Income tax on rent, worked example, in Japan

Taxation Researcher | March 01, 2016

Non-Resident Couple:

Non-resident couple´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

DISCLAIMER: The information contained above is marketing material only and is not written tax advice directed at the particular facts and circumstances of any person and should not be relied upon. We encourage you to discuss your particular situation with us or an independent tax advisor. This information was last updated on March 1, 2016.

Notes


Grant Thornton Japan is a member firm of Grant Thornton International. Grant Thornton International is not a worldwide partnership. Member firms of the international organization are independently owned and operated.

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 couple´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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