Enjoy our simple guide to property taxes in Japan: whether you are buying, selling or owning real estate
When buying property in Japan, it's important to be aware of the various property-related taxes. Here's an overview, but please note that taxes are calculated on the local council's ASSESSED value of the property, not the sales price. This is typically significantly lower than the sales price, especially in resort areas, about 1% of the sales price is a good guide.
- Property Acquisition Tax: This one-time tax is levied when you acquire property. The tax rate varies depending on the type and value of the property. For residential land and buildings, the rate is currently 3% of the assessed value. However, there are reductions available for newly built houses or for land purchased for residential use. Note that tax on land is due to increase to 4% from April 2024.
- Fixed Asset Tax: This is an annual tax, levied on the owner of the property as of January 1st each year. The rate is 1.4% of the assessed value of the property. The value is reassessed every three years, which can lead to changes in the tax amount. If you purchase a property midway through the year you will pay the tax pro-rata.
- Title Registration Stamp Duty: When you register a property or change the registered information (like ownership), this tax is applicable. The rate for acquiring real estate is 2% of the assessed value for land and 2% for buildings.
- Japanese Consumption Tax: Applicable only to property purchases (not land), this is 10% of the SALES price, not assessed value. Buyers can reclaim this amount if the property is rented out in the subsequent year after purchase to short-term holiday rentals.
- Contract Stamp Duty : When you execute a contract within Japan for a property transaction, a stamp duty is payable. The amount depends on the value of the property or the amount stated in the contract and is payable by both the buyer and the seller
- 10,000 JPY for transactions at 10m-50m JPY
- 30,000 JPY for transactions at 50m-100m JPY
- 60,000 JPY for transactions at 100m-500m JPY
- Withholding Tax: If the seller lives overseas, the buyer pays withholding tax (10.21%) to the Japanese tax office and the remaining 89.71% of the purchase price to the seller. This is usually done by the real estate agent on the buyer's behalf, but it must be done by the 10th day of the following month after the sales transaction completes.
Remember, the assessed value used for tax calculation differs massively from the market value. It's also important to check for any local variations or additional taxes specific to the area where the property is located. This overview provides a general guide, but it's advisable to consult with a local tax professional for precise calculations and up-to-date information.