The government has decided to extend the home loan tax deduction program for new home buyers to allow a three-year period whereby a home owner could deduct up to 2% of the building portion of their purchase price from their income tax. This is an effort to help support the housing market this year when the consumption tax rate is scheduled to increase to 10% from October 2019.
The three-year extension to the current 10-year maximum term will allow a home owner to deduct up to 2% of the property purchase price* from their income tax apportioned over a three year period.
Note: The deduction only applies to the building portion of the purchase price for properties purchased where the new 10% consumption tax rate applies. Consumption tax only applies to the building portion of a sale, not the land portion. Consumption tax does not apply when the seller is a private individual.
The current home loan tax deduction allows you to deduct up to 1% of your remaining home loan from your income tax each year for the first 10 years, with a maximum deduction ranging from 200,000 ~ 500,000 Yen per year. The new proposal would apply to new home buyers and allow them to apply the 1% deduction for the first 10 years, followed by a 2% deduction of the purchase price apportioned over 3 years.
During the three-year extended term, either 2% of the building portion of the purchase price apportioned over the three years or 1% of the remaining loan balance, whichever amount is lower, may be deducted from the borrower’s income tax.
The three-year extension only applies to those who purchase and move into their eligible home between October 1, 2019 and December 31, 2020. For properties under construction, the term will apply for contracts signed from April 2019.
For example, if a home buyer purchased an apartment or house in 2020 and the building portion of the purchase price was 20,000,000 Yen, the home owner would be able to deduct a maximum of 400,000 Yen (2%) from their income tax over the three years from 2031 ~ 2033.
Various criteria must be met by borrowers, so please check before buying. Details can be found on the official Sumai Kyufu website here: http://sumai-kyufu.jp/ (Japanese language only).
The Sankei News, December 4, 2018.
The Chunichi Shimbun, December 4, 2018.
The Tokyo Shimbun, December 15, 2018.
2,098 total views, 2 views today