Income tax on rent, worked example, in Japan

Taxation Researcher | March 01, 2016

Non-Resident Couple:

Non-resident coupleĀ“s joint monthly rental income1
Monthly Rental Income2 1,500 6,000 12,000
Annual Rental Income 18,000 72,000 144,000
Less: Depreciation 3 (11,880)3 (29,700)4 (59,400)5
= Taxable Income 6,120 42,300 84,600
INCOME TAX7
Flat rate 10% 612 4,230 8,460
Annual Income Tax Due 612 4,230 8,460
Tax Due as % of Gross Income 3.40% 5.88% 5.88%
Source:
Global Property Guide research


1 The property is jointly owned by husband and wife.

2 Exchange rate used: 1.00 US$ = 113.00 JPY

3 Depreciation expense is claimed against the acquisition cost of the property and is computed through the straight-line method.

4 The property is worth US$600,000.

5 The property is worth US$1,500,000.

6 The property is worth US$3,000,000.

7 Rental income earned by nonresident individuals is taxed at a flat rate of 10%.


Non-Resident Couple (property owned through a local corporation):

Non-resident coupleĀ“s joint monthly rental income1
Monthly Rental Income2 1,500 6,000 12,000
Annual Rental Income 18,000 72,000 144,000
Less: Depreciation 3 (11,880)3 (29,700)4 (59,400)5
= Taxable Income 6,120 42,300 84,600
INCOME TAX7
Corporate Income Tax 15% 918 6,345 12,690
Annual Income Tax Due 918 6,345 12,690
Tax Due as % of Gross Income 5.10% 8.81% 8.81%
Source:
Global Property Guide research

Notes


1The property is jointly owned by husband and wife through a local corporation.

2 Exchange rate used: 1.00 US$ = 113.00 JPY

3 Depreciation expense is claimed against the acquisition cost of the property and is computed through the straight-line method.

4 The property is worth US$600,000.

5 The property is worth US$1,500,000.

6 The property is worth US$3,000,000.

7 Rental income earned by nonresident individuals who own property through a local corporation is taxed at the corporate tax rate of 15%.

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