Japan – Property Taxes

What taxes and fees apply when buying a property in Japan?

Purchasing real estate in Japan typically brings upfront costs of around 5% of the property’s value, spread across a range of taxes and charges that together formalise the transaction and transfer legal title. Where mortgage financing is involved or additional professional services are required, total costs can climb higher. Always verify current rates directly with the National Tax Agency Japan (NTA).

The principal costs at the point of purchase are as follows:

• Stamp Duty (印紙税): Japan levies stamp duty on the sales contract, with the amount varying according to the property price. Reduced rates are currently in effect until 31 March 2027, making purchases during this window more attractive. As an illustration, a contract valued between ¥10 million and ¥50 million carries a ¥10,000 stamp under the current reduced schedule. Both the buyer and seller are each liable for the duty; in practice, it is customary for the two parties to divide the cost equally. This is broadly analogous to document duty in other countries, though the amounts involved are comparatively low.
• Registration and Licence Tax (登録免許税): This tax arises when ownership is transferred, a mortgage is registered, or ownership rights are preserved. A transfer of property ownership attracts a 2.0% charge, while the standard rate for land registration stands at 1.5%. Reduced rates may apply to new housing or in particular circumstances. Unlike many legal systems where a solicitor or notary oversees the conveyancing process, property registration in Japan is handled by a judicial scrivener (司法書士), who prepares the legal documentation and files it with the relevant local authority.
• Real Estate Acquisition Tax (不動産取得税): This prefectural tax is levied when you acquire real estate and is a one-off charge rather than an annual obligation. It applies to purchases, new constructions, renovations or extensions, gifts, and exchanges — though inherited property is exempt. The current rate for residential properties and land is 3% until 31 March 2027, rising to 4% for non-residential property. A tax notice is issued by the prefectural government approximately three to six months after completion.
• Real Estate Agent Fee: Agent commissions in Japan are subject to statutory limits, set at 3% of the purchase price plus ¥60,000, with consumption tax added on top. This transparent, regulated structure contrasts with markets where fees can vary considerably between agents.
• Consumption Tax on Services: Japan’s 10% consumption tax applies to most professional services, including agent commissions, judicial scrivener fees, and other service charges. Quoted prices usually incorporate this tax, but it is worth confirming when drawing up your budget.
• Mortgage-related costs (if applicable): Buyers financing their purchase with a mortgage should budget for a handling fee of at least 2.2%, including tax.

Worked example — ¥50 million residential property purchase (as of 2025):

Note: For tax calculation purposes, assessed value is typically 50–70% of construction cost for buildings and approximately 70% of market price for land — meaning the taxable base differs materially from the market value. All figures above are illustrative. Verify current rates with the NTA or a qualified tax adviser.

What taxes and fees apply when selling a property in Japan?

Selling property in Japan triggers its own set of tax obligations, including tax on any gain realised from the sale, together with charges such as stamp duty and Registration and Licence Tax. While the seller’s cost profile differs from the buyer’s, it can still be considerable — especially when a meaningful capital gain has been made.

The principal costs borne by the seller include:

• Capital Gains Tax: For most sellers, this represents the largest single cost. Full details, including rates and examples, are set out in the dedicated section below.
• Stamp Duty: A revenue stamp must be affixed to the sale contract. Contracts prepared between 1 April 2014 and 31 March 2027 for property priced above ¥100,000 qualify for a reduced stamp duty rate. The cost is generally divided equally between buyer and seller.
• Agent Commission: The regulated cap of 3% of the property price plus ¥60,000, plus consumption tax, applies equally to sellers. Aside from capital gains tax, this is typically the most significant out-of-pocket cost a seller will face.
• Registration and Licence Tax for Deregistration: Where a mortgage or other encumbrance is secured against the property, a fee is payable to remove it from the title register upon completion of the sale. This is arranged by the judicial scrivener.
• Tax Return Filing: The seller must submit a tax return and settle any tax due during the filing period — 16 February to 15 March — in the calendar year following the year of sale.

When determining the taxable gain, sellers may deduct legitimate transaction costs including agent commissions, stamp duty, address-change fees, depreciation, and similar outlays. Costs associated with maintenance, renovations, and improvements undertaken to facilitate the sale may also be deductible in certain circumstances.

Is capital gains tax payable on property sales in Japan?

Capital gains arising from the sale of real property — including land, buildings, and structures — are taxed separately from ordinary income. Gains on property held for more than five years as of 1 January of the year in which the transfer occurs are treated as long-term capital gains, attracting a flat rate of 20.315% (comprising 15.315% national tax and 5% local inhabitant’s tax). Gains on property held for five years or fewer are classified as short-term capital gains and taxed at 39.63% (30.63% national tax plus 9% local inhabitant’s tax).

This two-tier structure — which broadly halves the applicable rate once ownership surpasses five years — is a defining feature of Japan’s capital gains tax regime. While conceptually similar to length-of-ownership discounts found in other jurisdictions, Japan’s short-term rate of nearly 40% is notably steep compared to standard CGT rates in countries such as Germany or Canada.

How the five-year rule works: The holding period runs from the date of purchase to 1 January of the year in which the property is sold. Sellers must be alert to how this works in practice: the five-year threshold must have been crossed as of 1 January of the sale year. For example, a buyer who purchased on 1 July 2018 and sells on 1 August 2023 will have held the property for only four years and six months as of 1 January 2023, meaning the short-term rate applies. Long-term treatment would only be available from 1 January 2024 onwards.

Primary residence deduction: A special deduction of up to ¥30 million is available on capital gains from the sale of a primary residence, irrespective of whether the gain is long-term or short-term. If the gain falls below ¥30 million, no capital gains tax is payable. To qualify, the seller must have used the property as their main home for a qualifying period; the sale must take place within three years of vacating the property; the purchaser must not be a relative or close associate; and the deduction must not have been claimed in either of the preceding two years. Investment properties and secondary residences are not eligible.

Long-term primary residence (10+ years): Where a seller disposes of a primary residence that has been owned for more than ten years, a reduced rate may apply to any remaining long-term gain after the ¥30 million special deduction has been applied. Gains up to ¥60 million are taxed at 14.21%, with any excess taxed at the standard long-term rate of 20.315%.

Non-resident sellers: Non-residents are subject to lower effective rates because local inhabitant’s tax does not apply — 30.63% on short-term gains and 15.315% on long-term gains. However, sales of land or buildings by non-residents are subject to a 10.21% withholding tax, unless the individual acquired the property for personal residential use and the sale price does not exceed ¥100 million. Under this withholding mechanism, the buyer deducts 10.21% of the sale price and remits it to the tax authority on the seller’s behalf. This is a provisional payment, not a final tax assessment — if the actual gain is smaller, the non-resident seller may file a return to claim a refund.

Practical example (as of 2025): A resident sells an investment apartment after seven years. Original purchase price: ¥30 million; sale price: ¥42 million; deductible selling costs (agent fees, etc.): ¥1.5 million. Taxable gain = ¥42m – ¥30m – ¥1.5m = ¥10.5 million. CGT at the long-term rate: ¥10.5m × 20.315% ≈ ¥2.13 million. Had this been the seller’s primary residence, the ¥30 million deduction would have wiped out the entire CGT liability.

Always confirm current rates and conditions with the National Tax Agency Japan or a qualified tax accountant.

Are there annual property taxes in Japan?

Owning property in Japan brings ongoing annual tax obligations that contribute to funding local public services and infrastructure. These taxes are calculated on assessed values rather than market values, which generally keeps the burden at a manageable level.

Fixed Asset Tax (固定資産税 — Kotei Shisanzei): This annual levy falls on whoever owns the property as of 1 January each year. The standard rate is approximately 1.4% of the assessed value. Municipal authorities determine assessed values for land and buildings using national fixed asset assessment standards, which are revised every three years. Land assessed values are calculated at roughly 70% of the officially published land price. Compared with annual property taxes in countries such as France (taxe foncière) or the United States — where rates can exceed 1–2% of market value — Japan’s fixed asset tax is often lighter in absolute terms because the taxable base is assessed value rather than market value.

City Planning Tax (都市計画税): Fixed asset tax is payable either in a lump sum or across four instalments during the year. Properties situated in designated urban planning areas are also subject to city planning tax at up to 0.3% of assessed value. This additional levy applies only where urban planning designations are in place. In most major cities — including all 23 wards of Tokyo — both taxes are levied, producing a combined effective rate of around 1.7%.

Reductions for new homes: Qualifying new residential buildings may benefit from a reduction in fixed asset tax on the building element by half for three years from completion, or five years in the case of condominiums.

Small residential land special exemption: For small residential lots, the taxable land value may be reduced by as much as one-sixth under special exemption provisions, significantly lowering the annual tax burden for many homeowners.

Payment and billing: Property tax notices are generally issued by the relevant city or town in April or May each year. Payment schedules and methods vary between municipalities, but bills can typically be settled either in four instalments or as a single lump-sum payment.

Rough annual cost example: For a residential property in an urban area such as Tokyo with an assessed value of ¥20 million, annual fixed asset tax would be approximately ¥280,000 (1.4%), plus city planning tax of around ¥60,000 (0.3%), giving a combined total of roughly ¥340,000. Because assessed values are generally well below prevailing market prices, the real tax burden on a property with a ¥50 million market value is considerably lower than a headline rate might imply. Verify current assessed values with your local municipality or the Ministry of Internal Affairs and Communications.

How is rental income from property taxed in Japan?

Rental income is calculated as the total rent collected from letting real estate to either a private individual or a commercial tenant. Allowable expenses and depreciation are deducted from gross income to arrive at the taxable figure. Net rental losses (excluding those attributable to overseas real estate) may generally be set off against other categories of income.

Residents: Rental income earned by residents is combined with other income and subjected to Japan’s progressive income tax rates, which range from 5% to 45% depending on total taxable income. Permissible deductions include mortgage interest on the building portion, property management fees, depreciation, repair and maintenance expenditure, property taxes, and insurance premiums. Note that mortgage interest referable to land (as opposed to the building) cannot be offset against non-rental income.

Non-residents: Where a non-resident has no permanent establishment in Japan, rental income from Japanese property is generally subject to withholding tax at 20.42%, or at a lower rate where a relevant tax treaty applies. Non-resident landlords are required to appoint a Tax Agent in Japan to manage their filing and payment obligations.

Short-term rentals (Airbnb/民泊): Japan’s Minpaku Law (住宅宿泊事業法), which came into force in 2018, establishes a regulatory framework for short-term home-sharing. Hosts must register with their local authority and comply with applicable restrictions, including a cap of 180 nights per year in most locations. For tax purposes, short-term rental income may be treated as business income rather than passive rental income once a certain operational scale is reached, which affects both available deductions and applicable rates. Buyers who let their property to short-term holiday guests may in certain circumstances be able to reclaim Japanese consumption tax in the year following purchase. Given the complexity, those operating short-term rentals are strongly advised to consult a Japanese tax accountant. Registration requirements are administered by the Ministry of Land, Infrastructure, Transport and Tourism (MLIT).

Does inheritance tax apply to property in Japan?

Japan’s inheritance tax framework operates by reference to the residency status of the parties involved and the location of the assets in question. Non-residents and non-permanent residents are liable for inheritance tax on assets situated in Japan; residents face inheritance tax on assets inherited anywhere in the world.

Inheritance tax rates are progressive, applied to the market value of assets after deducting allowable expenses and other available deductions that vary according to the beneficiary’s circumstances. Japan’s inheritance tax rates rank among the highest globally, reaching up to 55% on the largest estates. In practice, the basic deduction combined with per-heir allowances means that many modest estates attract little or no tax. Japan’s top rate compares steeply with countries such as Germany (where rates range from 30–50% depending on the relationship) or the UK (where a flat 40% applies above the threshold), and stands in stark contrast to jurisdictions that impose no inheritance tax at all.

Basic deduction formula (as of 2025): The basic deduction is calculated as ¥30 million plus ¥6 million multiplied by the number of statutory heirs. For a couple with two children, for example, the deduction would be ¥30m + (¥6m × 3) = ¥48 million. Estates falling below this threshold owe no inheritance tax.

The Real Estate Acquisition Tax does not apply to property that passes through inheritance, as it is exempt from that charge.

Tax treaties: Where a non-resident is domiciled in a country that has concluded a tax treaty with Japan, income — and in some cases inheritance — may be fully exempt or subject to a reduced rate. Japan has estate and gift tax agreements with a limited number of countries, including the United States. Nationals of countries without a treaty are particularly exposed and should seek specialist advice, as Japan’s inheritance tax can extend to worldwide assets once an heir has been resident in Japan for a qualifying period. Treaty status should be confirmed with the NTA or a qualified adviser.

Foreigners living in Japan may face inheritance tax on their worldwide assets depending on their residency classification, whereas non-residents are generally liable only on assets located within Japan.

Does gift tax apply to property transfers in Japan?

Where property is received as a gift, gift tax applies. The amount of tax is determined by the value of the property gifted. Both inheritance and gift tax regimes offer various deductions and exemptions, making advance planning an important part of any property transfer strategy.

Japan’s gift tax (贈与税) is an annual charge levied on whoever receives a gift. Two calculation methods are available:

• Regular (暦年課税 — Annual Taxation): Each recipient benefits from an annual basic exemption of ¥1.1 million. Amounts above this threshold are subject to progressive rates starting at 10% on smaller sums and reaching 55% on transfers exceeding ¥30 million to non-lineal heirs. Slightly lower rates apply to gifts made directly to lineal relatives such as children and grandchildren. Japan’s maximum gift tax rate is among the highest in the world, deliberately structured to prevent the erosion of inheritance tax revenues through lifetime gifting.
• Special (相続時精算課税 — Settlement at Inheritance): Under this system, a donor aged 60 or over may gift up to ¥25 million to a child or grandchild aged 18 or over without immediate gift tax liability, with any excess taxed at a flat 20%. The value transferred is subsequently brought back into the estate for inheritance tax purposes. From 2024, an additional annual exemption of ¥1.1 million per recipient per year was introduced within this system — consult the NTA website for the latest rules.

The Real Estate Acquisition Tax applies to property acquired by gift as well as by purchase and exchange. Gifts of property between spouses who have been married for 20 years or more may qualify for a special exemption of up to ¥20 million on the market value of a primary residential property. Always verify current thresholds and qualifying conditions with the NTA or a qualified adviser, as these provisions are subject to change.

Are there any tax advantages or incentives for buying property in Japan?

A range of tax reliefs and exemptions exists in Japan, though these generally apply only where specific conditions are satisfied. Eligibility criteria vary according to the type and use of the property, its size, and the buyer’s residency status. The most significant incentives available as of 2025 are outlined below:

Mortgage Tax Credit (住宅ローン控除): Owner-occupiers who take out a mortgage to buy or build a new or pre-owned home may be entitled to claim an annual income tax credit. The credit is calculated as a percentage of the outstanding mortgage balance at the end of each tax year and can meaningfully reduce income tax liability over the credit period — up to 13 years for new homes that meet prescribed energy-efficiency standards under recent reforms. This is one of the most valuable incentives available to resident owner-occupiers. Current rates and eligibility requirements should be confirmed with the NTA.

Reduced Real Estate Acquisition Tax for residential property: The reduced rate of 3% for residential properties and land applies until 31 March 2027. Newly built homes satisfying certain criteria — including a minimum floor area of 50 m² and residential use — may qualify for additional deductions from the assessed value before the tax is computed.

Reduced registration tax for new or pre-owned homes: Purchasers of a primary residence may access a preferential registration and licence tax rate. For pre-owned homes, for example, the reduced rate is 1.5% on land and 0.3% on the building. A minimum floor area of 50 m² is among the qualifying requirements.

New home fixed asset tax reduction: Qualifying new residential buildings may benefit from the fixed asset tax on the building element being reduced by half for three years from completion, or five years in the case of condominiums.

Renovation incentives: Tax deductions and credits are available for qualifying renovation works, including earthquake-resistant reinforcement, barrier-free adaptations, and energy-efficiency improvements. These measures can reduce both income tax and fixed asset tax liabilities. As the details of available programmes change regularly, reference should be made to the Ministry of Land, Infrastructure, Transport and Tourism for current information.

Primary residence CGT deduction: As described above, the ¥30 million capital gains deduction on the sale of a primary residence is one of the most generous property tax reliefs within the Japanese system. It is available to qualifying residents regardless of how long they have owned the property or whether the gain is classified as short-term or long-term.

Do different rules apply to foreign buyers or non-residents purchasing property in Japan?

Foreign nationals and non-residents are permitted to acquire property in Japan. Nonetheless, a thorough understanding of the tax system is essential for making well-informed decisions about Japanese real estate investment. Japan imposes no restrictions on foreign property ownership and levies no additional surcharge or supplementary transfer tax solely on the basis of the buyer being a non-citizen or non-resident. This makes Japan a notably accessible market compared with jurisdictions such as Canada or Australia, which have introduced foreign buyer surcharges of 20% or more on residential property in recent years.

Regardless of nationality or residency status, anyone owning real estate in Japan is liable for the applicable property taxes. Fixed asset tax, city planning tax, and other ownership-related charges apply equally to foreign and domestic owners.

Nevertheless, there are significant practical and compliance differences for non-residents:

• Tax Agent requirement: Fixed Asset Tax and City Planning Tax apply to all property owners irrespective of where they reside. A foreign national living outside Japan carries the same tax payment obligation as a domestic resident. Where the owner cannot personally manage tax payments, they are required to designate a Tax Agent — a person living in Japan who acts on their behalf. A “Notification of Tax Agent” form must be submitted to the local tax office with jurisdiction over the relevant property.
• Withholding tax on property sales: Where the seller is based overseas, the buyer is required to withhold 10.21% of the sale price and remit it to the Japanese tax authority, passing the balance to the seller. This is commonly handled by the real estate agent on the buyer’s behalf, but must be completed by the 10th day of the month following the transaction.
• Withholding tax on rental income: The withholding tax rate applicable to a property sale is 10.21% of the sale price; for rental income, the applicable rate is 20.42%. Non-resident landlords must appoint a Tax Agent to fulfil these obligations.
• No legal translation requirement, but a practical necessity: All contracts and transaction documentation are prepared in Japanese. Foreign buyers are strongly advised to engage bilingual agents or professional translators to ensure they fully understand the terms of any document they are asked to sign.
• Mortgage access: Securing a Japanese mortgage as a non-resident is substantially more challenging than for residents, and most lenders require Japanese residency or permanent residency status. Many foreign buyers therefore purchase in cash or through specialist lending arrangements.
• Inheritance and gift tax exposure: Foreigners resident in Japan may be subject to inheritance tax on their worldwide assets depending on their residency classification, while non-residents are generally liable only on assets located within Japan. Long-term residents who subsequently leave Japan may face “exit tax” obligations in relation to certain financial assets.

The National Tax Agency Japan and the Ministry of Justice both publish English-language guidance relevant to foreign property buyers.

How do I register property in Japan? A step-by-step guide to the purchase process

1. Agree the purchase price and terms — Once a property has been identified and terms settled with the seller or developer, the agent will prepare the necessary transaction documents. Any documentation should be reviewed by a bilingual adviser if required.
2. Sign the Explanation of Important Matters (重要事項説明書) — Before any purchase contract can be signed, a licensed real estate agent must walk through a comprehensive disclosure document covering legal title, encumbrances, zoning designations, and material defects. This is a legally mandatory step specific to Japan’s property transaction process.
3. Sign the Purchase and Sale Agreement and pay the deposit — Stamp duty is payable at this point, with revenue stamps affixed to the contract. A deposit of typically 5–10% of the purchase price is paid to the seller at signing.
4. Complete mortgage application (if applicable) — Applications are submitted to a Japanese bank or specialist lender. Non-residents face more stringent lending criteria and may need to finance the purchase in cash or through specialist channels.
5. Settlement and balance payment — The remaining balance of the purchase price is transferred. The agent’s fee — or its final instalment if split — is also ordinarily due at this stage.
6. Registration of ownership transfer — The judicial scrivener (司法書士) submits the registration documentation to the Legal Affairs Bureau (法務局). Registration and Licence Tax is paid at this stage, and legal ownership formally transfers upon registration.
7. Pay the Real Estate Acquisition Tax — The prefectural government issues a tax notice approximately three to six months after completion. Payment is made at a bank or other designated financial institution.
8. Annual property tax billing commences — Property tax notices are sent by the relevant city or town each April or May. Non-residents should ensure a Tax Agent is in place and ready to receive and settle these bills on their behalf.

Frequently asked questions about property taxes in Japan

Do I need to file a Japanese tax return if I sell a property while living overseas?

Yes. Even where you are a non-resident with no registered address in Japan and have not lived there continuously for a year, you remain obligated to file a tax return and pay capital gains tax on any disposal of Japanese real estate. You will need to nominate a Tax Agent who is resident in Japan to submit the return on your behalf, and you must notify the local tax office with authority over the property by filing a “Notification of Tax Agent” form.

Is there a deadline for filing a capital gains tax return after selling property in Japan?

Yes. Sellers are required to file a final tax return in the calendar year following the year of sale, with the filing window running from 16 February to 15 March. Late filing may attract penalties. Consult the NTA or a local tax accountant to ensure you meet the deadline.

Are annual property taxes higher in Tokyo than elsewhere in Japan?

The underlying rates are consistent nationally — 1.4% for fixed asset tax plus up to 0.3% for city planning tax. In the majority of Tokyo’s 23 wards and in Osaka City, both levies apply, producing an effective combined rate of around 1.7%. In rural municipalities, city planning tax may not apply, keeping the effective rate lower. The actual amount payable is heavily influenced by the assessed value, which differs markedly between locations.

Can I avoid capital gains tax if I reinvest the proceeds into a new property?

Where you sell your primary residence and acquire a replacement within a three-year window — spanning the year of sale, the preceding year, and the following year — you may be able to defer the capital gains tax liability, provided you have owned the original property for more than ten years as of 1 January of the sale year and satisfy certain additional conditions. This is a deferral rather than a permanent exemption — tax will ultimately become payable when the replacement property is eventually sold. Note that this deferral regime and the ¥30 million primary residence deduction cannot be used in combination; only one may be elected. Confirm current requirements with the NTA.

Does Japan have an inheritance tax treaty with my home country?

Japan has entered into estate and gift tax agreements with a limited number of countries, including the United States. Many nations have no such treaty with Japan on inheritance or gift taxation, which gives rise to potential double taxation risk in some situations. Where a non-resident is domiciled in a treaty country, income — and sometimes inheritance — may be exempt or taxed at a reduced rate. Consult the NTA’s treaty information and engage a specialist adviser with cross-border estate planning expertise.

How is property assessed for tax purposes, and how often does it change?

Assessed values are determined by municipalities using fixed asset assessment standards established at the national level, which are reviewed once every three years. The assessed value for land is set at approximately 70% of the officially announced land price, which the government publishes annually. Building values are based on estimated replacement cost after accounting for depreciation. Because assessed values are typically well below prevailing market values, annual property tax liabilities tend to be lower than buyers accustomed to market-value-based taxation in other countries might anticipate.

Do I need a judicial scrivener, and what do they cost?

Yes. Property registration in Japan must be handled by a judicial scrivener (司法書士), who prepares the legal paperwork and files it with the appropriate local authority. Unlike the role of a notary in civil law countries such as France or Germany — where regulated fees can represent a significant percentage of the purchase price — judicial scrivener fees in Japan are comparatively modest, generally falling in the range of approximately ¥80,000 to ¥200,000 or more, depending on the complexity of the transaction. It is advisable to obtain a written fee estimate before proceeding.

Are there any taxes on vacant or abandoned properties in Japan?

Japan faces a well-documented challenge with unoccupied properties (akiya, 空き家). As of 2025, no dedicated vacancy tax exists at the national level, though certain municipalities have introduced local measures, and the national government has progressively tightened regulations around akiya to encourage owners to renovate or demolish. Properties formally designated as “hazardous vacant properties” under the 2015 Akiya Law can lose the small residential lot land exemption that ordinarily reduces fixed asset tax — an outcome that can multiply the annual land tax bill by as much as six. Contact your local municipality for area-specific rules and refer to the MLIT for national policy developments.