Japan Property Tax for Foreigners: What You Need to Know
If you’re considering buying property in Japan as a foreigner, understanding the tax obligations is essential before making your investment. The good news: foreign property owners in Japan pay the same taxes as Japanese citizens—there are no additional foreigner-specific property taxes. However, non-residents face unique requirements, including mandatory tax agent appointments and withholding rules on rental income.
📅 Last Updated: February 2026
This guide covers every tax you’ll encounter as a foreign property owner in Japan, from annual fixed asset taxes to capital gains when selling. We’ll break down assessed values, payment schedules, and the specific requirements that apply to non-resident owners.
| Quick Reference | 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 |
| Long-term Capital Gains | 15.315% (held over 5 years) |
| Short-term Capital Gains | 30.63% (held 5 years or less) |
| Tax Agent Required? | Yes, mandatory for non-residents |
Annual Property Taxes: Fixed Asset Tax and City Planning Tax
Every property owner in Japan pays two annual taxes: Fixed Asset Tax (固定資産税) and City Planning Tax (都市計画税). These taxes fund local government services and urban development.
Fixed Asset Tax (Kotei Shisan Zei)
Fixed Asset Tax is levied at a standard rate of 1.4% of the assessed value—not the market price or purchase price. This distinction matters significantly for your budget.
| 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 |
City Planning Tax (Toshi Keikaku Zei)
City Planning Tax applies only to properties within designated urbanization promotion areas. Most urban properties in Tokyo, Osaka, and other major cities fall within these zones. The maximum rate is 0.3% of assessed value, though some municipalities charge less.
⚠️ Important: Tax bills are based on who owns the property on January 1st. Even if you sell mid-year, the January 1st owner is responsible for the full year’s tax.
How Assessed Value is Calculated
Here’s where Japan property tax for foreigners often surprises new buyers—in a good way. The assessed value (評価額) used for tax calculations is typically about 70% of the officially announced land price, which itself is usually below market value.
This means if you purchase a property for ¥50 million, your assessed value might be around ¥30-35 million, making your actual tax burden significantly lower than the rates suggest.
Real-World Example
| Property Purchase Price | ¥50,000,000 |
|---|---|
| Estimated Assessed Value | ¥35,000,000 (70%) |
| Fixed Asset Tax (1.4%) | ¥490,000/year |
| City Planning Tax (0.3%) | ¥105,000/year |
| Total Annual Tax | ¥595,000/year |
Without understanding assessed value, you might calculate ¥850,000 in annual taxes based on the purchase price. The assessed value system reduces your actual burden by roughly 30%.
Tax Reductions for Residential Properties
Japan offers significant tax reductions for residential land, which most foreign investors qualify for when purchasing apartments or houses.
Small Residential Land (Under 200 sqm)
Land classified as “small-scale residential” receives a 1/6 reduction on Fixed Asset Tax and a 1/3 reduction on City Planning Tax. This applies to land under 200 square meters.
General Residential Land (Over 200 sqm)
For the portion of residential land exceeding 200 sqm, a 1/3 reduction applies to Fixed Asset Tax and a 2/3 reduction applies to City Planning Tax.
| 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) |
💡 Pro Tip: When buying a standard Tokyo apartment (typically 20-80 sqm of land per unit in a mansion building), you’ll almost always qualify for the maximum 1/6 reduction on your share of the land.
One-Time Purchase Taxes
Beyond annual taxes, you’ll pay several one-time taxes when acquiring property in Japan.
Real Estate Acquisition Tax
This prefectural tax is charged at 3% of assessed value for residential properties (reduced from the standard 4% rate through March 2027). The bill arrives 3-6 months after purchase, so budget accordingly.
Registration License Tax
Paid when registering ownership transfer with the Legal Affairs Bureau:
| 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 meeting specific conditions.
Stamp Duty
Stamp duty applies to purchase contracts based on the transaction value:
| Contract Value | Stamp Duty (Reduced Rate*) |
|---|---|
| ¥10-50 million | ¥10,000 |
| ¥50-100 million | ¥30,000 |
| ¥100-500 million | ¥60,000 |
*Reduced rates apply through March 2027.
Consumption Tax
Japan’s 10% consumption tax applies to building value only—land is exempt. In practice, this primarily affects new construction purchases.
Rental Income Tax for Non-Residents
If you’re buying investment property in Japan, understanding rental income taxation is crucial. Non-residents earning rental income face specific withholding requirements that differ from resident taxation.
The 20.42% Withholding Rule
When a corporate tenant (company) rents your property, they must withhold 20.42% of the gross rent and remit it directly to the tax office. You receive only 79.58% of the rental amount.
| Monthly Rent | ¥100,000 |
|---|---|
| Withholding (20.42%) | ¥20,420 |
| Amount You Receive | ¥79,580 |
This withholding must be paid to the tax office by the 10th of the following month.
Individual Tenant Exception
There’s an important exception: individual tenants using the property as their personal residence are not required to withhold tax. You receive the full rent amount but must still report and pay income tax through your annual return.
💡 Pro Tip: Some foreign landlords prefer individual tenants specifically because they receive full rent upfront, improving cash flow. However, this requires diligent annual tax filing through your tax agent.
Withholding Tax: Who Pays and When
Understanding the withholding mechanics helps you plan rental income expectations accurately.
| Tenant Type | Withholding Required? | Your Responsibility |
|---|---|---|
| Corporation | Yes (20.42%) | Annual tax return to settle |
| Individual (personal residence) | No | Full filing + payment required |
| Individual (business use) | Yes (20.42%) | Annual tax return to settle |
Corporate tenants handle withholding and remittance—you just need to file an annual return to reconcile any differences. With individual tenants, you bear full responsibility for declaring and paying tax.
Capital Gains Tax When Selling Property
Japan’s capital gains tax on real estate depends heavily on your holding period. The difference between short-term and long-term rates is substantial.
Holding Period Calculation
Japan measures holding period from January 1st of the year after acquisition to January 1st of the year you sell. This quirk means you often need to own property for more than 5 calendar years to qualify for long-term treatment.
| 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 |
Practical Implications
The nearly 15% difference in tax rates makes timing your sale strategically important. If you’re approaching the 5-year mark, waiting a few additional months could save millions of yen.
⚠️ Warning: The holding period is measured from January 1st of the year following purchase, not from your actual purchase date. If you bought in December 2024, the clock starts January 1, 2025.
Tax Agent (Zeirishi) Requirements
For non-resident property owners, appointing a licensed tax agent (税理士, zeirishi) is not optional—it’s a legal requirement under Japanese tax law.
Why You Need a Tax Agent
- Submit and receive tax documents on your behalf
- File income tax returns for rental income
- Handle capital gains tax returns when selling
- Manage property tax payments while you’re abroad
- Communicate with tax authorities in Japanese
Tax Agent Costs
| Service | Typical Fee |
|---|---|
| Basic Annual Tax Return | ¥100,000 |
| Per Additional Property | ¥10,000 |
| Foreign Tax Credit Calculation | ¥50,000+ |
| Monthly Ongoing Service | ¥3,000 |
Appointment Process
- Select a licensed zeirishi (over 76,000 are registered in Japan)
- Complete a Notification of Tax Agent form
- Submit to the tax office with jurisdiction over your property
- Provide your tax agent with property documents and rental records
⚠️ Important: If you fail to appoint a tax agent, the government may appoint one on your behalf—and you’ll have no say in who represents you.
Property Tax Payment Schedule and Deadlines
Property tax notices arrive in April or May each year, based on January 1st ownership. Most municipalities offer four quarterly payment options.
Typical Payment Schedule
| Installment | Due Period |
|---|---|
| 1st Payment | April-May |
| 2nd Payment | July |
| 3rd Payment | December |
| 4th Payment | February |
Exact dates vary by municipality. Tokyo, Osaka, and other major cities each set their own deadlines.
Payment Methods
- Bank transfer (direct debit available)
- Convenience store payment (for smaller amounts)
- Payment at city/ward office
- Through your tax agent or property manager
💡 Pro Tip: Tax bills arrive in Japanese only. Having a bilingual tax agent or property manager is essential for non-Japanese speakers to avoid missed deadlines.
Depreciation Deductions for Rental Properties
Depreciation is your most powerful tool for reducing taxable rental income. Japan allows you to deduct the building’s value over its statutory useful life.
Depreciation Periods by Building Type
| Building Type | Useful Life | Annual Depreciation Rate |
|---|---|---|
| Reinforced Concrete (RC) | 47 years | ~2.1% |
| Steel-framed (S) | 34 years | ~2.9% |
| Wooden | 22 years | ~4.5% |
Example Calculation
For a ¥30 million RC building:
- Annual depreciation: ¥30,000,000 ÷ 47 = ¥638,298
- This amount offsets your rental income before tax is calculated
💡 Pro Tip: Filing for depreciation deductions requires detailed records separating building acquisition costs from land costs. Your tax agent can help structure this properly at purchase.
Inheritance and Gift Tax Considerations
Japan’s inheritance and gift taxes apply to property located in Japan regardless of the owner’s nationality or residence.
Inheritance Tax Rates
| Taxable Amount | Tax Rate |
|---|---|
| Up to ¥10 million | 10% |
| ¥10-30 million | 15% |
| ¥30-50 million | 20% |
| ¥50-100 million | 30% |
| ¥100-200 million | 40% |
| ¥200-300 million | 45% |
| ¥300-600 million | 50% |
| Over ¥600 million | 55% |
Inheritance tax must be paid within 10 months of death. Estate planning with a Japanese tax professional is advisable for high-value property portfolios.
Double Taxation Treaties: USA, UK, and Others
Japan has tax treaties with numerous countries including the United States, United Kingdom, Australia, and most EU nations. These treaties help prevent being taxed twice on the same income.
How Foreign Tax Credits Work
If you pay income tax in Japan on rental income, you can typically claim a credit for those taxes in your home country, avoiding double taxation. The specific mechanism varies by country:
- USA: Claim Japan tax paid as a foreign tax credit on Form 1116
- UK: Similar foreign tax credit mechanism applies
- Australia: Foreign income tax offset available
⚠️ Important: Tax treaty benefits require proper documentation. Your Japanese tax agent and home-country accountant should coordinate to maximize treaty benefits.
For the complete U.S. perspective, see our guide on buying property in Japan as an American.
Late Payment Penalties and Interest
Missing tax deadlines in Japan carries meaningful penalties. Understanding these helps prioritize timely compliance.
Penalty Structure
| Violation | Penalty Rate |
|---|---|
| Late Filing (standard) | 15% of principal tax |
| Late Filing (over ¥500,000) | 20% of excess amount |
| Repeat Offender | Additional 10% surcharge |
| Delinquent Interest | ~9% annually |
Avoiding Penalties
- Appoint your tax agent immediately upon purchase
- Set up automatic payment or calendar reminders
- Maintain communication with your property manager
- File returns even if you can’t pay immediately (reduces penalties)
Frequently Asked Questions (FAQ)
Is rental income taxable in Japan for non-residents?
Yes. Non-residents earning rental income from Japanese property must pay income tax in Japan. Corporate tenants withhold 20.42% automatically, while individual tenants don’t withhold—but you must still declare and pay tax through your annual return filed by March 15th.
What is the property tax rate in Japan for foreigners?
Foreign property owners pay the same rates as Japanese citizens: 1.4% Fixed Asset Tax plus up to 0.3% City Planning Tax, calculated on assessed value (typically 70% of official land price). Residential land receives additional reductions of up to 1/6 for small plots.
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) to manage tax affairs. This isn’t optional—failure to appoint one may result in the government assigning an agent without your input.
How is capital gains tax calculated when selling property in Japan?
Capital gains tax is 15.315% for properties held over 5 years (long-term) or 30.63% for 5 years or less (short-term). The holding period is measured from January 1st of the year after purchase to January 1st of the sale year. Deductible expenses include acquisition costs and selling expenses.
When do I receive property tax bills in Japan?
Property tax notices arrive in April or May each year. Bills are sent to whoever owned the property on January 1st of that year. Payment is typically due in four quarterly installments, with schedules varying by municipality.
Related Guides
Understanding Japan property tax for foreigners is one piece of the investment puzzle. Continue your research with these related guides:
- Complete Guide to Buying Property in Japan as a Foreigner - Full step-by-step buying process
- Japan Rental Income Tax Guide - Detailed rental income taxation
- Buying Property in Japan as an American - U.S.-specific tax considerations
Official Sources
- National Tax Agency - Non-Resident Real Estate Income
- National Tax Agency - Non-Resident Tax Overview
- MLIT - Tax System on Possession of Land
- MLIT - Tax System on Acquisition of Land
Final Thoughts
Japan property tax for foreigners follows the same rules as for Japanese citizens—there are no discriminatory surcharges or special foreign owner taxes. The complexity lies in non-resident requirements: mandatory tax agents, withholding rules, and filing obligations from abroad.
The key takeaways:
- Budget based on assessed value, not purchase price—actual taxes are typically 30% lower than you’d calculate from market price
- Appoint a tax agent immediately when purchasing as a non-resident
- Plan your holding period carefully to benefit from long-term capital gains rates
- Use depreciation strategically to offset rental income tax
- Coordinate with home-country accountants to maximize tax treaty benefits
With proper planning and professional support, the Japanese property tax system is manageable and predictable. Your tax agent and property manager become essential partners in maintaining compliance while you build your Japanese real estate portfolio.
This guide was last updated in February 2026. Tax rates and regulations may change—consult a licensed Japanese tax accountant (zeirishi) for advice specific to your situation.