Taxes on Purchasing and Owning Property in Japan

Taxes on Purchasing and Owning Property in Japan

A residence in one of Tokyo's prestigious neighborhoods is not only a home, but also an asset that can be held across borders.

Diversification into yen-denominated assets, a transparent ownership system, stable urban infrastructure, and one of the safest living environments in the world are among the factors attracting international investors to Japan's real estate market. As a result, prime residential properties in central Tokyo are increasingly being considered by high-net-worth individuals as a long-term investment and wealth preservation opportunity.

At the same time, purchasing property from overseas involves certain Japan-specific procedures, including transaction documentation, identity verification, fund transfers, taxation, and post-purchase property management..

In this article, we provide a simple overview of the taxes that may arise when purchasing and owning real estate in Japan.

You can broadly divide the taxes to consider when purchasing real estate in Japan into two categories: (1) taxes that are paid only once at the time of acquisition, and (2) taxes that are paid on an ongoing basis while you own the property.

(1) Taxes that are paid only once at the time of acquisition:

-Registration and License Tax 

-Real Estate Acquisition Tax 

-Stamp Duty 

-Consumption Tax (where applicable)

(2) Taxes that are paid on an ongoing basis while you own the property:

-Fixed Asset Tax

-City Planning Tax

-Income Tax (if the property is rented out and generates rental income)

*Income tax is generally imposed on rental income earned during the calendar year from January 1 through December 31.

For summary of the taxes, such as tax rates, please visit our website.

Learn More About Property Taxes in Japan

*Please consult the relevant tax office or a qualified tax professional regarding the calculation of specific tax amounts applicable to an individual property or transaction. We can also introduce tax professionals who are able to provide services in English or Chinese.

We can assist you in estimating the total acquisition costs, including taxes and related expenses.

Based on your financial objectives and budget, our experienced team will help you identify the property that best suits your needs.