The property acquisition tax in Japan consists of three components:
The acquisition tax itself (fudousan shutokuzei): This is the main tax imposed on the acquisition of real estate.
Stamp tax (inshizei): Stamp tax is another payment associated with real estate transactions. It is a separate tax but is often discussed alongside the property acquisition tax.
Registration tax (touroku mankyozei): This tax is related to the registration of property ownership transfers and mortgages. Like stamp tax, it is often considered in conjunction with the property acquisition tax.
1. The acquisition tax itself
The property acquisition tax is a singular payment required for transactions involving the purchase, sale, donation, or any other form of transfer of real estate in Japan, encompassing both land and buildings. This obligation extends to property exchanges as well.
The tax is applied uniformly at a fixed rate—3% for land and residential property, and 4% for non-residential property. The tax will be calculated and issued as a bill by your local tax office shortly following the property acquisition.
You're exempt from this tax in inheritance and company mergers. Recent changes in inheritance tax laws emphasize the need to stay updated on potential adjustments to rates and exemptions. In a company merger, real estate ownership can be transferred without incurring property acquisition tax, as it happens indirectly through the corporate merger.
2. Stamp Duty
The higher the deal amount, the higher the corresponding stamp duty amount according to the specified rates in the provided table. You can refer to this link provided by the Tax Office that outlines how the stamp duty varies according to the settlement price of the transaction.
3. Registration Tax This tax applies during ownership transfers or when securing a mortgage for a property. Once you register, your legal rights to the property are officially listed in the Real Estate Registry, certifying your ownership. The tax amount is then calculated based on the fixed asset tax book, and a judicial scrivener can help estimate the tax.
For ownership transfer, it's 1.5% of the land value and 0.3% of the building value (for new construction or if the building is over 50 sqm, within a specific age range, and used as a personal residence). If it's a second home or rental, the building tax is 2.0% of the value.
Mortgage registration tax is 0.4% of the property value. Some personal residences may have a reduced rate of 0.1% if the property is used as a personal residence and meets some other requirements.
Tax laws can be complex and may vary based on the specifics of the transaction, so seeking professional advice is advisable for accurate and personalized information.
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