The home loan tax deduction allows you to deduct 1% of your remaining home loan from your income tax each year for 10 years. If the deduction exceeds your income tax liability, the remainder may be deducted from your municipal tax (limits apply).
The deduction amount has been expanded to compensate for the increase in consumption tax rates.
|Up until March 31, 2014*||From April 1, 2014|
|Maximum deduction||2,000,000 Yen|
(200,000 Yen x 10 years)
(400,000 Yen x 10 years)
|Term||10 years||10 years|
from municipal tax
(5% of taxable income from preceding year)
(7% of taxable income from preceding year)
|Conditions||– Floor area over 50 sqm (inner-wall measurement)|
– Mortgage term over 10 years
*Properties purchased under the 5% consumption tax rate will fall under these terms, even if delivery of the property is not until after April. Secondhand properties that are not subject to consumption tax will also fall under these terms.
*Properties designated as long-term superior housing and low-carbon housing have a maximum deduction of 3,000,000 Yen (up until March 31, 2014) and 5,000,000 Yen (from April 1, 2014 until June 30, 2019).
Who is eligible?
The deduction is only available for personal residences and cannot be used for holiday homes, second homes or rental properties. The tax office will require proof of residence. You must also move into the residence within 6 months of purchase.
Your personal annual income must not exceed 30 million Yen.
Non-residents (those who are living overseas and who do not have residence in Japan) are not eligible.
What kind of properties are eligible?
- Homes with a floor area over 50 sqm.
- Brand new homes.
- Secondhand homes:
- For wooden construction: Less than 20 years old
- For concrete construction: Less than 25 years old
- Must have a certificate to show the building meets earthquake-resistant standards
- Must be covered under a warranty against defects
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