From February 28, 2015, the Act on Special Measures Concerning Vacant Houses will go into effect. This law has been designed to help reduce the number of abandoned homes across the country. Such homes pose fire and hygiene hazards, can invite crime and can be a general blight on the neighbourhood.
Under this Act, a local government can designate an abandoned and deteriorating property as a risk to the environment, and thereby make the property owner ineligible for the fixed asset tax deductions that would otherwise apply. In some cases, local governments may have the right to forcibly demolish the building.
In the 1970s, tax breaks were introduced to help ensure a steady supply of housing at a time when there was a housing shortage. Under this tax scheme, the annual fixed asset tax on residential land was reduced to a 1/6th on the first 200 sqm, and 1/3rd for the portion over 200 sqm, provided there was a house on the land.
Naturally this made it much more cost effective to leave a dilapidated and inhabitable structure on land that the owner had no current plans for, since removing the house could result in their tax bill increasing six-fold. For example, an annual fixed asset tax bill of 80,000 Yen would become 480,000 Yen.
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