Tax/ Economics | 税金・経済



About Japanese Real Estate

Boasting one of the largest populations and the third-biggest GDP in the world, after many years of economic stasis Japan is now poised to shrug off its deflationary mantle and reposition itself as a stable, risk-free destination for real estate investment in Asia. With mid to long-term investments performing well and renewed interest in the economy from foreign investors, a shortage of incoming supply and high residential occupancy rates provide numerous benefits to investors seeking stable yields. In addition to having the world’s largest metropolitan area GDP, Tokyo’s population continues to grow exponentially, providing real estate investors with a vast pool of potential tenants in one of the world’s most recognisable and iconic cities.

Taxes
CurrencyJapanese Yen (JPY)
Source of tax lawCorporation Tax Law, Income Tax Law, Consumption Tax Law, Special Taxation Measures, Special Taxation Measures Law
Tax treatiesJapan has concluded 65 tax treaties with other countries for the purpose of avoiding double taxation.
Tax authoritiesNational Tax Agency (NTA: http://www.nta.go.jp/foreign_language/)
Acquisition & Registration
Brokerage fee
  • Property price less than JPY 2,000,000: 5% + consumption tax
  • Property price from JPY 2,000,000 to JPY 4,000,000: 4% + JPY 20,000 + consumption tax
  • Property price JPY 4,000,000 or greater: 3% + JPY 60,000 + consumption tax

There is no need to pay a brokerage fee when the property is purchased directly from the seller.
Acquisition tax

From 3.0 - 4.0% of the fixed asset value.

Land:
3.0%
Building (residence):
3.0%
Building (non-residence):
4.0%
A tax relief deduction is applicable for acquisition of residential Land Use Zones. The estimated value of the fixed asset is halved.
Stamp tax

The amount of stamp tax payable is dependent on the property price listed on the Purchase & Sales Agreement.

There are tax relief measures in effect for contracts signed between 31 March, 2013 and 31 March, 2014. The tax relief reduction will be doubled from 1 April 2014.

Current stamp tax ranges from JPY 15,000 to JPY 540,000, and from 1 April 2014, from JPY 10,000 to JPY 480,000.
Consumption tax

From 1 April, 2014, the consumption tax will rise from 5.0% to 8.0%; from October, 2015, it will rise from 8.0% to 10.0%.

Building:
5.0%
Land:
0.0%
Please note that all of the prices listed on this website include consumption tax where applicable.
Registration tax

Registration tax is payable upon acquisition of either a piece of land or a building. The tax is calculated against the taxable fixed asset value, which is valued by the Japanese government once every 3 years.

Registration of land ownership: 2.0% (1.5% with tax relief) 
(tax relief deduction of 0.5% in effect until 31 March, 2015)

Registration of building ownership: 2.0% (0.3% with tax relief)
(tax relief deduction for own-occupancy of 1.7% in effect until 31 March, 2015)

Registration of Mortgage: 0.4% (0.1% with tax relief)
(tax relief deduction for own-occupancy of 0.3% in effect until 31 March, 2015)

* The tax rates above are not dependent on the Land Use Zone and are flat rates that apply across all Land Use Zone categories.
Holding Period
Fixed Asset Tax

This type of property tax is 1.4% of the estimated fixed asset value on average, though the upper limit of the tax rate is 2.1% as enacted by respective municipalities.

Fixed Asset Value: 
One-sixth of the fixed asset value is taxable for land areas less than 200 sqm.
One-third of the fixed asset value is taxable for land areas greater than 200 sqm.

One-half of the value of the estimated fixed asset value is deducted from the taxable amount for a period of 5 years following acquisition of a building constructed within the past year and greater than 50 sqm, but less than 280 sqm in area.
City Planning tax

The upper limit of the tax rate is 0.3% as enacted by the respective municipalities.

The standard taxable value of the city planning tax is calculated based on the tax valuation of fixed assets.

Residential property less than 200 sqm: One-third of the standard taxable value. Residential property greater than 200 sqm: Two-thirds of the standard taxable value.
Resident taxpaid by tenant
Rental Income
Non-Resident
Income tax
20% flat-rate withholding tax 
When the annual income tax is filed by March the following year the owner will receive a refund.
Income tax bands
Income Per AnnumAmount of Tax PayableDeduction
Less than JPY 380,000 =
JPY 380,001 - JPY 1,950,000 =
JPY 1,950,001 - JPY 3,300,000 =
JPY 3,300,001 - JPY 6,950,000 =
JPY 6,950,001 - JPY 9,000,000 =
JPY 9,000,001 - JPY 18,000,000 =
Greater than JPY 18,000,000 =
0% (non-taxable income)
5.0%
10.0%
20.0%
23.0%
33.0%
40.0%


JPY 97,500
JPY 232,500
JPY 962,500
JPY 1,434,000
JPY 4,404,000
Disposal
Capital Gains taxWhen a capital gain is generated on the disposal of a fixed asset, the following capital gains tax is applied.
a) Short-term capital gains (less than 5 years): 39% (income tax: 30%, resident’s tax 9%).
b) Long-term capital gains (equal to or greater than 5 years): 20% (income tax: 15%, resident’s tax: 5%).
* The holding period is calculated from 1 January.
Withholding tax10% of sales price (fully credited after tax returns filed)
Surtax
SurtaxA 2.1% surtax will be levied on the withholding tax and income tax for certain Japan-source income arising from 1 January, 2013. Residents of countries with tax treaties in effect with Japan may be able to receive a partial or full refund on this surtax.
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