Real estate in Japan

Real Estate Taxes in Japan

Under the current Japanese law, foreigners are subject to real estate taxes under the same conditions as the citizens of Japan.

If you are planing on purchasing, renting or even selling any real estate in Japan, it’s good to familiarize yourself with the types of Real Estate Taxes currently applicable in Japan. You should not forget about the additional costs, though, such as the real estate agent’s fees as well as the lawyer’s fees.

When you purchase a real estate in Japan or as it is called in Japanese — “fudosan” (不動産), you have to prepare to pay the following taxes:

• purchase tax;
• registration tax;
• property tax;
• (plus the fees mentioned above).

If you are not sure how much tax you are going to pay for the real state acquired, take a look at our article — Property Tax in Japan. We provided some examples, so it can give you a rough estimate of how much you are going to have to pay to the Japanese revenue authorities.

Property and Consumption Taxes in Japan

Other Japanese taxes are pretty similar to those found in the European countries and North America.

If you have already purchased any type of real estate in Japan you will be subject to the Japanese Property Tax — 固定資産税 (Kotei shisan zei).

On the other hand, should you decide to sell your real estate or even rent it out – from the legal point of view your assets generated profits. Therefore you will be have to pay Income Tax as well as Consumption Tax — 消費税 (Shо̄hizei).

Be advised Japan does not have a VAT/GST type of Tax, that can be as high as 20-28% in some European countries.

The standard Shо̄hizei rate is 10%. This tax is also called Consumption or Sales Tax.

We already covered those topics on our blog, take a look:

• • Consumption Tax in Japan.
  • Income tax and resident tax for Real Estate Investment in Japan.

Please remember, that under the current Japanese law, even if you do not have any legal address in Japan you are still obligated the taxes we described. 

Real estate as a gift or as an investment

If you were fortunate to receive any type of real estate in Japan as a gift, it should be accounted for and the respective Gift Tax has to be paid to the Japanese Tax services.

If you, however, acquired real estate in Japan as an asset for investment purporses, which can be quite attractive, it may be a good idea to learn more about the depreciation cost, that can save you some money on taxes, take a look: Depreciation cost and Negative cash flow in real estate investment.

Japanese Tax system can be quite tricky sometimes, especially if you had no experienced dealing with the Japanese authorities before. Get in touch with us, we are always ready to help you out and find the most optimal solution available.

Other than articles mentioned above, you can find many articles. You can find them in “Blog about Japanese Law and Tax” or you can search it in this website.

akiyama(at)japan-law-tax.com