Tax (Individual)

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, 2021)・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 10% (Out of the 10%, 2.2% is Local Consumption Tax)

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％

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)

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％

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

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
														