When you buy
Real estate acquisition tax, registration & license tax, stamp duty, and (for new builds) consumption tax. Mostly one-off, payable within a few months of closing.
Guide · Legal & Tax
Legal & Tax in Japanese Real Estate
A plain-English map of the taxes you pay when you acquire, hold, and sell Japanese property — plus the legal process from purchase agreement to title registration. Designed for foreign investors and non-resident owners.
At a glance
3 phases, 3 tax bundles
Japanese real estate tax splits cleanly into three life-cycle phases. Understanding which bundle applies when helps you budget accurately from day one.
While you own
Annual fixed asset tax and city planning tax, both municipal. If you rent the property out, income tax on net rental income applies every year.
When you sell
Capital gains tax on any uplift, calculated differently for short-term and long-term holdings, and differently again for residents vs non-residents.
Phase 1 · Acquisition
Taxes you pay to buy
These are one-off and assessed in the months around closing. Most have reductions or exemptions for qualifying residential property — always check before budgeting at the headline rate.
| Tax | Base rate | When & how paid | Common reductions |
|---|---|---|---|
| Real estate acquisition tax 不動産取得税 |
4% of assessed value (3% for land & residential buildings until Mar 2027). | One-off. Billed by the prefecture approximately 3–6 months after closing. | Deduction of up to ¥12M from the assessed value for qualifying residential property. |
| Registration & license tax 登録免許税 |
2% of assessed value for ownership transfer; 0.4% for mortgage registration. | One-off. Paid to the Legal Affairs Bureau at the title registration, handled by the judicial scrivener. | Reduced rates (0.3% / 0.1%) for qualifying owner-occupied homes including certified used property. |
| Stamp duty 印紙税 |
Fixed fee based on contract value (e.g. ¥10,000 for ¥10M–50M contracts). | One-off. A revenue stamp is affixed to the signed purchase agreement. | None. Electronic contracts without a physical document are currently exempt in practice. |
| Consumption tax 消費税 |
10% on the building portion only (land is exempt). | Embedded in the price when buying from a business seller (new builds or refurbished stock). | Zero when buying from a private individual — typical for used property between individuals. |
Phase 2 · Holding
Taxes you pay every year
Annual municipal taxes assessed on the property as of January 1. Both appear on a single combined bill delivered in April–June.
| Tax | Rate | Base | Key points |
|---|---|---|---|
| Fixed asset tax 固定資産税 |
1.4% (standard). | Municipal assessed value (固定資産税評価額), typically 60–70% of market value. | Residential land under 200 sqm receives a 1/6 reduction on the base; the next 200 sqm, 1/3. |
| City planning tax 都市計画税 |
Up to 0.3% (set by municipality). | Same assessed value. | Only applies to property inside designated urbanisation-promotion areas; residential reductions of 1/3 or 2/3 also apply. |
| Rental income tax 所得税 |
Progressive: 5% – 45% national + 10% local. | Net rental income (rent minus depreciation, interest, management, repairs). | Non-residents with Japan-sourced rental income must file annually in Japan via a tax agent (納税管理人). |
Phase 3 · Disposal
Capital gains on sale
Japan taxes real estate gains separately from other income, with rates that depend on how long you held the property and your residence status at the time of sale.
| Holding period | Resident rate | Non-resident rate | Notes |
|---|---|---|---|
| Short-term ≤ 5 years on Jan 1 of sale year |
30% national + 9% local = 39.63% (incl. surtax). | 30.63% national (local portion may be separate). | The 5-year clock counts to Jan 1, not the calendar day — a practical early-sale trap. |
| Long-term > 5 years on Jan 1 of sale year |
15% national + 5% local = 20.315% (incl. surtax). | 15.315% national (local portion may be separate). | The single biggest reason most foreign investors time exits to clear the 5-year line. |
| Withholding on sale by non-resident | Not applicable. | 10.21% withheld at settlement. | Creditable against the final tax bill when you file. Exempt if the buyer is an individual buying for own residence and the price is ≤ ¥100M. |
| Primary-residence exemption | Up to ¥30M deduction from taxable gain. | Not available. | Residents only and only on the property used as the primary home. |
Inheritance · 相続税Who is taxed on what
Who is taxed on what
when the owner dies
Japanese inheritance tax is notoriously broad. Whether you, your heirs, or the property itself are in Japan all matter. The diagram below shows the most common cases at a glance.
Scope of taxable assets
Heir in Japan
Heir overseas
Owner
in Japan
Worldwide assets
Worldwide assets
Owner overseas
(short-term)
Worldwide assets
Japan assets only
Owner overseas
(long-term)
Japan assets only
Japan assets only
Worldwide — all assets taxed in Japan
Mixed — depends on heir status
Japan-situs only (incl. this property)
Key takeaways for foreign owners
The property is always taxable. Japanese real estate is a Japan-situs asset, so Japanese inheritance tax applies regardless of where the owner or heirs live at the time of death.
Worldwide vs Japan-only. If you or your heirs hold a Japanese address within 10 years of the relevant date, Japan generally taxes the heir on worldwide assets inherited — not only the Japanese ones. Structuring the holding period can matter significantly.
Basic deduction. ¥30M + ¥6M × number of statutory heirs is deducted from the taxable estate before rates are applied. Rates are progressive from 10% to 55%.
Filing window. The inheritance tax return is due within 10 months of the date of death. Late filings incur surcharges and interest.
Legal process · 契約から登記までFrom agreement
From agreement
to registered title
The four milestones of any Japanese real estate transaction. Expect roughly 4–8 weeks from signed purchase agreement to registered title, depending on financing.
- A
Purchase agreement · 売買契約
Both parties sign the purchase agreement and the buyer pays an earnest-money deposit, typically 5–10% of the price. The contract specifies the closing date, penalties for default, and the non-conformity clause.
Watch for: the cancellation window, any financing contingency (ローン特約), and how the earnest money is forfeited or refunded. - B
Important matters explanation · 重要事項説明
A licensed real estate transaction specialist (宅地建物取引士) delivers a mandatory disclosure covering zoning, title history, infrastructure, and contract terms. By law this must be done before the purchase agreement is signed.
Watch for: request an English translation or a bilingual scrivener — this is the single most information-dense step. - C
Settlement · 決済
Remaining balance, taxes and fees are paid; keys are handed over; the judicial scrivener confirms the title documents are in order to proceed with registration the same day.
Watch for: pro-rated fixed asset tax from the settlement date; confirm the cleared funds route if wiring from overseas. - D
Title registration · 所有権移転登記
The judicial scrivener (司法書士) files the ownership transfer with the Legal Affairs Bureau. Registration typically completes within 1–2 weeks; you then receive the identification information (登記識別情報) — your proof of ownership.
Watch for: store the identification information securely — it replaces the old paper title deed and cannot be re-issued if lost.
Disclaimer · 免責事項
This guide is general information, not advice for your specific case
Rates, thresholds and reductions change by tax year and by municipality. Residence status, holding structures (personal vs corporate), tax treaties, and inheritance relationships all materially affect the numbers on an individual transaction.
For any concrete case, please consult a licensed Japanese tax accountant (税理士), judicial scrivener (司法書士), or lawyer (弁護士). We can introduce vetted bilingual professionals through the Submit Requirements form below.
FAQ
Common tax & legal questions
What does the judicial scrivener (司法書士) actually do?
They handle the title registration and verify that the documents exchanged at settlement are in legal order. They act as a neutral professional — not an advocate for either side — and their fee (typically ¥100,000–¥300,000) is split by convention or paid by the buyer.
What is the “important matters explanation” and why does it come before signing?
The 重要事項説明 is a mandatory disclosure by a licensed real estate transaction specialist covering zoning, title history, infrastructure, and contract terms. By law it must be delivered before the purchase agreement is signed — treat it as your final due-diligence checkpoint, not a formality.
How does the 2020 civil code reform affect my used-property purchase?
The old “defect liability” was replaced with a broader “contract non-conformity” regime. Most individual-seller contracts now limit or exclude this liability — which is legal but shifts structural risk to the buyer. Always read the clause carefully and consider a pre-signing inspection.
How is rental income taxed for non-residents?
Net rental income (after depreciation, interest, repairs, and management fees) is taxed at Japan’s progressive rates (5–45% national plus 10% local). Non-residents must file annually in Japan via a tax representative. Most tax treaties allow you to credit the Japanese tax against your home-country liability.
How does the short-term vs long-term capital gains rule work?
Held ≤ 5 years on January 1 of the sale year = short-term (≈ 39.63% residents / 30.63% non-residents). Held > 5 years = long-term (≈ 20.315% / 15.315%). The clock counts to Jan 1, not the calendar day — a timing trap worth planning around.
Is Japanese inheritance tax a concern for foreign owners?
Yes. Japanese real estate is a Japan-situs asset, so Japanese inheritance tax always applies on the property itself. Whether worldwide assets are also caught depends on the residence status and timing of the owner and heirs — see the Legal & Tax guide for the matrix.
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