Legal & Tax

Acquisition Tax

The tax is imposed when real estate is acquired. In principle,

Tax amount＝Assessed Value of fixed assets ×４％

Under special provision: 3% (for land and residential buildings) and 4% (for non-residential buildings)

Registration & License Tax

When land and buildings are constructed or bought, registration and license taxes are imposed mainly for registration of preservation and relocation of ownership. The following tax rates are levied against the assessed value of fixed assets.

Registration of land ownership: 1.5％（up to Mar. 31, 2021 ※standard rate is 2％), Registration of building ownership : 2％.

Stamp Tax

The amount of stamp tax to be paid depends on the property price listed on the purchase agreement.

Consumption Tax (Not imposed on land)

When buying real estate, a 10% consumption tax will be levied on the purchase price. Since the land is tax-exempt, there is no consumption tax for a land purchase, but the building is subject to consumption tax.

※If the transaction is taxable, such as the purchase of newly constructed building or brokerage fee, consumption tax will be levied.

※For non-taxable transactions, such as purchasing a pre-owned home by an individual from an individual, the transaction is not subject to consumption tax.

Fixed Asset Tax

Owners of land, a house, and depreciable assets as of January 1st every year will be imposed yearly. In principle,

Tax amount = assessed value of fixed assets x 1.4% 

The tax rate is decided by each municipal tax offices, which varies from areas.

City Planning Tax

Owners of land, a house, and depreciable assets as of January 1st every year will be imposed yearly. In principle,

Tax amount = assessed value of fixed assets x 0.3% (Maximum)

The tax rate is decided by each municipal tax offices, which varies from areas.

・Buyers will pay taxes proportionally when transaction is made

As mentioned above, fixed asset tax and city planning tax are imposed on owners of real estate as of January 1st of the year. However, most transactions take place during the calendar year. In this case, buyers usually pay the proportion of the fixed asset tax and city planning tax corresponding to the time the new buyer will own the property in the year to the sellers. Hence, these taxes are incurred when real estate is purchased as well.

Income Tax

It is a tax levied on personal income. The calculation is to subtract all expenses and deductions from the income of the year to get the profit, and then multiply it by the corresponding tax rate.

・When a non-resident leases real estate, if certain conditions are met, the lessee of the real estate is obligated to withhold 20.42% of the monthly rent and pay it to the tax office. (e.g., if the tenant is a corporation, it is not for residential use, the amount exceeds \100 million yen, etc.)

Capital Gain Tax

ift Tax

Gift tax is imposed when one receives properties such as land, a house, or the purchase money for real estate donated by individuals.

■Calculation of gift tax

Taxable amount＝ gifted asset value – \1.1 million（basic exemption）

Gift tax ＝taxable amount × tax rate －exemption

※1 Basic exemption: The gift tax will not be imposed if the total value of properties donated in one year is less than \1.1 million.

※2 Donations between spouses can be exempted under certain circumstances. Meanwhile, special rate is applicable if the beneficiary is 20 years or older and is a direct descendant of the donor.

Inheritance Tax

Inheritance tax is imposed when one acquires properties by inheritance or bequest upon the death of a decedent.

■Calculation of inheritance tax

Basic exemption＝\30 million + \6 million X number of statutory heirs

Total taxable estate＝ Net estate amount −basic exemption

Inheritance tax＝total taxable estate× tax rate – exemption

■How is inherited real estate assessed?

・Land

• Roadside land value method: roadside land prices for inheritance purpose × land size
• Multiplying method: assessed value of fixed assets × a certain multiplying rate (※ If roadside land value is not applicable）

・House: Assessed Value of fixed assets, which is approximately 70% of the actual value.