yen and price for land is 5 million yen ) and statutory durable year is 47 years.

So, you can depreciate 10 million yen by 47 years.

10 million yen × 0.022 ( depreciation rate in the case of 47 years durable years )= 220,000 yen. So, roughly speaking you can sum up 220,000 yen as depreciation cost.

9)  In the case you have borrowed money from bank to purchase a real estate for investment, interest expense can be sum up as deductible expense.
( If your Real Estate investment shows loss, you can offset the loss with salaried income )

10) In the case you have repaired air conditioner, wall paper etc., you can sum up such expense as deductible expense.

Once you have filled in application paper and other supporting documents, you can submit blue file tax return.

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