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Feb 21, 2014

Moderate roundtrip buying costs in Japan


How high are realtors’ and lawyers’ fees in Japan? What about other property purchase costs?

Transaction Costs

Who Pays?
Agent’s Fee 5% buyer
Acquisition Tax 4% buyer
Registration Tax 2% buyer
Stamp Duty 0.01% - 0.20% buyer
Legal Fees 0.10% buyer
Real Estate Agent’s Fee 3.15% + JPY63,000 (US$620) buyer
Costs paid by buyer 9.26% - 9.45%
Costs paid by seller 0%
ROUNDTRIP TRANSACTION COSTS 14.26% - 14.45%
See Footnotes
Source: Global Property Guide

Process of buying property

There are no legal restrictions on foreigners owning real estate property in Japan.

Negotiations and private survey may begin once property has been chosen. It is important to hire the services of a real estate agent, who can also act as the buyer’s translator. An offer or a letter of intent, however, is not legally binding.

Japan minamalist house designBefore the deal, a Juyoujikou- Setsumeisho (similar to a Property Disclosure Statement or Seller´s Real Property Disclosure Statement) is drafted by the real estate agent. The purchase contract is drafted once a deal is settled. After this, a 10% deposit is expected from the buyer before the contract date.

During closing, the title is transferred. Both parties should have certificates of their seal impressions. Stamps are obtained, and government fees and taxes are paid to register the title.

The last step is to pay the remaining balance.

The whole process of registering property has six procedures, which can be completed in around 12 days.




Footnotes to transaction costs table

The round trip transaction costs include all costs of buying and then re-selling a property – lawyers’ fees, notaries’ fees, registration fees, taxes, agents’ fees, etc.

Consumption Tax
Sales of buildings are subject to consumption tax, which is levied at a flat rate of 5%. Sales of land are exempted from consumption tax.

Acquisition Tax
Acquisition tax is levied at a flat rate of 4% for land. The tax is levied on the valuation of the property as determined by local government agencies, which is usually around 60% to 80% of the market value of the property.

A reduced acquisition tax rate of 3% may be applicable for real property purchased for personal use until 31 March 2012.

Registration Tax
Registration tax is levied at a flat rate of 2% for land, and 2% for buildings. The tax is levied on the valuation of the property as determined by local government agencies, which is usually around 60% to 80% of the market value of the property.

A reduced registration tax rate of 1.50% may be applicable for purchased land until 31 March 2013.

Stamp Duty
Stamp duty is levied on deed of contracts concerning transfer of real estate properties.

STAMP DUTY

Property Value, JPY (US$) Rate, JPY (US$)
Up to 10,000 (US$98) 0
10,000 - 100,000 (US$84) 200 (US$1.97)
100,000 - 500,000 (US$4,921) 400 (US$3.94)
500,000 - 1 million (US$9,843)) 1,000 (US$9.84)
1 million – 5 million (US$49,213) 2,000 (US$19.69)
5 million – 10 million (US$98,425) 10,000 (US$95)
10 million – 50 million (US$492,126) 15,000 (US$148)
50 million – 100 million (US$984,252) 45,000 (US$443)
100 million – 500 million (US$4,921,260) 80,000 (US$787)
500 million – 1 billion (US$9,842,520) 180,000 (US$1,772)
1 billion – 5 billion (US$49,212,598) 360,000 (US$3,543)
Over 5 billion (US$49,212,598) 540,000 (US$5,315)
No stated property value 200 (US$1.97)

Judicial Scrivener Fees
A judicial scrivener (shiho shoshi) is a paralegal who settles and registers property transactions. Judicial scrivener fees are negotiable but are typically around 0.10% of the property value.

Real Estate Agent’s Fee
Real estate agent’s fee are set at 3.15% of the sales price of the property, plus JPY63,000 (US$620).






Comments

#1 YASUSHI UJIOKA | December 09, 2011

I think you fail to point out the most annoying feature of Japanese property market, or rather bank. If you are foreign residents (including Japanese nationals), it is almost impossible to find a bank to provide you a mortgage loan!!

#2 AKIYAMA | July 07, 2014

As for Consumption Tax,
When seller owns buildings for business, Consumption Tax is levied. But when seller owns buildings for residence, Consumption Tax is NOT levied.

And now Consumption Tax rate is 8%.

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