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Property taxes in Japan form a substantial part of your real estate investment costs, with multiple taxes applying at purchase and annually thereafter.
Buying property in Japan involves paying property acquisition tax (3-4%), registration and license tax (0.4-2%), stamp duty (¥5,000-¥60,000), and annual fixed asset tax (1.4%) plus city planning tax (0.3%).
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Property buyers in Japan face multiple tax obligations including upfront acquisition taxes and ongoing annual property taxes.
Total upfront taxes typically range from 6-8% of the assessed property value, while annual taxes amount to 1.7% of assessed value.
| Tax Type | Rate | When Applied |
|---|---|---|
| Property Acquisition Tax | 3% (residential buildings), 4% (commercial), 3% (land until March 2027) | At purchase |
| Registration & License Tax | 2% (ownership transfer), 0.4% (new buildings), 0.4% (mortgage registration) | At ownership transfer |
| Stamp Duty | ¥5,000-¥60,000 depending on contract value | When signing purchase agreement |
| Fixed Asset Tax | 1.4% of assessed value | Annual |
| City Planning Tax | 0.3% of assessed value | Annual (urban areas) |
| Consumption Tax | 10% on new buildings only | At purchase from developer |
How much is the property acquisition tax when buying a home in Japan?
Property acquisition tax in Japan is levied at 3% for residential buildings and 4% for commercial properties as of September 2025.
For land purchases, Japan currently offers a reduced rate of 3% that remains valid until March 31, 2027. After this date, the standard 4% rate will apply to all land acquisitions.
The tax is calculated on the assessed value determined by local government authorities, not the actual purchase price you pay. This assessed value is typically 60-80% of the market value, which effectively reduces your tax burden.
For example, if you buy a residential property with an assessed value of ¥50 million, you'll pay ¥1.5 million in property acquisition tax (3% × ¥50 million).
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What is the registration and license tax that applies at the time of ownership transfer?
Registration and license tax varies depending on whether you're buying a new property or transferring ownership of an existing one.
For ownership transfers of existing properties, you'll pay 2% of the assessed value for both land and buildings. However, new buildings benefit from a reduced rate of just 0.4% of the assessed value.
If you're taking out a mortgage to finance your purchase, you'll face an additional 0.4% tax on the loan amount for mortgage registration. This applies regardless of whether the property is new or existing.
Using the same ¥50 million property example, an existing property ownership transfer would cost ¥1 million (2% × ¥50 million), while a new building would only cost ¥200,000 (0.4% × ¥50 million).
How much stamp duty needs to be paid when signing the purchase agreement in Japan?
Stamp duty in Japan is calculated based on the total contract value and must be paid when signing the property sales agreement.
| Contract Value Range | Stamp Duty Amount | Validity Period |
|---|---|---|
| Up to ¥10 million | ¥5,000 | Until March 2027 |
| ¥10-50 million | ¥10,000 | Until March 2027 |
| ¥50-100 million | ¥30,000 | Until March 2027 |
| ¥100-500 million | ¥60,000 | Until March 2027 |
| Over ¥500 million | ¥100,000+ | Until March 2027 |
What is the real estate acquisition tax rate for both land and buildings?
Real estate acquisition tax rates differ between land and buildings, with current temporary reductions in effect until March 2027.
Buildings face a 3% acquisition tax rate for residential properties and 4% for commercial or non-residential buildings. Land purchases currently benefit from a reduced 3% rate, down from the standard 4%.
These rates apply to the assessed value, not your purchase price. Japanese tax authorities typically assess properties at 60-80% of market value, effectively reducing your total tax obligation.
After March 2027, land acquisition tax will return to the standard 4% rate, potentially increasing costs for future buyers by approximately 25% on the land portion of their purchase.
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How much annual fixed asset tax (kotei shisan zei) will I pay on the property after purchase?
Annual fixed asset tax in Japan is set at 1.4% of the assessed property value, payable every year after your purchase.
This tax applies to both land and buildings based on the local government's assessed valuation, which is typically reviewed every three years. You'll receive a tax notice annually, usually in April or May.
For a property with an assessed value of ¥50 million, you'll pay ¥700,000 per year in fixed asset tax (1.4% × ¥50 million). This amount remains consistent unless the assessed value changes during periodic reassessments.
Small residential properties may qualify for reduced rates, particularly for land under 200 square meters, which can receive up to a 1/6 reduction in the taxable assessed value.
What is the city planning tax and how is it calculated in Japan?
City planning tax is an additional annual tax of 0.3% of assessed value, typically charged in urban areas designated under city planning laws.
This tax applies alongside fixed asset tax and uses the same assessed valuation basis. Not all municipalities charge city planning tax, so rural properties may be exempt from this additional cost.
Combined with the 1.4% fixed asset tax, property owners in urban areas face a total annual tax burden of 1.7% of assessed value. For our ¥50 million example property, this would mean ¥150,000 annually in city planning tax.
Tokyo, Osaka, and other major metropolitan areas consistently charge city planning tax, while smaller cities and rural municipalities may waive this additional levy.
Are there any consumption tax obligations when buying new property from a developer?
Consumption tax of 10% applies only to new building purchases directly from developers, not to land or resale properties from private individuals.
This tax significantly impacts new construction purchases, adding ¥5 million to a ¥50 million new building purchase. Land transactions remain exempt from consumption tax regardless of whether you buy from a developer or private seller.
Resale properties sold by individual owners are completely exempt from consumption tax, making them potentially more attractive from a tax perspective compared to new developments.
Foreign buyers should factor this 10% consumption tax into their budget when considering new properties, as it represents a substantial additional cost beyond other property taxes.
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How are property taxes different if I buy as an individual versus through a company?
Individual and corporate buyers pay identical property acquisition taxes, registration fees, and annual property taxes at the same rates.
The key differences emerge in ongoing tax treatment and deductibility. Corporations can deduct property expenses, depreciation, and maintenance costs against business income, while individuals face more limited deduction options.
Corporate ownership may offer advantages for rental properties through expense deductions and different capital gains tax treatments. However, companies face additional administrative requirements and corporate income tax obligations.
Individual buyers benefit from simpler tax filing requirements but miss opportunities for business expense deductions that corporations enjoy for income-generating properties.
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What are the withholding tax rules for non-residents selling property in Japan, and do they affect buyers?
Buyers purchasing from non-resident sellers must withhold and remit capital gains taxes to Japanese tax authorities on behalf of the seller.
The withholding tax rate ranges from 10.21% to 20.42% depending on the seller's circumstances and length of ownership. This doesn't increase your purchase costs but creates additional administrative responsibilities.
You're required to deduct the appropriate withholding tax from the purchase price and remit it directly to the National Tax Agency within one month of the transaction. Failure to comply can result in penalties and personal liability.
Working with experienced real estate agents and tax professionals becomes crucial when buying from non-resident sellers to ensure proper compliance with withholding tax obligations.
How do property taxes differ between Tokyo and other prefectures in Japan?
Property acquisition tax, registration fees, and stamp duty maintain consistent national rates across all Japanese prefectures, including Tokyo.
Fixed asset tax and city planning tax rates are standardized at 1.4% and 0.3% respectively throughout Japan, but assessed valuations can vary significantly between locations. Tokyo properties typically face higher assessments, resulting in higher absolute tax payments.
Tokyo's high property values mean substantially higher tax payments even at identical rates. A Tokyo apartment assessed at ¥100 million pays ¥1.4 million annually in fixed asset tax, while a similar property in rural areas assessed at ¥30 million pays only ¥420,000.
Some rural municipalities may waive city planning tax entirely, providing slight savings compared to major metropolitan areas that consistently apply both taxes.
What are the ongoing tax filing requirements once I own property in Japan?
Property owners must pay annual fixed asset tax and city planning tax bills sent directly by local tax authorities, typically due in four quarterly installments.
If you generate rental income from your property, you must file annual income tax returns declaring this revenue along with applicable deductions for maintenance, management fees, and depreciation.
Foreign property owners face additional reporting requirements, including potential obligations to report Japanese property ownership to their home country tax authorities depending on residency status and local tax laws.
Companies owning property must incorporate property taxes and related expenses into their corporate tax filings, maintaining detailed records of all property-related income and expenses throughout the tax year.
It's something we develop in our Japan property pack.
What tax deductions, exemptions, or rebates can I apply for when buying property in Japan?
Several tax reductions are available for Japanese property purchases, particularly for residential properties and small land parcels.
New residential properties may qualify for reduced property acquisition tax rates, while small residential land under 200 square meters can receive up to 1/6 reduction in fixed asset tax assessment. First-time homebuyers may access additional deductions through government programs.
Mortgage interest deductions allow homeowners to deduct loan interest from income tax for up to 10 years, providing significant savings for owner-occupied properties. Investment properties face more limited deduction opportunities.
Energy-efficient buildings and properties meeting specific construction standards may qualify for additional tax breaks, while renovations improving earthquake resistance or energy efficiency can generate rebates or reduced tax assessments.
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.
Understanding Japanese property taxes is essential for making informed investment decisions and avoiding unexpected costs.
Factor these various tax obligations into your total investment budget, as they can add 8-10% to your initial purchase costs and 1.7% annually in ongoing expenses.
Sources
- E-Housing - Understanding Property Taxes in Japan
- Land Housing - Registration and License Tax Guide
- Real Estate Tokyo - Property Cost and Tax Guide
- DLA Piper - Tax on Property Acquisitions in Japan
- Mailmate - Real Estate Acquisition Tax Guide
- Sugee Housing - Registration Tax Information
- Japan Law Tax - Stamp Duty in Japan
- I-Interface - Real Estate Tax Tips
- MF Realty - Consumption Tax Guide
- Nara Prefecture - Real Estate Acquisition Tax Guide