Home loan tax deduction

The home loan tax deduction allows you to deduct 1% of your remaining home loan from your income tax each year for up to 10 years. If the deduction exceeds your income tax liability, the remainder may be deducted from your municipal tax (limits apply).

A special three-year extension applies for residences that are moved-into between October 1, 2019 and December 31, 2020, where the 10% consumption tax rate was applied to the purchase. Be aware that consumption tax may only apply in certain real estate transactions.

  From April 1, 2014 ~ December 2021 From October 1, 2019 ~ December 31, 2020 [*1]
Maximum deduction 4,000,000 Yen
(200,000 Yen x 10 years)
4,000,000 Yen
(400,000 Yen x 10 years) for years 1 ~ 10
Deduction % 1% 1%
Term 10 years 10 years + 3 year extension
Maximum deduction
from municipal tax
136,500 Yen/year
(7% of taxable income from preceding year)
136,500 Yen/year
(7% of taxable income from preceding year)
Conditions – Floor area over 50 sqm (inner-wall measurement)
– Mortgage term over 10 years

Notes: 

[*1] From years 11 ~ 13, the following can be deducted from the borrower’s annual income tax (the lowest amount applies):
(1) 1% of the remaining loan balance or aquisition price (not exceeding 40 million Yen); or
(2) Building aquisition price (not exceeding 40 million Yen) x 2% / 3

*Properties designated as long-term superior housing and low-carbon housing have a maximum deduction of 5,000,000 Yen (from April 1, 2014 until December, 2021).

Who is eligible?

The deduction is only available for personal residences and cannot be used for holiday homes, second homes or rental properties.  The tax office will require proof of residence. You must also move into the residence within 6 months of purchase.

Your personal annual income must not exceed 30 million Yen.

Non-residents (those who are living overseas and who do not have residence in Japan) are not eligible.

What kind of properties are eligible?

  • Homes with a floor area over 50 sqm.
  • Brand new homes.
  • Secondhand homes:
    • For wooden construction: Less than 20 years old
    • For concrete construction: Less than 25 years old

OR

    • Must have a certificate to show the building meets earthquake-resistant standards
    • Must be covered under a warranty against defects

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