Guides
The complete process and tax guide for overseas investors to purchase Japanese real estate
Tokyo News: Japan is one of the few developed countries in the world that has almost no restrictions on foreign home purchases - regardless of nationality, visa, or residency status, anyone can purchase land and buildings in their personal or corporate name, and ownership protection is completely the same as that of Japanese nationals. But 'can buy' and 'bought right' are two different things. In the current situation where the Japanese yen is weak and the Tokyo real estate market continues to attract overseas funds, fully mastering the transaction process and three-stage tax structure is the key to controlling costs and avoiding pitfalls.
1、 Pre preparation: Identity documents are the biggest variable
The biggest difference between foreign buyers and Japanese buyers lies in their identification documents. For those who are unable to obtain a Japanese resident permit and seal certificate, alternative documents must be used to fill in the space: the address certificate can be a residence certificate issued by the local government, or an affidavit certified by a local notary public with a valid passport copy; The seal certificate shall be replaced by a signature certificate issued by the Japanese Embassy or Consulate, or a signature authentication by a local notary public. The passport photocopy must match the passport status on the date of the affidavit or application, and the foreign language document must be accompanied by a Japanese translation.
The registration system has also been adjusted in the past two years: starting from April 21, 2025, registration applications must be accompanied by "search information", and non Japanese nationals must provide their name, Romanization, address, date of birth, and email address on their residence card; Starting from October 5th, 2026, registration will further specify nationality. Experts remind that if there are differences in the order or middle name between the passport and the name on the card, the version should be determined early and all documents should be kept consistent, otherwise it will be very easy to get stuck when selling or transferring loans several years later.
Financing is another narrow door. The government supported long-term fixed rate product Flat 35 requires applicants to be Japanese nationals, permanent residents, or special permanent residents; Sumitomo Mitsui Trust Bank Prestia is open to non permanent residents of foreign countries in Japan to apply, with an annual income threshold of 10 million yen. In practice, non residents often purchase in cash or need to prepare higher self provided funds.
2、 Transaction process: Five to six key nodes
The standard process is as follows: interview and condition confirmation → object proposal and internal consultation → submission of housing purchase application (according to Japanese practice, the first applicant to submit the application has priority negotiation rights) → pre examination of residential loans → explanation of important matters and signing of sales contracts → payment of final payment, delivery, and registration.
When signing the contract, the purchaser of the residential land and building shall provide important information, including the intended use area, building restrictions, legal burdens, earthquake risks and defects. After the buyer confirms the accuracy, they shall sign the sales contract and pay a deposit (usually 5% to 10% of the house price).
On the delivery date, the buyer shall pay the final payment after deducting the handling fee, and at the same time, the judicial clerk shall handle the transfer of ownership registration with the legal bureau. The buyer and seller shall settle the fixed asset tax, urban planning tax, management fees, etc. on a daily basis. Japan does not have an escrow mechanism, so the intervention of judicial clerks is the core arrangement to ensure the synchronous delivery of funds and property rights. Finally, pay the intermediary handling fee and judicial clerk's remuneration, obtain the key, and sign the "Real Estate Extradition Confirmation".
3、 Tax and fee structure: acquisition, holding, and sale in three stages
Acquisition stage - generally requires preparation of various fees ranging from 6% to 10% of the housing price:
Real estate acquisition tax: 3% for land and self use residential properties, 4% for non self use or non residential properties; The reduced tax rate applies until March 31, 2027. Residential land also has significant reductions, with the tax base for the portion within 200 square meters being 1/6 of the estimated value, and for the portion exceeding 1/3.
Login exemption tax (registration permit tax): The standard tax rate for land ownership transfer is 2.0%, and those registered before March 31, 2026 enjoy a 1.5% discount; Building preservation registration is 0.4%, transfer registration is 2.0%, and for self occupied residential properties, it will be reduced to 0.15% and 0.3% respectively by March 31, 2027. The mortgage right is set at 0.4% of the loan amount, and eligible residential loans can be reduced to 0.1%.
Stamp duty: Classified by contract amount, the reduction measures will be implemented until March 31, 2027, with a maximum limit of 480000 yen after reduction.
Consumption tax: 10% will be levied on the building portion, and land will be exempt from taxes; Purchasing second-hand residential properties from individuals usually does not incur consumption tax.
Intermediary handling fee: The legal upper limit is 3% of the house price plus 60000 yen (plus consumption tax).
Holding stage - Fixed asset tax is levied at 1.4% of the assessed amount of fixed asset tax, and the upper limit of urban planning tax is 0.3%, all of which are paid in four installments by the taxpayer on January 1st each year. The evaluation amount is usually 50% to 70% of the market price, and is reassessed every three years. The apartment also needs to bear management fees and repair fees.
Sale stage - judged based on the holding period on January 1 of the year of sale: holding for more than 5 years is considered long-term transfer income, with a tax rate of 20.315% (income tax 15%+resident tax 5%+special income tax for revival 0.315%); For short-term periods of less than 5 years, the tax rate is 39.63% (30%+9%+0.63%). The transfer of self occupied residential properties can enjoy a special deduction of up to 30 million yen.
4、 Three continuing obligations of non residents
Firstly, it is necessary to designate a tax administrator (tax accountant, management company, or trusted friend in Japan) to submit declarations to the tax bureau and local governments separately, otherwise the tax form and payment deadline may quietly pass overseas.
Secondly, the rent must be withheld by 20.42%. When non resident landlords rent Japanese properties, tenants or management companies must withhold 20.42% of the total rent on a monthly basis and pay it to the tax bureau. Usually, taxes and expenses are deducted first before exporting the balance.
Thirdly, post event report on foreign exchange laws. Non residents who acquire real estate in Japan must submit a report to the Bank of Japan within 20 days from the day after the transaction; Exemption is granted for personal residence, office use, or acquisition from other non residents, but villas and second residences are not considered "residential use" and must still be reported.
It is worth noting that the government is promoting the acquisition of nationality information during real estate transfer registration, establishing a "real estate basic database" (expected to be launched in 2027), and discussing strengthening regulations related to foreign land acquisition. For overseas investors who intend to invest in the long term, the increase in compliance costs has become a definite trend.