Tax in Japan
Tax Summary 2017
If you own real estate in Japan then you must pay Japanese Taxes. However, Japan has Tax Treaties with 65 countries worldwide so that you will not be double taxed. Below is a summary of all the taxes related to purchasing, owning, and selling a property in Japan. In addition, there are links to references and detailed explanations of certain taxes at the bottom.
Contract Price: 10 Million ～ under 50 Million: 10,000 JPY
Contract Price: 50 Million ～ under 100 Million: 30,000 JPY
Contract Price: 100 Million ～ under 500 Million: 60,000 JPY
Contract Price: 500 Million ～ under 1Billion: 160,000 JPY
*Relief Period until March 31, 2018
8% of the Building Price
2% of Assessed Residential Property Value
*0.4% for brand new property
2% of Assessed Land Value
3% of Assessed Residential Property Value
*4% for Commercial Buildings
1/2 of Assessed Land Value X 3%
*Relief Period until March 31, 2018
*Charged to Owner 3 to 6months after purchase
「Owner Switch Over」
Assessed Property Value X 1.4%
City Planning Tax
Assessed Property Value X 0.3%
Taxable Profit X 5% ～ 45%
Income Tax if Corporate
Taxable Profit X 15% ～ 26.62%
Capital Gain Tax
Re-sell within 5 years from purchase: 30% of Capital Appreciation
Re-sell after 5 years from purchase: 15% of Capital Appreciation
9% +if a Japan Resident
10% of Sales Price (will be fully refunded after filing taxes)
「Individual Income Tax Rate」
Rates Income (in Millions) Basic Balancing Deduction
5% ～ 1.95 JPY 0 JPY
10% 1.95 JPY ～ 3.30 JPY 97,500 JPY
20% 3.30 JPY ～ 6.95 JPY 427,500 JPY
23% 6.95 JPY ～ 9.00 JPY 636,000 JPY
33% 9 JPY ～ 18.0 JPY 1,536,000 JPY
40% 18 JPY ～ 40.0 JPY 2,796,000 JPY
45% 40 JPY ～ 4,796,000 JPY
「Corporate Income Tax」
* Fixed Tax Rate
Rates Financial Year Beginning
26.62% Before March 31, 2014
24.95% Beginning on or After April 1, 2015
24.43% Beginning on or After April 1, 2016
25.81% Beginning on or After April 1, 2017
「SME Income Tax Rates」
* SME = Company Capital of less than JPY 100 Mil
Rates Income （in Millions） Financial Year Beginning
Above Rates 8 JPY ～ Throughout
15% 4 JPY ～ 8 JPY Before April 1, 2018
19% 4 JPY ～ 8 JPY After April 1, 2018
* Income tax from the past year must be filed by Mid-March each year.
* Tax accountant fees will be separate.
Detailed Explanations of Taxes
Stamp Duty/ Tax:
The amount of stamp tax payable is dependent on the property price listed on the Purchase & Sales Agreement.
Consumption tax will be applied to only the building and not the land. Usually this is already included into the Purchase Price. *When buying a second hand property, if the seller is an individual owner then it will be consumption tax free.
Registration tax is payable upon acquisition of either a piece of land or a building. The tax is calculated against the taxable fixed asset value, which is valued by the Japanese government once every 3 years.
This is only a 1 time payment per purchase and will be charged to the new owner 3 ~ 6 months after the property has been registered.
Property and City Planning Tax:
The Property Tax and City Planning Tax is calculated from the property and lands assessed value. The tax bill will be combined and sent to the owner (or tax representative) each year around June.
Income tax rate is a progressive rate based on your NET annual income. For Corporates it will be a fixed rate no matter the income amount. Many costs that deal with managing your property may be deducted from your gross annual income so please talk to a tax accountant to understand what costs can be applied.
Capital Gain Tax:
Capital Gain Tax will be calculated from the NET Capital Appreciation of your property. Costs needed to sell your property may also be applied to your Capital Appreciation but do talk to a tax accountant to understand what costs can be applied.
Withholding Tax will be applied when you sell your property. However, that amount will be refunding to you after you have filed your Income Taxes. In addition, as a foreign owner overseas, should your property tenant be a corporate tenant, Withholding Tax of 20.42% will be applied to your monthly rental income each month. This will also be refunded to the owner after Income Tax has been filed.
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