Guide to Property Taxes in Japan
Tax Rate on Rental Income |
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| Monthly Income | US$1,500 | US$6,000 | US$12,000 |
| Tax Rate | 20.42% | 20.42% | 20.42% |
Nonresidents are taxed on their Japanese-sourced income. Nonresidents are taxed differently depending on their classification as a taxpayer for tax purposes. Married couples are assessed and taxed separately.
Income Tax on Rental Income
Nonresident individuals earning rental income from Japanese property are taxed at 20.42%. Taxable income is gross rent less income-generating expenses and depreciation.
| Tax Type | Rate |
| Rental Income Tax | 20.42% |
Capital Gains Tax
| Holding Period | Tax Rate | Details |
| Short-term (less than 5 years) | 39.63% | Taxed on net gains. If the property is the taxpayer’s personal residence, JPY30 million (US$275,230) can be deducted from the gross sales price under certain conditions. |
| Long-term (more than 5 years) | 20.315% | Taxed on net gains. |
The taxable gain is computed by deducting the acquisition costs and related expenses, improvement costs, and transfer costs from the gross sales price.
Corporate Taxation in Japan
Income Tax
Income and capital gains earned by companies are subject to corporate income tax at the following rates:
| Tax Type | Rate |
| Corporate Tax | 20.42% |
Property Buying and Selling Taxes/Costs
| Tax Type | Rate |
| Property Transfer Tax | 3.00% - 4.00% |
| Agent Fee (Buyer) | 3.00% |
| Agent Fee (Seller) | 3.00% |
| Legal Fees | 1.00% |
| Notary Fee | 0.40% |
| Roundtrip Cost | 10.40% - 11.40% |
| Source: Global Property Guide, PWC |
Property Taxation in Japan
Property Tax
Municipal tax is levied at 1.4% on the assessed value of the land or building. The calculation method entails multiplying the tax base amount by 1.4%.
City Planning Tax
City planning tax is levied at a flat rate of 0.3% on the assessed value of the land or building. The property is exempt if its value is less than certain thresholds. City planning tax is levied together with the property tax. For both taxes, the owner of the land or building is liable.
| Tax Type | Rate |
| City Planning Tax | 0.3% |
Consumption Tax
Sales of buildings are subject to consumption tax, which is levied at a flat rate of 10%. Sales of land are exempted from consumption tax.