When buying real estate in Japan, many of the taxes are based on the fixed asset tax value of the individual property, which is different to the purchase price. When you have found a property you wish to purchase, your agent should be able to provide you with an estimate of the taxes and costs before purchase.
As a general guide, plan for the fees and taxes to be equivalent to around 6~7% on top of the purchase price.
5,000 ~ 480,000 Yen
Stamp tax is paid when signing a construction contract, sales contract or mortgage contract. The tax is based on the price indicated in the contract.
|PURCHASE PRICE||STAMP TAX (*REDUCED RATE)|
|5 ~ 10 million Yen||5,000 Yen|
|10 ~ 50 million Yen||10,000 Yen|
|50 ~ 100 million Yen||30,000 Yen|
|100 ~ 500 million Yen||60,000 Yen|
|500 million ~ 1 billion Yen||160,000 Yen|
|1 billion ~ 5 billion Yen||320,000 Yen|
|5 billion Yen +||480,000 Yen|
*The stamp tax rates indicated above are the reduced tax rates which apply to purchase contracts that take place between April 1, 2014 and March 31, 2024.
Real Estate Registration Tax
1.5% of the fixed asset tax value of the land
0.3%* of the fixed asset tax value of the building
0.1% ~ 0.4% of the value of the mortgage
This tax is paid upon transfer of ownership, and also when a mortgage is taken out on a property. A judicial scrivener will provide an estimate of the registration tax that must be paid.
The tax rate is 1.5% of the fixed asset tax value of the land, plus 0.3% of the fixed asset tax value of the building (*if it is brand-new construction; or if the floor area is over 50 sqm, within a certain age, and used as a personal residence). If the property is to be used as a second home or rented out, the tax rate on the building is 2.0% of the fixed asset value.
Mortgage registration tax is 0.4% of the value of the mortgage. For personal residences that meet certain requirements, the tax rate may be reduced to 0.1%.
Real Estate Acquisition Tax
1.5% of the fixed asset tax value of the land
3.0%* of the fixed asset tax value of the building
You will receive a bill for the real estate acquisition tax from the tax office within around 3 ~ 6 months after purchase.
- 1.5% of the fixed asset value of the land.
- 3.0% of the fixed asset value of the building.
The normal tax rate for land is 3% of the fixed asset value, but if the land is designated as ‘building land’ the tax rate is halved.
Deductions apply for new housing and housing that has received long-term superior housing certification. There are also deductions for secondhand homes and apartments which can vary depending on the age of the building, its size and purpose of use.
Real Estate Brokerage Fee
3% + 60,000 Yen + consumption tax
If you are using the services of a real estate agent when buying or selling real estate in Japan, you will be required to pay them a brokerage fee or commission of 3% of the base price + 60,000 Yen + consumption tax (currently 10%).
Brokerage fees are paid by both the seller and the buyer. As a buyer, if you work directly with the seller’s broker, that broker is also entitled to collect the same brokerage fee from you (effectively earning a double commission on the sale while representing both parties).
The base price is the consumption tax-free price of the property and will be lower than the actual purchase price if the property includes consumption tax, so make sure you check that your agent has not overcalculated their fees. Consumption tax applies to the building portion of the property if the seller is a company (the consumption tax is typically included in the sale price and then paid by the seller).
Fixed Asset & City Tax
Fixed asset tax: 1.4% of the base taxation amount
City tax: 0.3% of the base taxation amount
These are essentially the annual property taxes.
The annual fixed asset and city taxes will be different for each property, so please check with your agent for the latest tax figures. Taxes tend to be higher for properties with a larger and more valuable share of land ownership.
You will have to pay the pro-rated taxes to the seller at the time of sale, and then continue to pay these taxes to the tax office each year.
Taxes can be paid once annually or in quarterly payments. If a property is jointly owned by several parties, all parties have a joint tax payment obligation. Taxes are not and cannot billed to each owner based on their share of ownership. Eg, if Person A and Person B each have a 50% ownership in the property and the annual tax bill is 100,000 Yen, both A and B are responsible for making sure the amount is paid. Person A cannot request to the tax office that they only pay 50,000 Yen. If Person B pays the entire 100,000 Yen, the tax liability for both Person A and B is cleared.
These taxes are usually halved for the first 3 ~ 5 years after a new home or apartment building is completed.
Example of annual fixed asset and city taxes:
- 32-year old 26sqm apartment in Roppongi: 51,141 Yen
- 8-year old 102sqm apartment in Shibaura: 252,324 Yen
- 24-year old 165sqm apartment in Motoazabu: 1,438,742 Yen
- 17-year old house in Nishihara: 1,399,896 Yen
Management and Repair Fund Fees
(for apartment owners)
If you own an individual apartment in a building, you will be required to pay monthly fees to the building’s management company and to the repair fund. Management fees go towards the general running of the building, while repair fund fees go towards future repairs and maintenance of the common areas. The fees are calculated based on the internal size of your apartment, so larger apartments will incur higher monthly fees. There may also be additional fees for apartments with roof terraces or gardens.
Fees may be set low by a developer when a building is new, but as the building ages, these fees may have to increase to cover maintenance. The building’s owners association (made up of apartment owners) has the right to vote to change the fees.
As a very general guide, these fees may typically range from 350 to 600 Yen per square meter, depending on the building and its facilities, although you may find some properties with fees outside this range.
Contact your bank
If you are purchasing with finance, your bank will charge you fees on top of the mortgage. There may also be fire and life insurance premiums as well. Please contact your bank directly to inquire about the fees as they can vary and there are different options for payment.
Contact your insurance provider
Fire insurance is usually required as a condition of a bank loan, but otherwise is optional for property buyers. Earthquake insurance is also optional, and may be taken out along with fire insurance (but cannot be taken out on its own).
Payouts are limited and vary depending on building age, size, location and level of coverage, so please contact an insurer to find out about premiums and maximum payouts. For earthquake insurance, maximum payouts may be capped at 50 million Yen regardless of the market price of the property.
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