The National Tax Agency (NTA) is, according to the Nikkei Shimbun newspaper, working on a plan that could see rosenka land values re-adjusted in the event of a severe drop in market prices.

Rosenka land values are provided by the National Tax Agency and used for the purpose of calculating inheritance and gift tax on real estate. The valuations are done on January 1 each year, with the results announced the following July. Any changes in real estate prices that occur later in that year are not going to be reflected in valuations until the following year. 

In a worst-case scenario, this can create a large divide between the actual market price and the inheritance or gift tax valuation, thereby resulting in an unfairly high tax burden on the heir or recipient. 

Under the current system, if the market price of inherited real estate is lower than the tax value, the taxpayer can hire an appraiser and use the appraised value as the basis for the tax calculation. Hiring an appraiser can cost several hundred thousand Yen, however. 

If the coronavirus pandemic continues to drag on the economy, any changes in real estate prices would not be reflected in rosenka land valuations until next year. On July 1, the annual Standard Land Price valuations will be carried out by prefectures, with the results to be announced in September. If these valuations show a drastic fall in land values, the NTA may introduce special measures to revise their tax valuations downwards accordingly.

Of the 1.36 million deaths recorded in 2018, there were 116,000 heirs that had inheritance tax liabilities. Over a third of the inherited assets were for land, totaling 6 trillion Yen. 

Source: The Nikkei Shimbun, June 24, 2020.