Japan Property Purchase Taxes: Acquisition, Registration, Fixed Asset

Buying property in Japan triggers registration and license tax, real estate acquisition tax and stamp duty at the time of purchase. When buying a building from a business, consumption tax is also included in the building price. During ownership, fixed asset tax and city planning tax are levied each year on the owner as at 1 January. Rates do not vary by nationality or place of residence, but housing reliefs carry requirements such as the owner living in the property.

Taxes on buying property at a glance

The fixed asset tax assessed value used as the tax base is the value recorded in the municipality’s fixed asset tax ledger. In many cases it is lower than the purchase price. Confirming the assessed value through the seller or broker before you buy lets you estimate the tax.

Estimating the tax before you buy

1. Confirm the fixed asset tax assessed values of the land and building through the seller or broker
2. Check whether housing reliefs apply (whether you will live there, floor area and so on)
3. Check whether the seller is a business, to establish whether consumption tax applies to the building
4. Ask a judicial scrivener for a quote for registration costs and confirm the amount of registration and license tax

Registration and license tax (payable on registration)

When ownership is transferred by sale, an application is made to the Legal Affairs Bureau to register the transfer of ownership, and registration and license tax is paid at that point. If a judicial scrivener handles the registration, the tax is usually paid together with their fee. The value used as the tax base is evidenced in the application by a certificate of fixed asset assessment or similar document.

The outline of the FY2026 tax reform states that the reduced rate for land purchases will be extended by three years, so the relief runs until 31 March 2029. Housing reliefs require meeting floor area and other conditions and registering within a set period after acquisition, and they also have expiry dates.

Worked example

For example, when buying an office building with a fixed asset tax assessed value of ¥30 million for the land and ¥10 million for the building, registration and license tax is ¥450,000 for the land (1.5%) and ¥200,000 for the building (2%), a total of ¥650,000.

Housing reliefs assume that the buyer personally lives in the property. When buying for investment while living overseas, the standard rate will normally apply.

Real estate acquisition tax (levied by the prefecture after acquisition)

Real estate acquisition tax is levied by the prefecture on anyone who acquires land or buildings through purchase, new construction or similar means. It applies whenever acquisition has taken place, even without registration. Acquisitions by inheritance, however, are not taxed. The tax notice often arrives some time after acquisition, so build it into your funding plan.

The 3% rate for land and housing and the halving of the tax base for residential land and similar apply to acquisitions made by 31 March 2027. The deduction for newly built housing and the reduction for residential land are subject to floor area and other requirements. Second-hand housing may also qualify for a deduction depending on when it was built.

For example, buying residential land with an assessed value of ¥30 million gives a tax base of half that, ¥15 million, and tax of ¥450,000 (3%). Land used for housing may qualify for a further reduction.

Claiming the reliefs may require a declaration or application to the prefecture. Deadlines and methods are set by each prefecture, so check with the prefectural tax office for the property’s location.

Stamp duty and consumption tax

Stamp duty

A property sale and purchase agreement is subject to stamp duty according to the contract amount stated. Agreements for the transfer of real estate benefit from a reduced rate, which has an expiry date. If the seller and buyer each keep an original, each original needs a stamp. Contracts concluded electronically incur no stamp duty. Failing to affix the required stamp may result in a penalty tax.

Consumption tax

The transfer of land is not subject to consumption tax. A building is subject to consumption tax (10%) when the seller is a business. If the sale is not made in the course of business, as when an individual sells their own home, no consumption tax applies to the building either. Brokerage fees and judicial scriveners’ fees are subject to consumption tax.

Fixed asset tax and city planning tax (payable every year during ownership)

Fixed asset tax and city planning tax are levied by the municipality on the person registered as owner in the fixed asset tax ledger as at 1 January each year. Even if the property is sold partway through the year, the tax for that fiscal year is levied on the owner as at 1 January. In practice, it is common for the buyer to pay the seller a pro-rata share for the period from the handover date. City planning tax applies in principle to land and buildings within urbanisation promotion areas.

The reduction for newly built housing has an expiry date and has so far been extended with each tax reform. Check the eligible construction period in the guidance of the municipality where the property is located. The residential land special measures do not apply to land used for offices or shops. A tax notice is sent each year, and many municipalities split payment into four instalments.

Owners living overseas are in principle required to appoint a tax agent (納税管理人) and notify the municipality, so that tax notices can be received and tax paid. Appointing a tax agent with the prefecture for real estate acquisition tax also makes the process smoother.

Points to note for foreign and overseas buyers

• The types and rates of tax are the same as for Japanese buyers. Differences arise in the requirements for housing reliefs and in how tax is paid from overseas.
• Separately from tax, non-residents who acquire property must file a report under the Foreign Exchange and Foreign Trade Act (FEFTA). The full process is explained in Buying property in Japan as a foreign national: process and points to note.
• If you rent the property out, income tax applies to the rent. See Non-resident rental income and tax returns.
• When you sell in future, withholding by the buyer and a tax return will be required. This is explained in When a non-resident sells Japanese real estate.
• The same rates apply when buying through a company. Registration and license tax and real estate acquisition tax may in some cases be expensed rather than included in the acquisition cost of the building and other assets. Decide the accounting treatment with your certified tax accountant.
• Taxes and brokerage fees paid on purchase affect the calculation of future capital gains and rental expenses. Keep receipts and tax notices.

Summary

• On purchase, registration and license tax, real estate acquisition tax, stamp duty and consumption tax on buildings apply.
• During ownership, fixed asset tax and city planning tax are levied every year on the owner as at 1 January.
• Reliefs have expiry dates and requirements, and the housing measures assume the owner lives in the property.

Working with partner judicial scriveners, certified tax accountants and licensed real estate brokerages, TIMOA supports you from pre-purchase tax estimates through registration and the appointment of a tax agent to post-purchase filings. For details, see our Real Estate services.