Japanese real estate essentials: What kinds of taxes are imposed on real estate in Japan? 

Tax matters.

In fact, the most expensive item in our life is not ‘real estate’ but ‘our government’.

And the government is the tax.

So what kinds of taxes are imposed on real estate in Japan? 

Real estate-related taxis include personal income tax, corporate tax, fixed-asset tax, city planning tax, real estate acquisition tax, registration tax, stamp duty, and consumption tax 

 

Personal income tax related to real estate is the tax on individuals who gain rental income or capital gain through the sales of real estate.

Corporate tax is a tax on companies that have taxable income. Therefore, their real estate rental income and any profit from a real estate sale have an impact on their total taxable income level.

The corporate tax rate in Japan is currently about 37% (as of July 2019) so if you have a very profitable property, it is wise to hold the title under a corporate name rather than an individual name.

The property taxes include fixed asset tax and City Planning text which are payable by individuals and companies which own real estate as of January 1st.

The local government uses the fixed asset tax payments for general purposes and the local government uses city Planning tax payments for new city planning projects.

The property tax rate is usually 1.4% of all the tax assessed value of the property. The city planning tax rate is often 0.3% of all the tax assessed value, but the local government of Japan determines the tax assessed value of each property and may also modify the tax rates.

Real estate acquisition tax is the tax on individuals and companies which acquire real estate in Japan. Its current tax rate can reach up to 3% of the tax assessed value of the land and building.

The registration tax is imposed on individuals and companies when they register their ownership of the property or change any contents of the real estate register.

Its tax rate can reach up to 2% of the tax assessed value of the land and building.

The stamp duty is imposed on both parties who signed the real estate purchase and sales agreement.

The consumption tax within Japan is levied on goods and services.

Regarding the real estate businesses, consumption tax is levied on the purchase price of the building and the rent for non-residential building spaces.

The current consumption tax rate is 8% but it will be up to 10% from the 1st of October 2019.

Other Helpful Articles

Japanese real estate essentials: What kind of laws do you need to understand before you buy a property in Japan?

Buying a very affordable condominium in Japan ?: Do the due diligence

Essentials: How is the real estate ownership registered in Japan?

Toshihiko Yamamoto
Real estate investing consultant and author.
Founder of Yamamoto Property Advisory in Tokyo.
International property Investment consultant and licensed
real estate broker (Japan).
He serves the foreign companies and individuals to buy and sell
the real estates in Japan as well as own homes.
He holds a Bachelor’s degree in Economics from
Osaka Prefecture University in Japan
and an MBA from Bond University in Australia

Toshihiko’s book, “The Savvy Foreign Investor’s Guide to Japanese Properties: How to Expertly Buy, Manage and Sell Real Estate in Japan”is now out on Amazon, iBooks (iTunes, Apple) and Google Play.
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