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 but there are exceptions
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, 2021)・Other properties 4%
・Special provision on tax base of residential land (Assessed Value x 1/2)
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 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 10% (Out of the 10%, 2.2% is Local Consumption 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
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
|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)
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
Buyer will be required to make tax payments for special income tax for reconstruction (2.1% of the amount of income tax for each year) from January 1st, 2013 through January 1st, 2037 annually together with income tax of respective years.
Determination of withholding tax obligation on rental by non-resident individual
Is lessor a non-resident?
Is lessee an individual?
Lessee or his/her relatives
Method of Taxation
● Tax rate of capital gain on property sale
Determination of withholding tax obligation on property sales by non-resident individual
Is seller a non-resident?
Is purchaser an individual?
For residence of purchaser or
JPY100,000,000 or less?
Method of Taxation