Tokyo Property Taxes and Fees

Fees and taxes associated with the acquisition of properties in Japan are determined by the country’s unique legal and regulatory frameworks, along with standardized processing charges paid to real estate agents. The specific fees applicable to your purchase, as well as subsequent property management fees, may vary depending on the nature and purpose of the property ownership. In order to provide a comprehensive understanding, we have compiled a guide outlining the various types of fees and taxes typically encountered in property ownership within Japan.

Brokerage Fee

Property purchased that is priced above ¥4 million will have a 3% brokerage fee, ¥60,000 fee and consumption tax.

Acquisition Taxes

Acquisition tax is a tax upon the purchase of real estate. Related documents will be sent to the buyer in about 3 to 6 months by the tax office.

Land		3% (reduction measures until 2024.March.31)
Building	Residential
	Non-Residential	4%

Stamp Tax

The amount of stamp tax to be paid depends on the property price listed on the purchase agreement. The tax is within the range of ¥10,000 to ¥480,000.

* Reduced tax rate is applied until 2024 March 31.

Consumption Tax (Sales Tax or VAT)

The consumption tax is 10% in Japan. Sometimes called sales tax or VAT in other countries.

	Taxable	Non-Taxable
Purchase/Selling Price	• Purchase/Selling price of a building • Construction costs for new construction or renovation of a residence Note: If the seller is an individual (not a business entity), consumption tax is not levied.	Purchase/Selling price of a land
Registration Fees	Fee for a judicial scrivener	Registration and license tax for land purchase/sale price
Loan-related Matters	Loan processing fee	Fire insurance premiums, Guarantor fees paid to a guarantee company

Registration and Licence Tax

The registration and license tax is a tax paid when registering or recording in the registry or registration books. For real estate, the tax amount is calculated by applying the tax rate to the assessed value for fixed asset taxation, while for registration of mortgages or other encumbrances, it is based on the amount of the claim. Additionally, there are tax reduction measures in place for newly built or acquired residential properties, land transactions, and registration of mortgages with reduced tax rates.

*For newly built houses, since the assessed value for fixed asset taxation has not been determined, it is based on the value determined by the New Building Property Taxation Standard Price Certification Standards table set by the Legal Affairs Bureau.

City Planning and Fixed Asset Tax

On average, the combined tax of City Planning and Fixed Asset Tax amounts to approximately 1.7% of the estimated fixed asset value. However, it is worth noting that for specific categories of real estate, such as residential land and certain other fixed assets, there may be opportunities for tax deductions.

Withholding Tax

A withholding tax of 10.21% is imposed at the time of property acquisition.

It is the responsibility of the buyer to deduct and remit withholding tax at a rate of 10.21% from the total purchase price when acquiring a property. This means that the buyer must ensure that only 89.79% of the purchase price is paid to the seller, while the remaining 10.21% is withheld and subsequently paid to the Tax Office by the 10^th of the next month. When non-residents or foreign corporations sell a property in Japan, a withholding tax of 10.21% is obligated. However, if the buyer is an individual who purchases a property for their own use and the price is less than 100 million JPY, a withholding tax is not obligatory.

When non-residents lend a property in Japan, the renter must pay 20.42% of the rent as an income tax. This means, a non-resident must pay 79.58% of the rent to the owner and the remaining 20.42% to the Tax Office until the 10th day of the following month. Additionally, non-residents who have leased the property need to adjust in the final tax returns to account for the sum paid as the income tax.

However, if the property will be used by the buyer or their family members as the place of their residence, income taxes are not obligatory.

Capital Gain Tax

In the event of a capital gain from a sale of a property, there is an associated tax obligation that varies depending on the specific circumstances.　

Short-term Capital Gain Tax (less than 5 years): 39% (income tax: 30%, residential tax: 9%).

Long-term Capital Gain Tax (more than 5 years): 20% (income tax: 15%, residential tax: 5%).

Tax Advice

Housing Japan primarily operates as a real estate agency, specializing in assisting clients with property transactions. While we can offer guidance on the specific taxes mentioned above, our expertise is limited to their application within the context of property-related matters.

Considering that individual taxation circumstances vary significantly; it is strongly recommended to consult a qualified accountant to determine the most appropriate taxation structure for your specific situation.