| Nominal rate of return on investment = one year’s rental income/purchase price of real estate x100 |
| Real rate of return on investment = (one year’s rental income – fees)/(purchase price of real estate + fees incurred during purchase)x100 |
| Completion of information requisition form (clients’ basic information, particular requirements, etc) |
| Collection and analysis of relevant information items (3 weeks – 1 month) Provision of information and advice |
| Arranging for inspection |
| Negotiation request form |
| Viewing the actual facilities |
| Submitting the purchase intent form |
| Explanation of important notices (Required by law to be conducted by qualified personnel before the official signing of the contract); signing of the contract – 10% signing fee – if the full contract price is to be paid at once, no signing fee shall be paid (except in the case of bank financing) |
| Notice: The legally required explanation of important notices and signing of the contract has to take place in the offices of the real estate agency. |
| Loan approval (around 1 month) |
| Calculation of transfer price and update of registration; transfer of property |
| Should a foreign national require a bank loan, the application would usually be carried out through a Tokyo branch of their home-country bank (domestic banks in Japan generally will not provide loans to foreign nationals), in principle the loan application should be carried out in person (that is, the applicant needs to be present in Japan) Usual boundaries for the mortgage collateral: In principle, to be located within Tokyo’s 23 wards (some banks will accept locations in Chiba prefecture, Kanagawa prefecture and Saitama prefecture) Requirements on loan amount: As determined by each bank. Either none in particular, or amounts above 3,500 JPY, etc. Requirements on floor area, age of building, earthquake resistance, etc: As determined by each bank. Interest rate: As determined by each bank (usually around 2.5-3%) Duration of financing: 7 years; 15 years Required documents: Proof of income, bank statement, home-country tax declarations, information on all real estate properties held locally in home country. |
| Property registration and license tax Land: Price assessed for the Fixed assets tax x 1.5% (to be adjusted to 2% from 1st April 2017 onwards) Building: Price assessed for the Fixed assets tax x 2% |
| Deposit: 0.4% of loan price |
| Property acquisition tax Land: Price assessed for the Fixed assets tax x 3% (to be adjusted to 4% from 1st April 2018 onwards) |
| Building: Price assessed for the Fixed assets tax x 3% (4% for non-residential buildings) (to be adjusted to 4% for all building types from 1st April 2018 onwards) Fixed assets tax and Urban planning tax Fixed assets tax: Price assessed for the Fixed assets tax x 1.4% Urban planning tax: Price assessed for the Fixed assets tax x 0.3% Taxpayer: On January 1st of every year, land and building owners (persons registered on the taxation account book for the Fixed Assets Tax) may choose to pay on an annual or seasonal basis. The price assessed for the Fixed assets tax is to be registered on the taxation account book Regular residential land (parts thereof above 200㎡) tax basis x 2/3 |
| Stamp duty Amount recorded on contract Tax amount Below 10,000 JPY Exempt Below 500,000 JPY 200¥ Below 1m JPY 500¥ Below 5m JPY 1,000¥ Below 10m JPY 5,000¥ Below 50m JPY 10,000¥ Below 100m JPY 30,000¥ Below 500m JPY 60,000¥ Below 1bn JPY 160,000¥ Below 5bn JPY 320,000¥ Above 5bn JPY 480,000¥ No record 200¥ |
| Fees for transfer of property registration （Judicial scrivener fees） |
| Fire and earthquake insurance |
| Brokerage fee Transfer Transfer price (excluding sales tax) Brokerage fee Up to 2m JPY: 5% of transfer price + sales tax (8%) Above 2m and below 4m JPY: 4% of transfer price + sales tax (8%) Calculation method: Transfer price x3% + 20,000JPY x 1.08) Above 4m JPY: 3% of transfer price + sales tax (8%) Calculation method: Transfer price x 3% + 60,000JPY x 1.08) Loan processing fees: As determined by each bank |
| Fixed assets tax and Urban planning tax Fixed assets tax: Price assessed for the Fixed assets tax x 1.4% Urban planning tax: Price assessed for the Fixed assets tax x 0.3% |
| Fire and earthquake insurance |
| Property maintenance fees 5% of rental income + sales tax (8%) |
| Tax agent fees When the taxpayer is a non-resident, they are obliged to appoint an agent |
| Annual tax report (tax accountant fees) |
| Repair expenses |
| Interests on loan – incurred if using loan |
| Sales tax – not incurred on residential property |
| Bank administrative fees on overseas payment |
| Income tax Income tax amount＝（Rental income – costs）×tax rate—rebate Reporting period：16th February – 5th March of the following year |
| Taxes：Property tax、Urban planning tax、Property Registration and License Tax 、Property income tax、Stamp duty、Car tax, etc |
| Insurance against damage: Fire insurance, earthquake insurance, insurance against damages on rental properties Insurance applies for the current year or part thereof |
| Depreciation： Fixed depreciation method Depreciation amount=Rental income ×legally-determined durable years Resale property Exceeded durable years： Durable years=Legally-determined durable years×0.2 Legally-determined durable years partially depreciated：Durable years=（Legally-determined durable years – years depreciated）+ years depreciated×0.2 Legally-determined durable years：Determined on the basis of the building’s structure There is a special method for calculating the value of depreciation when it is below 300,000JPY |
| Maintenance fees |
| Interest on loan： Interest on real estate acquisition loan, interest occurring since the start of the rental period Interest on land acquisition loan （Loan interest payments before the commencement of rental period may count towards property acquisition costs ）、if the income received results in a net loss it shall not be considered a cost Interest on loans outside of Japan may be considered as necessary costs if it can be proven that it was incurred as part of the acquisition of real estate, as the relevant regulations do not have restrictions pertaining to the location of the loan, hence the final determination shall be made by the tax bureau |
| Property maintenance fees |
| Transport fees（Occurring related to inspection visits and meetings with maintenance company etc Invoice required） |
| Telecommunication fees （Occurring related to communications with maintenance company etc Invoice required） |
| Cost of books and newspapers（To collect information on real estate and the economy, etc） |
| Entertainment expenses（Meal expenses during meetings with the maintenance company, tax accountant, tax agent etc Invoice required） |
| Cost of supplies（Purchase cost of digital cameras, computers, printers etc needed for the purpose of purchasing and maintaining property） |
| Cost of engaging tax accountant |
| Tax agent fees（Non resident） |
| Overseas bank transfer fees（Non resident） Proof required Residence tax＝（Income—costs）×10％＋4,000 JPY Non-residents need not pay tax Business tax＝（Income—costs－rebate－taxpayer rebate）×5％ Relevant towards：Those holding 5 independent buildings and above or 10 rooms and above Non-residents need not pay tax |
| Stamp duty Amount recorded on contract Tax amount Below 10,000 JPY Exempt Below 500,000 JPY 200¥ Below 1m JPY 500¥ Below 5m JPY 1,000¥ Below 10m JPY 5,000¥ Below 50m JPY 10,000¥ Below 100m JPY 30,000¥ Below 500m JPY 60,000¥ Below 1bn JPY 160,000¥ Below 5bn JPY 320,000¥ Above 5bn JPY 480,000¥ No record 200¥ |
| Brokerage fee Transfer Transfer price (excluding sales tax) Brokerage fee Up to 2m JPY: 5% of transfer price + sales tax (8%) Above 2m and below 4m JPY: 4% of transfer price + sales tax (8%) Calculation method: Transfer price x3% + 20,000JPY x 1.08) Above 4m JPY: 3% of transfer price + sales tax (8%) Calculation method: Transfer price x 3% + 60,000JPY x 1.08) |
| Mortgage cancellation registration fees （Judicial scrivener fees） If applicable |
| Profit tax from transfer Transfer profit=Sale price-（Purchase price+acquisition costs+transfer costs） Purchase price：Construction part Amortized costs deducted from purchase price Acquisition costs：brokerage fees、stamp duty、surveying costs、property registration and license tax、registration fees（judicial scrivener fees）、property income tax、financing guarantee costs etc Transfer costs：brokerage fees、stamp duty、advertising costs、surveying costs、mortgage cancellation registration fees（judicial scrivener fees）etc Tax rate：Non resident Income tax（Long term transfer（Period in possession Over 5 years）：15% Short term transfer（Period in possession Within 5 years）：30%） |
| Appraisal fee If land was inspected and handed over in person |
| Individuals Foreigners with the right to reside | Residence card ※Foreigners receiving the right to reside in Japan before 9th July 2012 may use a valid proof of residence in place of a residence card |
|---|---|
| Copy of residence records | |
| Certificate of registered personal seal (valid within 3 months of issuance) | |
| Registered personal seal” | |
| Foreigners residing overseas （No address within Japan） | Affidavit |
| Passport | |
| Registered personal seal | |
| Corporations Japanese branches or sub-entities (incorporated) of foreign corporations | Business registration book |
| Certificate of qualification | |
| Certificate of registration of company seal （In case of financing） | |
| ID of registered company representative （passport） | Foreign corporations | Affidavit |
| Official Company seal | |
| ID of registered company representative （passport） |
| Individuals Foreigners with the right to reside |
Certificate of registration of transfer of the title deed of the item for sale or notice of registration of distinguishing information |
|---|---|
| Residence card | |
| Certificate of registered personal seal (valid within 3 months of issuance) | |
| Registered personal seal | |
| Foreigners residing overseas （No address within Japan） | Certificate of registration of transfer of the title deed of the item for sale or notice of registration of distinguishing information |
| Documents in lieu of certificate of registered personal seal | |
| Passport | |
| Registered personal seal | |
| Corporations Japanese branches or sub-entities (incorporated) of foreign corporations |
Business registration book |
| Certificate of qualification | |
| Certificate of registration of transfer of the title deed of the item for sale or notice of registration of distinguishing information | |
| Certificate of registration of company seal | |
| Official company seal | |
| ID of registered company representative （passport） | |
| Foreign corporations | Affidavit |
| Certificate of registration of transfer of the title deed of the item for sale or notice of registration of distinguishing information | |
| Documents in lieu of certificate of registered seal | |
| Official company seal | |
| ID of registered company representative （passport） |
| After purchasing real estate in Japan, foreigners must make a declaration to the Ministry of Finance. Required information from seller • Certificate of registration of the title deed of the item for sale or notice of registration of distinguishing information •Residence card •Certificate of registered personal seal (valid within 3 months of issuance) •Personal seal Required information from seller •Business registration book •Certificate of qualification •Certificate of registration of the title deed of the item for sale or notice of registration of distinguishing information •Certificate of registration of seal •Company seal •ID of representative (passport) ●Individual （For foreigners residing overseas, with no permanent address in Japan） （Necessary documents from buying party） •Affidavit※ •Passport •Personal seal（Can be unregistered） ※The affidavit should contain the name, date of birth, permanent domicile, current place of residence, identification number, confirmation of personal identity and be certified by a notary in China in order to be valid as documentation for property in Japan. Certification of the authenticity for the affidavit may also be done at the relevant embassies or consulates. （Necessary documents from selling party） • Certificate of registration of the title deed of the item for sale or notice |