Real Estate Taxation in Japanfor non-resident individual

   ※ For further details, please consult a certified tax accountant.

Tax Item Acquisition Possession Disposition Administrative Body
Registration and License Tax Legal Affairs Bureau / Tax Office
Real Estate Acquisition Tax Local Tax Bureau
Stamp Duty Tax Office
Consumption Tax Tax Office
Inheritance Tax・Gift Tax Tax Office
Fixed Asset Tax・City and Planning Tax Municipal Office
Income Tax Tax Office
※ Residents Tax does not apply to non-resident individual.
  • Taxed
  • Taxed but there are exceptions
  • No taxation

Summary of Tax

Registration and License Tax Registration and License Tax is levied on ownership preservation and transfer registrations when construction is completed or land and building are bought.
● Tax amount = Tax base x Tax Rate (Land 1.5%, building 2.0%)
Real Estate Acquisition Tax Real Estate Acquisition Tax is levied by prefectures on acquisition, new construction and addition of property.
● Tax amount = Assessed Value of Fixed Asset x 4% (Standard tax rate)
   Based on special provisions, reduced tax rate and tax base apply in the following cases;
・Land and residential properties 3% (Up till March 31, 2018)・Other properties 4%
・Special provision on tax base of residential land (Assessed Value x 1/2)
Stamp Duty Stamp Duty is levied on taxable document. In real estate related transactions, sales and purchase agreement, construction contract and loan agreement fall under taxable document and are taxed based on the contract amount.
● Tax amount = JPY 0 - JPY 480,000
Consumption Tax Consumption Tax is levied on domestic transaction conducted by businesses. Examples are transfer of building and brokerage based on the cost and fee. As an exception, Consumption Tax does not apply to transfer and leasing of land.
● Tax amount = Tax base x 8% (Out of the 8%, 1.7% is Local Consumption Tax)
Fixed Asset Tax・City
and Planning Tax
Fixed Asset Tax and City and Planning Tax are levied on the owner of real estate property as of January 1 every year. Both taxes are based on the Assessed Value of Fixed Asset, which is re-assessed every three years.
● Fixed Asset Tax = Tax Base x 1.4% (Standard tax rate)
● City and Planning Tax = Tax Base x 0.3% (Maximum tax rate)
Inheritance Tax Inheritance Tax is levied on the inheritance of estate upon the death of a person, and can be relevant to non-resident individuals. A non-resident individual of Japan is taxed for real estate in Japan. If real estate is held through a Japanese company, the shares issued by the Japanese company are subject to Inheritance Tax.

● Tax rate of Inheritance Tax

Each legal shares of taxable estate (CUR.: JPY) Tax rate
0 ~ 10,000,000 10%
10,000,001 ~ 30,000,000 15%
30,000,001 ~ 50,000,000 20%
50,000,001 ~ 100,000,000 30%
100,000,001 ~ 200,000,000 40%
200,000,001 ~ 300,000,000 45%
300,000,001 ~ 600,000,000 50%
600,000,001 ~ Above 55%
Gift Tax Gift Tax is taxed on individuals who acquire assets by gift and can be relevant to non-resident individuals. Gift in Japan of real estate or money for the purposes of purchasing real estate is taxed.

● Tax rate of Gift Tax

Taxable amount less basic deduction (CUR.: JPY) Tax rate
0 ~ 2,000,000 10%
2,000,001 ~ 3,000,000 15%
3,000,001 ~ 4,000,000 20%
4,000,001 ~ 6,000,000 30%
6,000,001 ~ 10,000,000 40%
10,000,001 ~ 15,000,000 45%
15,000,001 ~ 30,000,000 50%
30,000,001 ~ Above 55%
Income Tax Non-resident individuals are levied income tax on real estate taxable income which is revenue from real estate less expenses and taxable capital gain realized on property sale.

● Tax rate of taxable income earned from property lease

Taxable income earned from property lease (CUR.: JPY) Tax rate
1,000 ~ 1,950,000 5%
1,950,001 ~ 3,300,000 10%
3,300,001 ~ 6,950,000 20%
6,950,001 ~ 9,000,000 23%
9,000,001 ~ 18,000,000 33%
18,000,001 ~ 40,000,000 40%
40,000,001 ~ Above 45%

    Determination of withholding tax obligation on rental by non-resident individual

Status
Is lessor a non-resident?
NO
YES
Is lessee an individual?
NO
YES
Lessee or his/her relatives
residing?
NO
YES
Withholding Tax
N/A
Withholding Tax
(20.42%)
N/A
Method of Taxation
Tax Return
Comprehensive Taxation

● Tax rate of capital gain on property sale

Ownership Period Tax rate
More than 5 years 15.315%
5 years or less 30.63%

    Determination of withholding tax obligation on property sales by non-resident individual

Status
Is seller a non-resident?
NO
YES
Is purchaser an individual?
NO
YES
For residence of purchaser or
his/her relatives?
NO
YES
JPY100,000,000 or less?
NO
YES
Withholding Tax
N/A
Withholding Tax
(10.21%)
N/A
Method of Taxation
Tax Return
Separate Taxation