Last Updated: March 2026
If you’re buying property in Japan as a foreigner, understanding your tax obligations before you sign makes a big difference. The good news: foreign property owners pay the same property taxes as Japanese citizens—there’s no extra “foreigner tax.” The complexity is in the details: assessed value (which is usually below market), non-resident withholding on rental income, capital gains timing, and the mandatory tax agent. I’ve seen non-residents assume they could handle everything from abroad without a zeirishi, only to run into missed deadlines and penalty letters. This guide covers what you’ll pay, when, and what you must set up so nothing slips.
Tax bills arrive in Japanese. Payment windows can be tight. And the holding period for capital gains is counted from January 1 to January 1, not from your purchase date—a quirk that has caught out more than one seller. Getting these right from the start saves a lot of hassle later.
Japan Property Tax for Foreigners: The Basics
Every owner in Japan pays two annual taxes: Fixed Asset Tax (固定資産税, kotei shisan zei) and City Planning Tax (都市計画税, toshi keikaku zei). Rates are set on the government’s assessed value, not the purchase price or market value. For non-residents, rental income is subject to withholding in some cases, and you must appoint a licensed tax agent (税理士, zeirishi). The table below is a quick reference; the sections that follow go into detail.
| Item | Details |
|---|---|
| Fixed Asset Tax | 1.4% of assessed value |
| City Planning Tax | Up to 0.3% of assessed value |
| Rental income withholding | 20.42% for non-residents (in certain cases) |
| Long-term capital gains | 15.315% (held over 5 years) |
| Short-term capital gains | 30.63% (held 5 years or less) |
| Tax agent | Mandatory for non-residents |
Annual Property Taxes: Fixed Asset Tax and City Planning Tax
Fixed Asset Tax is levied at 1.4% of the assessed value. City Planning Tax applies only in designated urbanization areas (most of Tokyo, Osaka, and other cities) at up to 0.3% of assessed value. Combined, the maximum is 1.7% of assessed value—but “assessed value” is the key. It’s typically well below market, so your real burden is lower than a straight 1.7% of what you paid. One important rule: liability is based on who owns the property on January 1. If you sell in July, you’re still liable for the full year’s tax; the buyer isn’t.
| Tax type | Rate | Notes |
|---|---|---|
| Fixed Asset Tax | 1.4% | Standard national rate |
| City Planning Tax | 0.3% max | Only in urbanization zones |
| Combined maximum | 1.7% | Of assessed value |
How Assessed Value Is Calculated
Japan property tax for foreigners often works in your favour here. The assessed value (評価額) used for tax is usually around 70% of the officially announced land price, which is itself below market. So a property you bought for ¥50 million might have an assessed value of ¥30–35 million. Your tax is then 1.7% of that lower number. If you naively applied 1.7% to the purchase price you’d overestimate your bill by roughly 30%. I’ve seen buyers panic when they do that calculation; once they understand assessed value, the real number is much more manageable.
| Purchase price | Example assessed value (70%) | Fixed Asset (1.4%) | City Planning (0.3%) | Total annual tax |
|---|---|---|---|---|
| ¥50,000,000 | ¥35,000,000 | ¥490,000 | ¥105,000 | ¥595,000 |
Tax Reductions for Residential Properties
Residential land gets significant reductions. For small-scale residential land (under 200 sqm), Fixed Asset Tax is reduced to 1/6 of the normal calculation and City Planning Tax to 1/3. For the portion over 200 sqm, the reductions are 1/3 and 2/3 respectively. When you buy a standard Tokyo apartment, your share of the land is usually under 200 sqm, so you’ll often get the maximum 1/6 reduction on the land portion.
| Land size | Fixed Asset Tax reduction | City Planning Tax reduction |
|---|---|---|
| Under 200 sqm | 1/6 (83% off) | 1/3 (67% off) |
| Over 200 sqm | 1/3 (67% off) | 2/3 (33% off) |
One-Time Purchase Taxes
When you acquire property you also face one-time taxes. Real Estate Acquisition Tax is a prefectural tax at 3% of assessed value for residential property (reduced from 4% through March 2027); the bill usually arrives 3–6 months after purchase. For a full list of purchase costs see our hidden costs guide. Registration license tax is paid at the Legal Affairs Bureau when you register the transfer: ownership transfer at 2.0% (or 0.3% for qualifying residential), new construction and mortgage registration at lower rates when conditions are met. Stamp duty on the contract depends on the transaction value (reduced rates through March 2027). Consumption tax at 10% applies only to the building value, not the land, and mainly affects new construction.
| Registration type | Standard rate | Reduced rate* |
|---|---|---|
| Ownership transfer | 2.0% | 0.3% |
| New construction | 0.4% | 0.15% |
| Mortgage registration | 0.4% | 0.1% |
*Reduced rates apply to qualifying residential properties.
Japan Rental Property Income Tax for Non-Residents
If you earn rental income from Japanese property as a non-resident, the rules differ from residents. When a corporate tenant rents your property, they must withhold 20.42% of the gross rent and pay it to the tax office; you receive 79.58%. When an individual tenant uses the property as their personal residence, they are not required to withhold—you get the full rent but must declare and pay tax through your annual return. Some foreign landlords prefer individual tenants for cash flow, but that means you must file properly through your tax agent every year. I’ve seen people assume that if the tenant doesn’t withhold, they don’t need to declare; that’s wrong. You still owe Japanese tax on the income.
| Monthly rent | Withholding (20.42%) | Amount you receive |
|---|---|---|
| ¥100,000 | ¥20,420 | ¥79,580 |
Withholding must be remitted by the 10th of the following month. You then reconcile via your annual return.
Withholding: Who Withholds and When
Corporate tenants withhold and remit; you file an annual return to settle. Individual tenants (personal residence) don’t withhold; you’re responsible for declaring and paying. Individual tenants using the property for business are required to withhold. Getting this wrong can mean unexpected tax bills or penalties—your tax agent can confirm which case applies to your tenant.
Japan Capital Gains Tax on Property When Selling
Capital gains rates depend on holding period. Japan measures the holding period from January 1 of the year after acquisition to January 1 of the year you sell. So you often need to hold for more than five calendar years to get long-term treatment. Short-term (5 years or less) is taxed at 30.63%; long-term (over 5 years) at 15.315%. The difference is large enough that waiting a few extra months to cross the threshold can save a lot. One seller I know had bought in December and assumed their holding period started then; they didn’t realise it started the following January 1 and almost sold in the short-term window. Their tax agent caught it in time.
| Holding period | Tax rate | Example: ¥10M gain |
|---|---|---|
| 5 years or less | 30.63% | ¥3,063,000 tax |
| Over 5 years | 15.315% | ¥1,531,500 tax |
Tax Agent (Zeirishi) Requirements
Non-resident property owners must appoint a licensed tax agent. It’s a legal requirement, not optional. The agent submits and receives documents, files your returns (rental income, capital gains), can handle property tax payments, and deals with the tax office in Japanese. If you don’t appoint one, the authorities can assign one for you—and you won’t choose who it is. Fees vary: basic annual return around ¥100,000, extra per property, plus possible fees for foreign tax credit work or ongoing monthly service. There are over 76,000 registered zeirishi; choose one, complete the Notification of Tax Agent form, and submit it to the tax office with jurisdiction over your property. Do this as soon as you buy; leaving it until the first tax deadline is risky.
Property Tax Payment Schedule and Deadlines
Tax bills are sent in April or May each year, based on January 1 ownership. Many municipalities allow four quarterly payments (e.g. April–May, July, December, February); exact dates vary. You can pay by bank transfer (often with direct debit), at convenience stores for smaller amounts, at the ward/city office, or through your tax agent or property manager. Bills are in Japanese only—if you don’t read Japanese, a bilingual tax agent or manager is essential so you don’t miss deadlines.
Depreciation Deductions for Rental Properties
Depreciation is one of the main ways to reduce taxable rental income. You deduct the building’s value over its statutory useful life (land is not depreciable). RC buildings: about 47 years; steel-framed: about 34; wooden: about 22. For a ¥30 million RC building, annual depreciation might be around ¥638,298, which offsets rental income before tax. You need a proper split of acquisition cost between land and building; your tax agent can set this up at purchase. Our depreciation guide has the full picture.
Inheritance and Gift Tax Considerations
Inheritance and gift tax apply to property located in Japan regardless of the owner’s nationality or residence. Rates are progressive; inheritance tax must be paid within 10 months of death. For substantial portfolios, planning with a Japanese tax professional is advisable. If you’re new to Japanese real estate, our beginners’ guide covers the basics of building a portfolio.
Double Taxation Treaties
Japan has treaties with the US, UK, Australia, and many others. They help avoid being taxed twice on the same income. If you pay tax in Japan on rental income, you can often claim a foreign tax credit at home (e.g. US Form 1116, UK foreign tax credit). The mechanics vary by country; your Japanese tax agent and home-country accountant should coordinate so you get the benefit. For US buyers, our American buyer guide covers treaty angles.
Late Payment Penalties and Interest
Missing deadlines leads to penalties (e.g. 15% of principal for standard late filing, more for larger amounts and repeat offenders) and interest (around 9% per year). Appoint your tax agent early, set reminders or automatic payments, and file on time even if you can’t pay in full—filing late usually increases penalties.
Frequently Asked Questions
Is rental income taxable in Japan for non-residents?
Yes. Non-residents must pay Japanese income tax on rental income from Japanese property. When the tenant is a corporation, 20.42% is withheld and you reconcile via your annual return. When the tenant is an individual using the property as their home, no withholding is required but you must still declare and pay tax; the return is due by March 15. A common misconception is that “no withholding” means “no tax”—you still owe the tax and must file.
What is the property tax rate in Japan for foreigners?
Foreign owners pay the same rates as Japanese citizens: 1.4% Fixed Asset Tax plus up to 0.3% City Planning Tax, on assessed value (typically around 70% of official land price). Residential land gets further reductions, up to 1/6 for small plots. There is no separate or higher “foreigner” property tax rate.
Do I need a tax agent to own property in Japan?
Yes, if you’re a non-resident. Japanese law requires non-resident property owners to appoint a licensed tax agent (zeirishi). If you don’t, the government can assign one and you have no say in who it is. Appoint one as soon as you complete the purchase.
How is capital gains tax calculated when selling property in Japan?
Rates are 15.315% for long-term (held over 5 years) and 30.63% for short-term (5 years or less). The holding period is from January 1 of the year after acquisition to January 1 of the sale year—not from the exact purchase date. You can deduct acquisition and selling expenses. Plan the sale date with this timing in mind.
When do I receive property tax bills in Japan?
Notices go out in April or May. Liability is based on ownership on January 1 of that year. Payment is usually in four installments; schedules differ by municipality. Have your tax agent or property manager help if you don’t read Japanese.
Related Guides
- Complete guide to buying property in Japan — Full buying process
- Rental income tax — Landlord tax in detail
- Depreciation explained — Building value and deductions
- Hidden costs of buying property — All purchase fees
- Mortgage without PR — Financing for non-residents
- Buying as an American — US-specific tax points
Official Sources
- National Tax Agency — Non-Resident Real Estate Income
- National Tax Agency — Non-Resident Tax Overview
- MLIT — Tax on possession of land
- MLIT — Tax on acquisition of land
Final Thoughts
Japan property tax for foreigners follows the same rules as for Japanese citizens—no extra surcharges or special foreign-owner rates. The complexity is in non-resident compliance: mandatory tax agent, withholding rules, and filing from abroad. Budget using assessed value, not purchase price; appoint a tax agent as soon as you buy; plan your holding period for capital gains; use depreciation to offset rental income; and coordinate with your home-country accountant for treaty benefits. With that in place, the system is manageable and predictable, and your tax agent and property manager become essential partners in keeping you compliant while you build your Japanese real estate portfolio.
This guide was last updated in March 2026. Tax rates and rules can change—consult a licensed zeirishi for advice for your situation.
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