Quick Fact: Japan has a tax treaty with Canadian, which may prevent double taxation.
If you’re a Canadian considering buying property in Japan, you’re looking at one of the world’s most accessible real estate markets for foreign investors. Japan places no restrictions on Canadian buyers—you have identical ownership rights to Japanese citizens, with no additional foreign buyer taxes.
This guide covers everything Canadian buyers need to know: CRA reporting requirements including the crucial T1135 form, the Canada-Japan Tax Convention, currency transfer strategies, and the complete step-by-step purchasing process.
Last Updated: February 2026
Can Canadians Buy Property in Japan?
Yes. Canadians can purchase property in Japan with virtually no restrictions. Japan grants full freehold ownership rights to foreign nationals—you have identical legal rights to Japanese citizens.
Key points for Canadian buyers:
- No visa or residency requirement to purchase
- Full freehold ownership of land and buildings
- No limit on the number of properties you can own
- No government approval required for most residential purchases
- No additional foreign buyer tax (unlike British Columbia’s or Ontario’s foreign buyer taxes, Japan has no equivalent)
The only exceptions involve properties near military installations and certain strategic locations under Japan’s national security laws. These affect a tiny minority of properties.
What property ownership does NOT give you:
- Residency rights or visa status
- Work permission in Japan
- Path to permanent residency
You can own a condo in Tokyo 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.
Pro Tip: Many Canadians buy Japanese property while living in Canada, then rent it out through a local property management company. The entire purchase can be completed remotely using notarised power of attorney.
Canada-Japan Tax Convention Benefits
The Canada-Japan Tax Convention (signed 1986, protocol updated 2000) prevents double taxation on property income and gains. This is crucial for Canadian investors.
How the Treaty Works
| Income Type | Where Taxed First | Canada Treatment |
|---|---|---|
| Rental Income | Japan (source country) | Taxable in Canada with Foreign Tax Credit |
| Capital Gains | Japan (primary right) | Taxable in Canada with Foreign Tax Credit |
| Property Taxes | Japan only | Deductible as expense |
Under Article 6 of the convention, income from immovable property may be taxed in the country where the property is situated. Japan has primary taxing rights, and Canada provides relief through foreign tax credits to prevent double taxation.
Foreign Tax Credit Mechanism
When you pay taxes to Japan, you can claim those payments as credits against your Canadian tax liability:
- Calculate your Canadian tax on the Japanese income
- Deduct the Japanese tax already paid (up to your Canadian tax amount)
- Pay only the difference to CRA
Example: You earn CAD $10,000 in rental income from Tokyo. Japan taxes this at 20%, so you pay CAD $2,000 to Japan. Your Canadian marginal rate is 35%, so Canadian tax would be $3,500. You claim $2,000 foreign tax credit, paying only $1,500 to CRA.
CRA Tax Obligations: T1135 and Foreign Property Reporting
As a Canadian tax resident, you have specific reporting obligations for foreign property. Missing these can result in significant penalties.
T1135: Foreign Income Verification Statement
This is the most important form for Canadians owning foreign property.
| Requirement | Details |
|---|---|
| Filing Threshold | Total cost of specified foreign property exceeds CAD $100,000 |
| Form | T1135 Foreign Income Verification Statement |
| Filing Deadline | Same as your T1 return (usually April 30, or June 15 if self-employed) |
| Late Filing Penalty | $25/day, minimum $100, maximum $2,500 |
| Gross Negligence Penalty | Up to $12,000 per year |
Important: The $100,000 threshold is based on cost, not market value. A property purchased for $150,000 requires T1135 filing even if its current value drops below $100,000.
What T1135 Requires
You must report:
- Description and country of property
- Maximum cost amount during the year
- Cost amount at year end
- Income earned from the property
- Gain or loss on disposition (if sold)
Other CRA Reporting Requirements
Beyond T1135, you must also:
- Report worldwide income on your T1 return (including Japanese rental income)
- File T776 Statement of Real Estate Rentals for rental income
- Report capital gains when you sell (Schedule 3)
- Claim foreign tax credits using Form T2209
Rental Income: Reporting to CRA
Japanese rental income must be reported on your Canadian tax return, but proper handling can minimize your tax burden.
Japan Tax on Rental Income
As a non-resident landlord in Japan:
| Situation | Tax Treatment |
|---|---|
| Corporate tenant | 20.42% withheld at source |
| Individual tenant (residential) | No withholding; annual return filing |
The 20.42% withholding is a prepayment of tax—your actual liability may be lower after deductions.
Canadian Reporting
On your Canadian return:
- Convert income to CAD using Bank of Canada exchange rates
- Report gross rental income on Form T776
- Claim allowable deductions:
- Property management fees
- Repairs and maintenance
- Insurance
- Japanese property taxes
- Capital Cost Allowance (CCA) if you choose to claim
- Travel expenses for property inspection (within limits)
- Claim Foreign Tax Credit (Form T2209) for Japanese taxes paid
Currency Conversion
CRA requires consistent use of exchange rates:
- Income: Use the Bank of Canada rate on the date received, or annual average rate
- Expenses: Use the rate on the date paid
- Capital transactions: Use the rate on the transaction date
Pro Tip: Keep detailed records in both currencies. CRA audits of foreign property can go back several years, and you’ll need documentation of Japanese taxes paid to claim foreign tax credits.
Capital Gains Tax: Canadian and Japanese Rules
Selling Japanese property triggers capital gains tax in both countries, but the treaty prevents double taxation.
Japan Capital Gains Tax
| Holding Period | Rate |
|---|---|
| Under 5 years | 39.63% |
| Over 5 years | 20.315% |
The 5-year calculation runs from January 1 of the year following purchase to January 1 of the year of sale. Holding just over 5 years nearly halves your Japanese tax.
Canadian Capital Gains Tax
From 2024, Canada’s capital gains inclusion rates are:
| Amount | Inclusion Rate |
|---|---|
| First $250,000 of gains (individuals) | 50% |
| Above $250,000 | 66.67% |
The included portion is then taxed at your marginal rate.
Avoiding Double Taxation
The treaty mechanism:
- Calculate your Canadian CGT liability
- Claim foreign tax credit for Japanese CGT paid
- Pay only the difference (if Canadian tax exceeds Japanese tax)
Example: You sell for a $100,000 CAD gain after 6 years. Japan charges 20.315% = $20,315. Canada includes 50% ($50,000) at your 40% marginal rate = $20,000 Canadian tax. Since you paid more to Japan than Canada would charge, you owe nothing additional to CRA on this gain.
Currency Considerations: CAD to JPY
Exchange rates significantly impact your total investment cost and returns.
Current Exchange Rate Context
| Period | Approximate Rate |
|---|---|
| Late 2025 | ~108 JPY/CAD |
| 5-year average | ~95 JPY/CAD |
| 10-year average | ~90 JPY/CAD |
Canadian buyers currently get approximately 15-20% more yen for their dollars compared to historical averages.
Smart Transfer Strategies
Never use your Canadian bank for large international transfers. Major banks typically charge 2-3% above mid-market rates. For a ¥40 million property (approximately CAD $370,000), that’s CAD $7,400-11,000 in hidden fees.
Better options:
| Service | Typical Cost | Best For |
|---|---|---|
| Wise | 0.5-1% total | Most transfers |
| OFX | Negotiable | Large transfers (>$50,000) |
| Knightsbridge FX | Competitive | Canadian specialist |
| Forward contracts | Lock rate | Once property selected |
Pro Tip: For a property purchase, consider using a forward contract to lock in the exchange rate once your offer is accepted. This protects you from rate movements during the 1-2 month closing period.
Step-by-Step Property Buying Process for Canadians
The process typically takes 3-6 months from initial research to receiving keys.
Step 1: Research and Budget Planning (1-3 months)
- Research Japanese markets (Tokyo, Osaka most popular with Canadian investors)
- Establish budget in CAD, accounting for exchange rate fluctuations
- Calculate total costs including 8-12% transaction fees
- Consult Canadian tax adviser on T1135 and treaty implications
- Research property management options if investing for rental
Step 2: Engage Professionals (2-4 weeks)
- Find English-speaking real estate agent in Japan
- Consult cross-border tax adviser familiar with Canada-Japan treaty
- Prepare notarised documentation
- Set up foreign exchange arrangements
Step 3: Property Search and Viewing (1-2 months)
- View properties in person or via video tours
- Check building age—post-1981 construction uses modern earthquake codes
- Assess location, transport access, and neighbourhood quality
- For investments, evaluate rental potential and management options
Step 4: Offer and Contract (2-4 weeks)
- Submit purchase offer (買付申込書)
- Negotiate price and terms
- Receive and review Important Matters Disclosure (重要事項説明書)
- Sign purchase agreement
- Pay deposit (typically 5-10% of purchase price)
Step 5: Completion and Registration (1-2 weeks)
- Transfer funds from Canada to Japan
- Pay remaining balance plus transaction costs
- Judicial scrivener (司法書士) handles ownership registration
- Pay stamp duty and registration fees
- Receive keys and documentation
- Appoint tax representative
- Begin T1135 tracking for CRA
Note: Starting April 2026, Japan requires nationality disclosure during property registration. This won’t affect your ability to buy but adds one more document requirement.
Required Documents for Canadian Buyers
Non-resident Canadian buyers need:
| Document | Purpose | How to Obtain |
|---|---|---|
| Canadian Passport | Identity verification | Already have |
| Notarised Affidavit | Certifies identity and address | Canadian notary or Canadian Embassy in Japan |
| Proof of Address | Verify Canadian residence | Utility bill, bank statement (within 3 months) |
| Bank Statements | Prove source of funds | Your Canadian bank |
| Power of Attorney | If completing remotely | Notarised |
| Tax Representative Form | Appoint Japan tax agent | Provided by agent/scrivener |
The notarised affidavit must include your full legal name, date of birth, current address, and signature matching your passport.
Mortgage Options for Canadians in Japan
Getting a mortgage as a Canadian non-resident in Japan is challenging.
Japanese Bank Requirements
Most Japanese banks require:
- Permanent residency in Japan, OR
- Japanese spouse willing to guarantee, OR
- Substantial assets held with the bank
Realistic Options for Canadian Buyers
| Option | Requirements | Down Payment | Notes |
|---|---|---|---|
| Cash purchase | None | 100% | Most common for non-residents |
| SMBC Prestia | High net worth, bank relationship | 30-50% | For clients with substantial deposits |
| Canadian HELOC | Canadian property equity | N/A | Use home equity to fund Japan purchase |
| Canadian mortgage | Canadian property as security | Varies | Refinance Canadian home |
Practical reality: Most Canadian non-residents purchase with cash or tap home equity in Canada. Japanese mortgage rates are remarkably low (0.5-1.5%), but access typically requires residency.
Pro Tip: If you own property in Canada, a HELOC can provide flexible funding for a Japanese purchase at Canadian interest rates (though higher than Japanese rates, this gives you access to financing).
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 (approximately CAD $370,000) property:
| Cost | Calculation | JPY | CAD (approx) |
|---|---|---|---|
| Agent Commission | 3% + ¥60,000 + 10% tax | ¥1,386,000 | $12,800 |
| Registration Tax | ~1.5% of assessed value | ~¥600,000 | $5,500 |
| Acquisition Tax | 1.5% land + 2% building | ~¥800,000 | $7,400 |
| Stamp Duty | Per contract value | ~¥30,000 | $280 |
| Judicial Scrivener | Document preparation | ~¥150,000 | $1,400 |
| Other Fees | Various | ~¥120,000 | $1,100 |
| TOTAL | ~¥3,086,000 | ~$28,500 (8%) |
Annual Property Taxes
| Tax | Rate | Notes |
|---|---|---|
| Fixed Asset Tax | 1.4% of assessed value | Paid annually |
| City Planning Tax | Up to 0.3% of assessed value | Urban areas only |
Note: “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 purchase price.
Common Mistakes Canadian Buyers Should Avoid
1. Missing the T1135 filing requirement If your Japanese property cost exceeds CAD $100,000, you MUST file T1135 annually. Penalties start at $25/day and can reach $2,500 per year—or much more for gross negligence.
2. Using Canadian bank wire transfers TD, RBC, BMO, and other big banks charge 2-3% above mid-market rates. On a $370,000 purchase, that’s $7,400-11,000 wasted. Use Wise, OFX, or a currency broker.
3. Forgetting to convert currencies properly for CRA CRA requires consistent exchange rate usage. Keep records in both CAD and JPY, and use Bank of Canada rates for conversions.
4. Ignoring the 5-year CGT threshold in Japan Selling before 5 years means paying nearly double the Japanese CGT rate (39.63% vs 20.315%). Plan your investment horizon accordingly.
5. Pre-1981 buildings without due diligence Japanese building codes changed dramatically in 1981 following major earthquakes. Pre-1981 buildings may lack modern earthquake resistance—verify construction date and any retrofitting.
6. Not appointing a tax representative Non-residents must have a Japan-based tax representative to receive tax notices and handle filings. Your property management company can often serve this role.
7. Underestimating management needs You can’t handle tenant issues from Canada. Budget 5-10% of rent for professional property management—it’s essential for non-resident investors.
8. Assuming property grants residency Property ownership provides zero immigration benefits in Japan. You’ll still need appropriate visas to stay long-term.
Property Management for Non-Resident Canadian Owners
Professional property management is essential if you’re investing for rental income.
Expect to pay 5-10% of rental income for full-service management including:
- Tenant finding and screening
- Rent collection
- Maintenance coordination
- Tax filing assistance (Japanese returns)
- English communication and regular reporting
Several agencies in Tokyo and Osaka specialise in serving overseas investors with bilingual staff.
Pro Tip: Choose a management company that can also serve as your tax representative and provide annual income documentation suitable for CRA reporting.
Comparison: Japan vs Canadian Real Estate Investment
Many Canadians compare Japan investment to buying additional property at home.
| Factor | Japan | Canada (Major Cities) |
|---|---|---|
| Foreign buyer tax | 0% | Up to 25% (BC, ON) |
| Entry price | Lower | Generally higher |
| Rental yield | 3.5-4.5% | 3-4% |
| Property tax | ~1.7% assessed | 0.5-1.5% assessed |
| Capital gains tax | 20.3% (5+ years) | ~25% effective (federal + provincial) |
| Currency risk | Yes (JPY) | No |
| Management ease | Requires professional | Can self-manage |
Japan offers comparable or better yields with significantly lower entry prices, but requires acceptance of currency risk and professional management.
FAQ: Canadians Buying Property in Japan
Do Canadians need a visa to buy property in Japan?
No. Canadians can purchase Japanese property without any visa. You can buy while visiting on a 90-day visa-free entry or even without entering Japan using power of attorney. However, property ownership provides no visa benefits—you’ll still need an appropriate visa to live in Japan long-term.
What is T1135 and do I need to file it?
T1135 (Foreign Income Verification Statement) is a CRA form required if you own specified foreign property with a total cost exceeding CAD $100,000. Since most Japanese property exceeds this threshold, you’ll likely need to file. Missing this form can result in penalties of $25/day (minimum $100, maximum $2,500 per year). File it with your annual tax return.
How do I report Japanese rental income to CRA?
Report Japanese rental income on Form T776 (Statement of Real Estate Rentals) attached to your T1 return. Convert income and expenses to CAD using Bank of Canada exchange rates. Claim foreign tax credits (Form T2209) for Japanese taxes paid to avoid double taxation. Keep detailed records in both currencies.
Can Canadians get a mortgage in Japan?
It’s difficult for non-residents. Most Japanese banks require permanent residency or a Japanese spouse as guarantor. Canadian buyers typically purchase with cash or use a HELOC/refinancing on their Canadian property. SMBC Prestia offers loans to some high-net-worth foreign clients but requires substantial assets and 30-50% down payment.
How do I avoid paying tax twice on the same income?
The Canada-Japan Tax Convention provides relief through foreign tax credits. When you pay tax to Japan on rental income or capital gains, claim a foreign tax credit on your Canadian return (Form T2209). This credits the Japanese tax against your Canadian liability, so you only pay the difference (if any). Keep documentation of all Japanese taxes paid.
Ready to explore Japanese property investment? Use our ROI Calculator to estimate returns, or read the Complete Guide to Buying Property in Japan for detailed process information.
This guide provides general information and should not be construed as tax or legal advice. Consult qualified Canadian and Japanese tax professionals for advice specific to your situation.