Japan Property Taxes - A Simple Guide For Sellers

Dec 14, 2023

Manga Tax Selling

A simple guide to property taxes in Japan: whether you are buying, selling or owning real estate

SELLING

When selling property in Japan, it's important to be aware of the various property-related taxes. Here's an overview, but note it is only a guide. Please contact a tax specialist for information and professional advice.

  1. Capital Gains Tax: this differs depending on whether the property is owned as an individual or through a company
    1. Individual / private ownership:
      1. less than 5 complete calendar years of ownership = approx 30% on any gain
      2. more than 5 complete calendar years of ownership = approx 15% on any gain
    2. corporate ownership: this varies and depends on the profits of the company, as the profit/income is treated as part of your annual tax return, but should be somewhere around 22-30%
  2. Withholding Tax (10.21%): the seller needs to appoint a tax representative in Japan to file a final tax return. This enables them to have any tax owing returned to them, less any taxes that may be owed.
  3. Japanese Consumption Tax (Shouhizei): Note that this is NOT applicable to land only sales.
    1. If the seller is registered as a JCT payer, they need to pay JCT owed on the sale as part of the year-end tax return (not the time of settlement)
    2. Sellers should confirm with their accountant if they are a JCT payer, but as a rule of thumb they will be if:
      1. they registered to claim a JCT refund when they bought the property and it's been less than 3 years since
      2. they have been paying annual JCT on rental income due to it being over 10m JPY per year net
    3. If the seller is a JCT payer, 10% of the sales price will be owed to the Japanese government.
  4. Contract Stamp Duty (Inshi-zei): 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
    1. 10,000 JPY for transactions at 10m-50m JPY
    2. 30,000 JPY for transactions at 50m-100m JPY
    3. 60,000 JPY for transactions at 100m-500m JPY

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.

For information on taxation related to purchase or ownership of properties, please click the appropriate link.

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