How to reserve a fund for future repair of real estate in Japan without paying income tax NO,2.

At first she needs to incorporate a company ( she is a representative director  ) in Japan and her company should invest in real estate in Japan.
If she already owns real estate in Japan by herself, she needs to transfer the ownership of the property to her company.

Then, her company  purchases life insurance and she is a insured person.

Assumed she ( representative director of her company and insured person ) is 30 years old and her company pays premium for 15 years and cancels its insurance when she is 45 years old and 80 % of its premium is reimbursed.
( Actually there is this kind of life insurance in Japan as of September 2015. I can introduce a bilingual employee of insurance company.)

😯 Assumed, her company invests in real estate in Japan but does not purchases life insurance.
And annual amount of her real estate sales is 10 million yen and effective tax rate ( = Jikko zeiritsu = 実効税率. It includes corporate tax, resident tax, business tax ) is  35% .

1st year 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Amount of real estate income 10 million 10 million 10 million 10 million 10 million 10 million 10 million 10 million 10 million 10 million 10 million 10 million 10 million 10 million 10 million
Corporate tax etc 3.5 million 3.5 million 3.5 million 3.5 million 3.5 million 3.5 million 3.5 million 3.5 million 3.5 million 3.5 million 3.5 million 3.5 million 3.5 million 3.5 million 3.5 million
 Profit after tax  6.5 million yen  6.5 million  6.5 million  6.5 million  6.5 million  6.5 million  6.5 million  6.5 million 6.54 million  6.5 million  6.5 million 6.5 million  6.5million 6.5 million 6.5 million

So, during 15 years, she can reserve  97.5 million yen. ( 6.5 million yen × 15 years = 97.5 million yen. )

😮 On the other hand, in the case her company invests in real estate in Japan and purchases life insurance ( annual amount of premium is 2 million yen ) by her company and annual amount of her real estate sales is 10 million yen and effective tax rate  35%.

1st year 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Amount of real estate income 10 million 10 million 10 million 10 million 10 million 10 million 10 million 10 million 10 million 10 million 10 million 10 million 10 million 10 million 10 million
Amount of premium 2 million yen 2 million 2 million 2 million 2 million 2 million 2 million 2 million 2 million 2 million 2 million 2 million 2 million 2 million 2 million
Taxable income 8 million yen 8million 8 million 8 million 8 million 8 million 8 million 8 million 8 million 8 million 8 million 8million 8 million 8 million 8 million
Corporate tax etc.  2.8 million yen 2.8 million  2.8 million  2.8 million  2.8 million  2.8 million  2.8 million  2.8 million 2.8 million 2.8 million  2.8 million 2.8 million  2.8 million 2.8 million 2.8 million
Profit after tax 5.2 million yen 5.2 million 5.2 million 5.2 million 5.2 million 5.2 million 5.2 million 5.2 million 5.2 million 5.2 million 5.2 million 5.2 million 5.2 million 5.2 million 5.2 million

5.2 million yen ( Profit after tax ) × 15 years = 78 million yen.
2 million yen ( Amount of premium ) × 15 years × 80% = 24 million yen.
78 million yen + 24 million yen = 102 million yen.

So, during 15 years, she can reserve  102 million yen.

102 million yen - 97.5 million yen = 4.5 million yen.
So, by purchasing a life insurance, she can reserve more money by 4.5 million yen.

And according to her condition, she can purchase insurance with higher cancellation return rate and can cancel insurance within shorter years.

In the case of her, her company cancels insurance and receives 24 million yen.

Her company needs to cancel its insurance when it uses the money to repair or remodel its building apartment or purchase other real estate or has other purpose.
Because, this 24 million yen is miscellaneous revenues ( zatsu shunyu = 雑収入 ).
So, if  her company does not use this money, it will increase taxable income.

BACK TO NO, 1

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