The National Tax Agency and the Ministry of Internal Affairs and Communications are considering introducing changes to the tax valuation of apartments in high-rises to counter-act a growing trend of wealthy Japanese buying up apartments on high floors to reduce their inheritance taxes. Changes could be introduced from as early as 2018.
When calculating inheritance taxes, assets such as cash and shares are valued based on their face value, while real estate is valued based on its ‘rosenka’ tax value which can be much lower than the actual market value.
For apartments in a high-rise building, the tax value is currently based on both the size of the apartment and the rosenka value of the small share of land. Tax values do not take into account the floor, views or facilities, so an apartment on the 2nd floor would have the same tax value as an apartment on the top floor, assuming they are the same size. The top floor unit, however, has a market value much higher than the lower floor unit.