Kyoto City’s plan to tax owners of vacant homes was approved by the Ministry of Internal Affairs and Communications in March, which means some ‘akiya’ or unoccupied homes will come with an additional annual tax. The new tax will not be imposed immediately – it may start in the 2026 fiscal year – and will not be applied to all vacant homes.
In recent years Kyoto City has been struggling with a housing shortage for families. The point of the new tax is to encourage empty-home owners to sell their land or apartments, providing some much needed supply for new residents. The city is also relaxing building height limits to encourage the construction of more apartment buildings.
An estimated 15,000 empty homes may be subject to this additional tax. It will result in a total annual property tax burden of approximately 1.5 times what the property owner had been previously paying.
The tax rate is based on the fixed asset tax value of the building and land, just as annual property taxes are calculated. These fixed asset tax values are often much lower than the market price of a property, at least in urban areas. For the structure, the vacant home tax will be 0.7% of the home’s fixed asset tax value. For the land portion, it is a progressive tax that is 0.15% of the land’s fixed asset value on a per-square-meter figure multiplied by the size of the house up to 7 million Yen, 0.3% for the amount between 7 ~ 9 million Yen, and 0.6% on the amount over 9 million Yen.
For example, a 60 sqm apartment in a 40-year old building might have an annual vacant home tax of 24,000 Yen. A 20-year old, 100 sqm house might have an annual vacant home tax of 33,000 Yen.
Owners of traditional machiya townhouses can rejoice because the tax will not apply to historic properties. Also, if your home is unoccupied because you are advertising for a tenant or have it listed for sale, the first year of advertising for tenants/buyers will not be taxed. The tax will not be imposed on places that are used for business purposes, or places that are temporarily vacant due to the resident/s being temporarily transferred for work or due to hospitalization.
What constitutes occupancy, such as how many days in a week does the owner have to be living on the premises, has not been defined, with the city to determine it on a case-by-case basis.
Sources:
Kyoto City News Release, April 17, 2023.
The Nikkei Shimbun, March 24, 2023.
