Tax and Real Estate in Japan

Income tax named shotokuzei shall be levied.

Assumed that Ms.Nancy (she is living in USA) has real estate in Japan.

(How to know if she is resident or non resident of Japan for tax view→)

In general, tax is levied on profit. As for income tax, even if Nancy has real estate in Japan, and does not have any profit, she does not need to pay tax.

So, in the case of cases below, she needs to pay income tax to Japanese government.

A) When Nancy sells her real estate and gets selling profit
(She will receive money from purchaser)

B)  When Nancy lends her real estate and receives rental fee and gets profit through her business.
(She will receive money from renter)

When she pays tax in Japan, her tax is withheld by purchaser or renter.

And even if her tax is withheld by purchaser or renter, she still needs to submit tax filing in Japan.

If you do not want to hire tax accountant every year, you can learn how to submit it without hiring tax accountant from me.

Details of withholding tax

How to calculate income tax via sale of real estate

How to calculate income tax via Renting out of real estate

Resident tax ( Juminzei = 住民税 )

In the case Nancy is living in Japan, she is a resident of Japan.

In that case, other than Income tax, she also need to pay Resident tax.

There are 2 kinds of resident tax in Japan.
One is taxation on income basis. It is named “shotoku wari”.  and another is taxation on per capita  basis. It is named ” kinto wari”.

Taxation on income basis is levied on person who lives in Japan as of January 1st. So, if Nancy does not live in Japan as of January 1st, she does not have to pay resident tax as for real estate income ( Hudosan shotoku ).

Precisely speaking, I have to find out whether she is resident or no resident in Japan. In this page, I assume that Nancy does not live in Japan and she does not have residence.

Taxation on per capita basis ( kinto wari = 均等割 ) is levied even if Nancy does not live in Japan as of January 1st as long as she has real estate for residence.

Property tax (Kotei shisan zei)

This tax is levied on person who owns the real estate as of January 1st. So, even if Nancy does not live in Japan, she still has to pay this tax.

When non resident owns real estate in Japan, she needs to appoint tax agent in Japan→.

How to calculate property tax

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