In the case a person ( landlord = investor = owner of real estate ) invests in real estate in Japan and continues her investment in good condition, she needs to maintain her real estate.
If one of renter leaves her room, she may change wall paper inside the room or repair minor defect and she can include her payment in expenses at her fiscal year.
On the other hand, even if she invests in newly built apartment, she may need to conduct large scale repair after 10 years.
So, she wants to reserve some fund for upcoming large scale repair.
When a elevator gets old, she will repair it.
Or when outer wall of her property gets old, she will renovate it and tries to attract new renters.
Or when floor plan of her building apartment has become obsolete, she needs to change it.
So, she wants to reserve some funds for upcoming renovation or repair.
But, even if she wants to reserve the fund, she still has not paid her money. So, she cannot include the money in deductible expense.
She needs to reserve some fund for upcoming large scale repair after she pays real estate income tax.
But now I will introduce a way to avoid such situation by using life insurance in Japan.
She can utilize a kind of life insurance in Japan.
There is a life insurance that she can deduct all amount of premium from her sales.
At the same, when she cancels her insurance, most of her premium is reimbursed to her.