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Buying property in Hiroshima requires understanding the complete cost structure beyond the purchase price. Property taxes and fees in Hiroshima can add 20-25% to your total investment cost, making proper financial planning essential for any real estate purchase in Japan's seventh-largest city.
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For a typical ¥40 million condominium in Hiroshima, you'll need approximately ¥47.8 million at closing including all taxes and fees.
Annual ongoing costs for property taxes, management fees, and insurance total around ¥763,000 in the first year.
| Cost Category | Amount (¥) | When Due |
|---|---|---|
| Property Price | 40,000,000 | At closing |
| Real Estate Acquisition Tax | 1,500,000 | 1-3 months after purchase |
| Registration & License Tax | 944,000 | At closing |
| Brokerage Commission | 1,386,000 | At closing |
| Consumption Tax (Building) | 3,000,000 | At closing |
| Loan-Related Costs | 830,000 | At closing |
| Annual Property Taxes | 476,000 | Quarterly payments |
What type of property are we using as an example in Hiroshima, and what's the price breakdown?
Most residential transactions in Hiroshima focus on condominiums, which represent the majority of urban housing purchases.
For our calculations, we'll use a typical new condominium priced at ¥40 million total. This splits into ¥10 million for the land portion and ¥30 million for the building portion, which is the standard breakdown used for tax calculations in Japan.
New condominiums in Hiroshima's central areas like Naka-ku and Minami-ku typically range from ¥35-50 million for a 70-80 square meter unit. The land-to-building ratio varies by location, but 25% land and 75% building is common for condominiums.
This example reflects market conditions as of September 2025, when Hiroshima's property market has shown steady growth due to urban development projects and the city's economic recovery post-pandemic.
What is the Real Estate Acquisition Tax rate in Hiroshima, and how much would it cost for our example?
Real Estate Acquisition Tax in Hiroshima Prefecture follows Japan's standard rates of 3% on land and 4% on buildings for residential properties.
The tax is calculated on the assessed value, which typically ranges from 70-80% of the market price, though we'll use market price for simplicity in our example.
For our ¥40 million condominium, the calculation would be: Land portion (¥10 million × 3% = ¥300,000) plus Building portion (¥30 million × 4% = ¥1,200,000), totaling ¥1,500,000 before any reductions.
Residential properties under 200 square meters qualify for reductions of up to ¥45,000 or more, depending on the specific floor area. The final amount due would be approximately ¥1,455,000 after standard residential reductions.
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What are the Registration and License Tax rates, and what amounts would these be?
Registration and License Tax applies to both ownership transfer and mortgage registration at different rates depending on whether the property is new or used.
For ownership transfer, the standard rate is 2% for used properties, but new builds may qualify for a reduced rate of 0.4%. Mortgage registration is consistently 0.4% of the loan amount.
Using our example with a new condominium and assuming an 80% loan-to-value ratio (¥32 million loan), the costs would be: Land registration (¥10 million × 2% = ¥200,000), Building registration (¥30 million × 2% = ¥600,000), and Mortgage registration (¥32 million × 0.4% = ¥128,000).
The total Registration and License Tax would be ¥928,000, though this could be reduced if the new build qualifies for the lower 0.4% rate on the building portion.
How much Stamp Duty is required on the purchase contract and mortgage deed?
Stamp Duty in Japan is applied through revenue stamps affixed to contracts, with rates based on the contract value.
For a purchase contract worth ¥40 million, the stamp duty is ¥10,000. This applies to the main purchase agreement between buyer and seller.
The mortgage deed requires separate stamping based on the loan amount. For loans between ¥10-50 million, the stamp duty is ¥20,000.
Total stamp duty costs for our example would be ¥30,000, which is relatively minor compared to other transaction costs but still mandatory for legal validity of the contracts.
What are typical judicial scrivener fees in Hiroshima?
Judicial scriveners (shihō shoshi) handle the legal registration process and document preparation for property transactions in Japan.
In Hiroshima, typical fees range from ¥40,000 to ¥200,000 depending on the complexity of the transaction and the scrivener's experience level.
For a standard condominium purchase like our ¥40 million example, budget approximately ¥100,000 for judicial scrivener services. This includes preparing registration documents, liaising with the legal affairs bureau, and ensuring all paperwork is correctly filed.
Some buyers attempt to handle registration themselves to save costs, but the complexity of Japanese real estate law makes professional assistance highly recommended, especially for foreign buyers.
What is the maximum brokerage commission for our example property?
Japan has statutory limits on real estate brokerage commissions, calculated using a specific formula plus consumption tax.
The formula is: (sale price × 3%) + ¥60,000 + 10% consumption tax. This represents the maximum allowable commission, though some brokers may charge less.
For our ¥40 million example: Base commission would be (¥40,000,000 × 3%) + ¥60,000 = ¥1,260,000. Adding 10% consumption tax brings the total to ¥1,386,000.
This commission is typically split between the buyer's and seller's agents if different brokers are involved. Some buyers choose to work directly with sellers to avoid or reduce brokerage fees, but this requires careful attention to legal requirements.
What loan-related costs apply in Hiroshima, and what would each cost?
Financing a property in Hiroshima involves several loan-related expenses beyond the mortgage registration tax.
| Loan Cost Type | Typical Amount | Based on ¥32M Loan |
|---|---|---|
| Origination Fee | ¥55,000-¥110,000 | ¥82,500 |
| Guarantee Fee/Insurance | 2% of loan amount | ¥640,000 |
| Mortgage Registration Tax | 0.4% of loan amount | ¥128,000 |
| Fire Insurance (annual) | ¥30,000-¥60,000 | ¥45,000 |
| Earthquake Insurance (annual) | ¥15,000-¥25,000 | ¥20,000 |
| Total First Year | - | ¥915,500 |
What are Hiroshima City's annual property tax rates and how are they calculated?
Hiroshima City levies two annual property taxes: Fixed Asset Tax and City Planning Tax, both based on assessed property values.
Fixed Asset Tax is set at 1.4% of the assessed value, while City Planning Tax is 0.3% of the assessed value. These rates are standard across most Japanese municipalities.
The assessed value is typically 70% of the market value, so for our ¥40 million property, the assessed value would be ¥28 million. Annual taxes would be: Fixed Asset Tax (¥28 million × 1.4% = ¥392,000) plus City Planning Tax (¥28 million × 0.3% = ¥84,000).
Total annual property taxes would be ¥476,000, with a first-year prorated amount of ¥238,000 if purchased mid-year. These taxes are billed quarterly in April, July, December, and February.
What are typical condominium management fees and repair reserves in Hiroshima?
Condominium ownership in Hiroshima requires monthly payments for building management and long-term repair reserves.
Management fees typically range from ¥15,000-¥25,000 per month for a standard 70-80 square meter unit, covering daily maintenance, security, cleaning, and administrative costs.
Repair reserve contributions range from ¥10,000-¥20,000 per month, building a fund for major repairs like exterior painting, elevator replacement, and structural maintenance.
For our example property, assuming ¥20,000 monthly management fees and ¥15,000 monthly repair reserves, the total annual cost would be ¥420,000. These fees are paid directly to the condominium management association and are separate from property taxes.
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How much consumption tax applies to new builds and what would it add to our example?
Consumption tax of 10% applies to the building portion and services when purchasing from taxable businesses, but not to land transactions.
For our ¥40 million new condominium example, consumption tax would apply to the ¥30 million building portion, adding ¥3 million to the total purchase price.
Consumption tax also applies to services like brokerage fees, judicial scrivener fees, and loan origination fees. The ¥1,386,000 brokerage commission already includes consumption tax in our calculation.
Private resales between individuals are generally exempt from consumption tax, making used properties potentially more cost-effective despite the building depreciation factor. This tax represents one of the largest additional costs for new construction purchases.
What exemptions and reductions are available to reduce these costs?
Several tax reductions and credits can significantly reduce the total cost of buying property in Hiroshima.
1. Real Estate Acquisition Tax reductions for residential land can reduce the tax by up to ¥45,000 or more for properties under 200 square meters2. Registration and License Tax reductions for new builds may lower the rate to 0.4% instead of 2%3. Mortgage loan tax credit allows income tax deductions for 10 years, typically saving ¥200,000-¥400,000 annually4. Temporary rate reductions for certified energy-efficient housing can reduce various taxes5. First-time buyer programs may offer additional local incentivesThese reductions could potentially save ¥500,000-¥1,000,000 over the first few years of ownership, making it crucial to understand eligibility requirements before purchase.
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What is the total estimated cash needed at closing and first-year ongoing costs?
The total cash required at closing significantly exceeds the property purchase price due to Japan's comprehensive fee structure.
For our ¥40 million condominium example, closing costs include: Property price (¥40,000,000), Consumption tax on building (¥3,000,000), Brokerage commission (¥1,386,000), Registration taxes (¥928,000), Loan-related costs (¥915,500), Judicial scrivener fees (¥100,000), and Stamp duties (¥30,000).
Total estimated cash needed at closing: approximately ¥46,359,500, assuming a down payment covers the non-financed portions and all fees.
First-year ongoing costs include: Prorated property taxes (¥238,000), Management and repair reserves (¥420,000), Insurance renewals (¥65,000), totaling ¥723,000 in the first year after purchase.
When are each of these taxes and fees billed and due?
Understanding payment timing is crucial for cash flow planning when buying property in Hiroshima.
At closing, you must pay: Property price, brokerage commissions, registration taxes, stamp duties, judicial scrivener fees, loan origination fees, and initial insurance premiums. These total approximately ¥46.4 million for our example.
Within 1-3 months after purchase, you'll receive the Real Estate Acquisition Tax bill from Hiroshima Prefecture, adding approximately ¥1,455,000.
Annual property taxes are billed quarterly in April, July, December, and February. Management fees are due monthly. Insurance renewals are annual, typically aligned with your loan anniversary date.
The first year total cash outlay reaches approximately ¥48.5 million including all taxes, fees, and ongoing costs, making proper financial planning essential before committing to purchase.
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Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Property investment in Hiroshima requires thorough understanding of the complete cost structure, as taxes and fees can add 20-25% to your initial investment.
The combination of acquisition taxes, registration fees, consumption tax, and ongoing property taxes makes professional guidance essential for any real estate purchase in Japan's dynamic market.
Sources
- How Much Does an Apartment Cost in Japan
- DLA Piper Real Estate Acquisition Tax Japan
- WA-Mare Property Tax Guide
- E-Housing Japan Tax Guide
- Real Estate Japan Registration Guide
- Universal Park Japan Transaction Guide
- Mailmate Judicial Scrivener Guide
- Japan Law Tax Real Estate Guide
- Real Estate Japan Tax Guide
- KPMG Taxation in Japan 2024