Quick Fact: Japan has a tax treaty with American, which may prevent double taxation.
If you’re an American considering buying property in Japan, you’re entering one of the world’s most stable real estate markets with virtually no restrictions on foreign ownership. This guide covers everything US citizens need to know about the purchase process, with special focus on FBAR requirements, FATCA reporting, and how the US-Japan Tax Treaty protects you from double taxation.
The good news: Americans have the same property rights as Japanese citizens. The challenge: navigating two tax systems simultaneously. We’ll walk you through both.
Last Updated: February 2026
Can Americans Buy Property in Japan?
Yes. Japan places no nationality or residency restrictions on property ownership. As an American, you have identical ownership rights to Japanese citizens—you can purchase residential, commercial, or agricultural land outright.
The only exception involves properties near military installations and certain strategic locations, which face restrictions under Japan’s national security laws. According to government data reported by Kyodo News, Americans purchased 211 properties near sensitive sites in FY2024, suggesting even these restrictions apply narrowly.
What property ownership does NOT give you:
- Residency rights or visa status
- Work permission
- Path to permanent residency
You can own a ¥100 million Tokyo penthouse and still need a tourist visa to visit it. For long-term stays, you’ll need a separate work visa, spouse visa, or investor visa (which has its own substantial requirements beyond property ownership).
Pro Tip: Many Americans buy property while living in the US, then rent it out through a property management company. You can complete the entire purchase remotely with a notarized affidavit and power of attorney.
US Tax Implications: FBAR and FATCA Requirements
Here’s where buying property in Japan as an American gets complicated. The US is one of only two countries (the other being Eritrea) that taxes citizens on worldwide income regardless of where they live. When you buy Japanese property, you trigger several reporting obligations.
FBAR (FinCEN Form 114)
The Foreign Bank Account Report catches many American property owners off guard. While the property itself isn’t reportable, any Japanese bank accounts you open for property transactions likely are.
| FBAR Requirement | Details |
|---|---|
| Threshold | $10,000 aggregate in foreign accounts at any point during the year |
| Form | FinCEN Form 114 |
| Deadline | April 15 (automatic extension to October 15) |
| Filed With | FinCEN (not the IRS) |
| Penalties | Up to $12,909 per violation; criminal penalties for willful violations |
IRS Warning: FBAR penalties are severe. Non-willful violations carry penalties up to $12,909 per account, per year. Willful violations can result in penalties equal to 50% of account balances or criminal prosecution.
What triggers FBAR for property owners:
- Japanese bank account for receiving rent
- Account for paying property management fees
- Account held for closing funds
- Any account where you have signature authority
FATCA (Form 8938)
FATCA has higher thresholds than FBAR but requires more detailed reporting. The thresholds depend on where you live:
| Filing Status | Living in US | Living Abroad |
|---|---|---|
| Single | $50,000 year-end / $75,000 during year | $200,000 year-end / $300,000 during year |
| Married Filing Jointly | $100,000 year-end / $150,000 during year | $400,000 year-end / $600,000 during year |
FATCA Form 8938 is filed with your regular tax return, not separately like FBAR.
Pro Tip: You must file both FBAR and FATCA if you meet both thresholds—they’re not either/or. Many Americans need to file both.
US-Japan Tax Treaty: Avoiding Double Taxation
The US-Japan Tax Treaty prevents you from paying full taxes to both countries on the same income. Here’s how different income types are treated:
| Income Type | Japan’s Rights | US Treatment |
|---|---|---|
| Rental Income | Taxable at source | Taxable, with Foreign Tax Credit |
| Capital Gains | Primary taxation rights | Taxable, with Foreign Tax Credit |
| Property Taxes | N/A (not income) | Deductible on Schedule A |
How the Foreign Tax Credit Works
When you pay taxes to Japan on rental income or capital gains, you can claim those payments as a credit against your US tax liability using Form 1116.
Example: You earn ¥1,200,000 ($8,000) in rental income from your Tokyo apartment. Japan taxes this at an effective rate of 20%. You pay ¥240,000 ($1,600) to Japan. On your US return, you report the $8,000 income but claim the $1,600 as a Foreign Tax Credit, reducing your US tax bill dollar-for-dollar.
Limitation: The credit cannot exceed the US tax you would have owed on that foreign income. Excess credits can be carried back 1 year or forward 10 years.
For a detailed breakdown of Japanese property taxes, see our Japan Property Tax Guide for Foreigners.
Step-by-Step Property Buying Process
The process typically takes 3-6 months from initial search to receiving keys.
Step 1: Initial Research and Preparation (1-3 months)
- Assess finances and determine budget
- Prepare notarized affidavit (required for non-residents)
- Research locations and property types
- Engage English-speaking real estate agent
- Get mortgage pre-approval if financing needed
Step 2: Property Search and Viewing (1-2 months)
- Browse listings through your agent
- Schedule property viewings (video tours available for remote buyers)
- Conduct property inspections
- Research building management and neighborhood reputation
Step 3: Offer and Negotiation (1-2 weeks)
- Submit purchase offer (買付申込書 / kaitsuke moushikomisho)
- Negotiate price and terms
- Receive Important Matters Disclosure (重要事項説明 / juyo jiko setsumei)
- Review all disclosures with professional help
Step 4: Contract and Due Diligence (1-2 months)
- Sign purchase agreement
- Pay deposit (typically 5-10% of purchase price)
- Complete title search and legal checks
- Finalize mortgage application
- Judicial scrivener verifies documents
Step 5: Closing and Registration (1-2 weeks)
- Pay remaining balance
- Transfer ownership at Legal Affairs Bureau (法務局 / Houmu Kyoku)
- Pay stamp duty and registration fees
- Receive keys and property documents
Pro Tip: Starting April 2026, Japan requires nationality disclosure during property registration. This won’t affect your ability to buy but adds one more document to prepare.
For the complete buying process applicable to all foreigners, see our Complete Guide to Buying Property in Japan.
Required Documents for American Buyers
Non-resident Americans need:
| Document | Purpose | Where to Obtain |
|---|---|---|
| Passport | Identity verification | Already have |
| Notarized Affidavit | Certifies identity and address | US Embassy/Consulate or US notary |
| Proof of Address | Verify residence | Utility bill, bank statement |
| Bank Statements | Prove funds | Your US bank |
| Power of Attorney | If buying remotely | Notarized, apostilled |
| Tax Representative Form | Appoint Japan tax agent | Provided by agent/scrivener |
The notarized affidavit must include your full legal name, date of birth, current address, and signature matching your passport. Japanese notaries won’t work—you need a US notary or consular official.
Mortgage Options for Americans in Japan
Getting a mortgage as an American is challenging but not impossible. Japanese banks typically require permanent residency, but alternatives exist.
| Lender Type | Requirements | Down Payment | Rate Range |
|---|---|---|---|
| Japanese Banks (Prestia, SMBC) | PR or spouse guarantor | 20-30% | 0.5-1.5% |
| International Banks | High net worth, relationship | 30-50% | 1.0-2.0% |
| US-based Lenders | Property as collateral | 30-50% | Varies |
| Cash Purchase | None | 100% | N/A |
Japanese mortgage rates are remarkably low—ranging from 0.179% to 1.380% as of 2024 according to e-housing.jp. However, non-residents rarely access these rates without significant assets or a Japanese spouse willing to co-sign.
Realistic options for Americans without PR:
- Cash purchase (most common for non-resident Americans)
- SMBC Prestia for high-net-worth clients with substantial deposits
- Home equity loan against US property to fund Japan purchase
- Seller financing (rare but occasionally available for commercial properties)
Total Costs: Purchase Fees and Ongoing Taxes
Budget 8-12% above the property price for transaction costs.
One-Time Purchase Costs
For a ¥40,000,000 ($270,000) property:
| Cost | Calculation | Amount |
|---|---|---|
| Agent Commission | 3% + ¥60,000 + 10% tax | ¥1,386,000 |
| Registration License Tax | ~1.5% of assessed value | ~¥600,000 |
| Real Estate Acquisition Tax | 1.5% land + 2% building | ~¥800,000 |
| Stamp Duty | Varies by contract value | ~¥30,000 |
| Judicial Scrivener | Document preparation/filing | ~¥150,000 |
| Other Fees | Various | ~¥120,000 |
| TOTAL ADDITIONAL COSTS | ~¥3,086,000 (7.7%) |
Annual Property Taxes
| Tax | Rate | Notes |
|---|---|---|
| Fixed Asset Tax | 1.4% of assessed value | Reduced 1/6 for small residential land |
| City Planning Tax | Up to 0.3% of assessed value | Urbanization areas only |
| Total Annual | ~1.7% of assessed value | Assessed value typically 50-70% of market |
Assessed value (固定資産税評価額) is typically 50-70% of market value, so effective annual tax runs closer to 0.85-1.2% of what you paid.
Capital Gains Tax When Selling
Japan’s capital gains tax depends on how long you’ve owned the property:
| Holding Period | Total Rate | Breakdown |
|---|---|---|
| Under 5 years | 39.63% | 30.63% national + 9% local |
| Over 5 years | 20.315% | 15.315% national + 5% local |
| Primary residence (10+ years) | Reduced rate | Special provisions apply |
Primary residence sellers can claim a ¥30,000,000 special deduction, potentially eliminating tax on smaller properties entirely.
For Americans: You’ll also owe US capital gains tax, but the Foreign Tax Credit mechanism prevents double taxation. Japan has primary taxation rights under the treaty—you pay Japan first, then credit that against your US liability.
Rental Income: Tax Reporting in Both Countries
As an American landlord in Japan, you report the same rental income to both countries.
Japan Tax Obligations
Non-resident landlords face a 20.42% withholding tax on rental income. When your tenant is a company, they withhold this amount and remit it to the tax office. Individual tenants using the property as their residence don’t need to withhold.
You can file a Japanese tax return (February 16 - March 15) to claim deductions and potentially receive a refund if your effective rate is lower than the withheld amount.
Required: You must appoint a tax representative (納税管理人 / nozei kanrinin) in Japan—someone who can receive tax notices and handle filings on your behalf.
US Tax Obligations: Schedule E Reporting
On your US return, report Japanese rental income on Schedule E (Supplemental Income and Loss):
- Convert all amounts from yen to USD using the average exchange rate for the year
- Report gross rental income received
- Deduct allowable expenses:
- Depreciation (using US rules, not Japanese)
- Property management fees
- Repairs and maintenance
- Property taxes paid
- Insurance
- Travel expenses for property visits
- Claim Foreign Tax Credit (Form 1116) for Japanese taxes paid
Pro Tip: US and Japan have different depreciation rules. Japan allows aggressive depreciation (wooden buildings: 22 years, RC: 47 years), while the US uses 27.5 years for residential and 39 years for commercial. Your US depreciation schedule will differ from Japanese filings.
Common Mistakes Americans Should Avoid
1. Assuming property gives you residency It doesn’t. You can own a building but still need a visa to enter Japan.
2. Forgetting FBAR for Japanese bank accounts The $10,000 threshold applies to aggregate balances. Even temporary spikes from receiving sale proceeds count.
3. Missing the tax representative appointment Non-residents must have a Japan-based representative. Failure to appoint one creates complications when tax notices go unanswered.
4. Using Japanese depreciation on US returns The IRS doesn’t recognize Japanese depreciation schedules. Calculate separately for each country.
5. Overlooking withholding on rental income If your corporate tenant fails to withhold the 20.42%, you’re still liable for the tax.
6. Buying near restricted areas Properties near military bases face ownership restrictions. Your agent should verify this during due diligence.
7. Underestimating transaction costs That 8-12% adds up. A ¥50 million property realistically costs ¥54-56 million to close.
English-Speaking Real Estate Agents
Working with an agent who understands both Japanese real estate law and American tax concerns significantly smooths the process. Look for agents who:
- Hold a Japanese real estate license (宅地建物取引士)
- Have experience with foreign buyers
- Can explain the Important Matters Disclosure in English
- Understand cross-border tax implications
For location-specific guidance on Tokyo’s best investment areas, see our Tokyo Real Estate Investment Guide.
Frequently Asked Questions
Do Americans need a visa to buy property in Japan?
No visa is required to purchase property. You can buy while visiting on a 90-day tourist visa or even without entering Japan at all (using power of attorney). However, property ownership provides no visa benefits—you’ll still need an appropriate visa to live in Japan long-term.
Does buying property in Japan give you residency?
No. Property ownership and residency are completely separate in Japan. Unlike some countries that offer “golden visas” for real estate investment, Japan grants no immigration benefits for property purchase. You must qualify for residency through work, family, or other visa categories independently.
Do I have to report my Japanese property on FBAR?
The property itself is not reported on FBAR. However, any Japanese bank accounts you open for property-related transactions (receiving rent, paying management fees, holding closing funds) must be reported if your aggregate foreign account balances exceed $10,000 at any point during the year.
How do I avoid double taxation on Japanese rental income?
File Form 1116 (Foreign Tax Credit) with your US tax return. Report Japanese taxes paid on rental income, and the IRS credits this against your US tax liability dollar-for-dollar, up to the amount of US tax you would have owed on that income. The US-Japan Tax Treaty specifically allows this mechanism.
Can Americans get a mortgage in Japan without permanent residency?
It’s difficult but possible. Most Japanese banks require permanent residency or a Japanese spouse as guarantor. Alternatives include SMBC Prestia (for high-net-worth clients with substantial deposits), cash purchases, or financing through US-based lenders using your American assets as collateral. Expect 30-50% down payment requirements for any non-PR mortgage option.
Ready to start your Japan property search? Use our ROI Calculator to estimate returns, or explore the Complete Guide to Buying Property in Japan for the full step-by-step process.
This guide provides general information and should not be construed as tax or legal advice. Consult qualified US and Japanese tax professionals for advice specific to your situation.