Property acquisition tax (fudousan shutokuzei) is a one-time payment that must be made when buying, selling, donating, or transferring real estate in Japan in other ways (both land and buildings). That also includes exchanges of property. This guide explains how to calculate and file your property acquisition tax in Japan.
What Does the Acquisition Tax Include?
Although the property acquisition tax exists separately from other taxes, nevertheless, it is often discussed with two other payments that must be made when acquiring real estate. Thus, we will talk about three aspects of the property acquisition tax:
- The acquisition tax itself (fudousan shutokuzei)
- Stamp tax (inshizei)
- Registration tax (touroku mankyozei)
Each of them will be discussed in a separate paragraph below.
Property Acquisition Tax
The tax rate depends on the type of buildings:
- 3% for land and residential buildings
- 4% for non-residential buildings
This tax is not applicable in two cases:
- Inheritance. Instead, one should pay inheritance and gift tax. During the recent years, the tax law on inheritance have seen several reviews and amendments. Be sure to consult with your accountant to know which terms and conditions apply in your particular case.
- Acquisition by merger of the company that owns the real estate.
This tax is regulated by the Stamp Duty Act that lists all the documents subject to this tax. Namely, contracts for transfer of land and real estate on that list. The amount of stamp duty depends on the amount of a deal stated in the conveyance documents. The table below shows how the settlement price affects the stamp duty as explained by the Tax Office.
|Amount of a deal (JPY)||Amount of stamp duty (JPY)|
|0.1 mln – 0.5 mln||200|
|0.5 mln – 1 mln||500|
|1 mln – 5 mln||1,000|
|5 mln – 10 mln||5,000|
|10 mln – 50 mln||10,000|
|50 mln – 100 mln||30,000|
|100 mln – 500 mln||60,000|
|500 mln – 1 bln||160,000|
|1 bln – 5 bln||320,000|
|Over 5 bln||480,000|
|Amount not disclosed||200|
To pay stamp duty, attach a fiscal stamp to the documents and press a certified sealing stamp over it. This tax may be paid by either seller or buyer, and it is up to the partied to agree on who pays the duty. The above-mentioned quotes are applicable for contracts concluded between April 1, 2018 and March 31, 2020.
As the name suggests, this tax is paid for the registration of a property transfer or when the mortgage is taken. Registration usually means the legal interests will be listed in the Real Estate Registry (toukibo) at the Legal Affairs Bureau. Such listing certifies the rights for property ownership. The amount of tax is based on the fixed asset tax book (kotei shisan kazai daichou). A judicial scrivener can provide an estimate of the tax for your particular case.
However, the general rule is that the tax is between 0.4% and 2%. Below we explain how different types of registration affect the tax amount.
Initial registration of ownership (shoyuuken hozon touki) that takes place when someone acquires property rights after its construction is 0.4%. The same property will be charged at 2% after ownership transfer (shouiiken iten touki).
The registration tax for mortgages is also 0.4% of the property value. In some cases, it can even be as low as 0.1% if the property is used as a personal residence and meets some other requirements.
Limited time reduction is 1.5% of the land value and 0.3% of the buildings’ value. Other factors influencing the price is the floor area, the age and the type of the building (residential or otherwise). The tax may rise to 2% if the property is used as a second home or leased to other tenants.
Property acquisition tax in Japan includes two additional payments: stamp duty and the registration tax. The rates depend on the type of land and buildings, their exploitation period, the total value and the type of the property transfer deal. An official scrivener may help you with the estimates. Other taxes to consider include fixed assets tax, withholding and income tax, consumption tax, capital gains tax.
Property Acquisition Tax FAQ
Do rules for property investment differ for foreigner/non-residents and Japanese citizens?
No, Japan applies the same regulations to everyone who is interested in Japanese property. The law ensures equal treatment for both Japanese nationals and foreigners.
Can I buy land and houses separately?
Yes, you can. The land and the constructions above and under it are treated separately.
What should I know before acquiring real estate in Japan?
The property market and regulations in Japan are somewhat different from other countries. If you are looking for additional information, we have a guide to help you make an informed decision.
What locations in Japan are good for property investments?
The Northern regions of Japan, namely Hokkaido, are popular for their powder snow and wonderful ski resorts. There are many real estate agencies and management companies that can help you find real estate options to suit your interests and taste.
Can I obtain a residential status in Japan if I own property in the country?
Generally speaking, no. The mare ownership of the property in not enough to become a resident or to come to live into the country. You will need to comply with the visa requirements and apply for the residential status the best describes your current situation and reasons to be in Japan.