JAPAN HOME GUIDE

Japan Home Guide (English)

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General information for overseas and foreign buyers of homes in Japan. UMJ is not a real estate broker.

When people estimate the return on a home in Japan, the cost they most often underestimate is the cost of holding it. This article lists the items overseas buyers should know first. It is general information; for actual amounts, follow the explanation from the local government and from your agency.

When you buy

• Brokerage fee: for a price above 8 million yen, the legal maximum is price × 3% + 60,000 yen, plus consumption tax. For homes priced at 8 million yen or less, since July 2024 the maximum can be up to 330,000 yen including tax.
• Real estate acquisition tax: charged once by the prefecture after you acquire the property. The standard rate is 4%; homes and land currently get a reduced rate of 3%.
• Registration costs: registration and license tax, plus the fee of the judicial scrivener (shiho shoshi) who files the registration.

Every year

• Fixed asset tax: paid by whoever owns the property on January 1. The standard rate is 1.4% of the assessed value. Land used for housing gets a reduction.
• City planning tax: in principle charged on land and buildings inside an urbanization promotion area, at up to 0.3% (0.3% in Tokyo’s 23 wards). Whether it applies depends on the rules of the municipality where the property is.

Every month (condominiums)

• Management fee: cleaning, the building manager and shared facilities.
• Repair reserve: money saved for future large-scale repairs. It usually rises as the building ages. Before buying a used condominium, check the building’s long-term repair plan and whether the reserve is sufficient.

Rules that apply to overseas owners

• Tax agent (nozei kanrinin): if you do not live in Japan, you appoint a tax agent in Japan to receive tax notices and file returns for you. A professional agent charges a fee.
• Withholding on rent: when a company or similar tenant pays rent to a non-resident landlord, it generally withholds 20.42% income tax first. The difference is settled when you file a return.
• Withholding on sale: when a non-resident sells Japanese property, the buyer generally withholds 10.21% of the price (with exceptions, such as an individual buying a home to live in for 100 million yen or less).
• Report after acquisition: in some cases a non-resident who acquires Japanese property must report it to the Minister of Finance through the Bank of Japan within 20 days. Ask your agency or a judicial scrivener whether it applies to you.

Bottom line

If you plan to rent the home out, subtract the annual taxes, the monthly management fee and repair reserve, and the cost of a tax agent and rental management before you calculate the real return.

Sources

• Tokyo Metropolitan Government Bureau of Taxation, Fixed Asset Tax and City Planning Tax (Japanese): https://www.tax.metro.tokyo.lg.jp/kazei/real_estate/kotei_tosi
• National Tax Agency, Paying rent to non-residents (Japanese): https://www.nta.go.jp/taxes/shiraberu/taxanswer/gensen/2880.htm
• National Tax Agency, Buying land from non-residents (Japanese): https://www.nta.go.jp/taxes/shiraberu/taxanswer/gensen/2879.htm

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