What are the "Expense" of purchasing real estate in japan①-Taxes-
- Japanese real estate expertise
Are you familiar with the "Expenses" when you purchase Japanese real estate other than paying the selling price?
Let us look at what are the “Expenses”.
We would like to focus on “Taxes” this time.
|Fixed Asset Tax and Real Estate Acquisition Tax|
・FIXED ASSET TAX and REAL ESTATE ACQUISITION TAX
When you purchase a real estate in Japan and become an owner, taxes are levied on the owner.
① Fixed Asset Tax:
“Assessed Value of Fixed Asset Tax x 1.4%(in principle)”
*Assessed Value of Fixed Asset Tax is registered in the Fixed Asset Tax ledger.
Fixed Asset Tax is taxable annually to the owner.
The owner of the real estate as of 1st January of that year will be taxed from the tax office. With regard to the year in which real estate was purchased, Fixed Asset Tax after the date of handover is commonly prorated and settled between the buyer and the seller.
There are special mitigation measures for residential sites and new residential buildings.
In addition, Urban Planning Tax (Assessed Value of Fixed Asset Tax x 0.3%(maximum)) is imposed together with Fixed Asset Tax on the real estate located in the Urban Planning Area.
There are mitigation measures for residential sites regarding the Urban Planning Tax as well.
② Real Estate Acquisition Tax:
“Assessed Value of Fixed Asset Tax x 4%(in principle)”
Real Estate Acquisition Tax is levied on the owner only once after purchase.
The owner will receive the notification and need to pay the tax several months after the handover.
If your real estate meets the requirements, the owner can apply to have special mitigation measures on the rate of taxation.
Generally, the Buyer and the Seller have a responsibility to borne and share the Stamp Duty on the Sales and Purchase Agreement (SPA) when they purchase/sell a real estate.
Here is the cost of the Stamp Duty for each SPA;
Price of real estate between JPY 10,000,001 and JPY 50,000,000 ➡ JPY 10,000
Price of real estate between JPY 50,000,001 and JPY 100,000,000 ➡ JPY 30,000
(This mitigation measures continue until 31st March 2020)
*This is a stamp duty based on Japanese regulations.
(National Tax Agency’s URL)
There are few real estate registrations which are “Registration of Preservation of Ownership” for purchasing a brand-new real estate, “Registration of Transfer of Ownership” on a site, etc. and also “Registration of the Establishment of a Mortgage” to secure the real estate when getting a financing from a bank, etc.
Each registration is subject to a tax called “Registration and License Tax”. The registration itself is generally performed by a judicial scrivener who is an expert. In short, the registration fees are “Registration and License Tax for registration + Fee for judicial scrivener”.
As described above, “Expenses” will be incurred besides the price of real estate when purchasing real estate.
We also handle all payments for these expenses on behalf of our customers. Therefore, it is easy for overseas owners to pay the expenses to us as it is possible to settle them at once. In addition, we can introduce some specialized “tax accountants” who can represent for the management of taxes incurred after purchase (e.g. Fixed Asset Tax, Urban Planning Tax, Real Estate Acquisition Tax, etc.) without language problem to overseas owners so please be assured.
When you consider purchasing real estate in Japan, please come to CLEARTH LIFE. We are more than happy to assist you.
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