Tax implications: When a non-resident sells
or rents out real estate in Japan
OLYMPUS DIGITAL CAMERA
(Case study)
In Japan, taxes are levied on residents (referred to as “residents”) regardless of nationality.
In this case, the income subject to taxation includes not only income generated within Japan
but also income from around the world.
Will Real Estate Prices Really Decline Long-term in Japan?
Based on the following four points, we will explore this issue.
In conclusion, while it is unclear what the long-term trend of real estate prices in Japan
as a whole will be, we can conclude that real estate prices in rural areas are likely to decline.
The relationship between population decline
and real estate prices In Japan
The population is declining, which is a contributing factor to falling real estate prices.
In particular, the decrease in population in rural areas is significant,
and it is expected that real estate prices will decline as demand decreases.
Discovering Lucrative Opportunities in Japanese Real Estate
for High-Net-Worth Investors
Introduction:
Japan has long been an attractive destination for high-net-worth individuals
who appreciate its rich culture, modern cities, and stunning landscapes.
As the yen continues to depreciate and real estate prices remain relatively low compared to other global cities,
now is the perfect time for investors with a net worth of 1-2 million
US dollars to explore opportunities in the Japanese property market.
Prime Locations:
While Tokyo is the most popular choice for foreign investors,
other metropolitan areas such as Osaka and Nagoya also offer attractive investment prospects.
For those interested in resort properties, Hokkaido and Okinawa are becoming increasingly popular choices.
Example Properties in Tokyo:
Minato-ku, Tokyo: A luxurious 2-bedroom apartment in the upscale Minato-ku district offers
investors a taste of cosmopolitan living. With a price tag of around $1 million,
the apartment offers a potential rental yield of 4-5%.
Shibuya-ku, Tokyo: A modern one-bedroom apartment in the vibrant Shibuya-ku area offers
a more affordable investment option at around $500,000.
The potential rental yield for this property is approximately 3-4%.
Revolutionizing Urban Living:
SETAGAYA Qs-GARDEN Unveils
a Multigenerational Community
for Enhanced Well-Being
On March 27th, 2023, five large companies, including Dai-ichi Life Insurance,
Marubeni Urban Development, Aioi Nissay Housing, NTT Urban Development,
and Nomura Real Estate announced the opening of “SETAGAYA Qs-GARDEN”
in Setagaya, Tokyo.
The project aims to create a community that promotes the well-being of its residents
by constructing multi-generational housing,
sports facilities, and community centres on a 9-hectare site owned
by Dai-ichi Life Insurance.
Rising Used Condominium Prices in Tokyo and Major Japanese Metropolitan Areas
Tokyo Kantei Press Released on March 23, 2023
Major Cities in the Three Major Metropolitan Areas: Monthly Trends in Used Condominium Prices (70 sqm)
In February, used condominium prices in the Tokyo metropolitan area increased
by 0.4% compared to the previous month, reaching 48.66 million yen,
marking the third consecutive month of increase.
In central Tokyo, prices once again surpassed the 100 million yen mark.
The average prices in the Kinki and Chubu regions also continued to rise modestly,
with no significant downward movement seen in the market.
In February 2023, used condominium prices in the Tokyo metropolitan area
rose for the third consecutive month, with a slight increase of 0.4% compared to the previous month,
reaching 48.66 million yen.
When looking at the data by prefecture, Tokyo saw an increase of 0.7% to 64.41 million yen,
surpassing the record high set in December of the previous year.
In Kanagawa Prefecture (+0.4%, 36.68 million yen), prices continued to rise compared
to the previous month, while in Chiba Prefecture (+1.7%, 28.29 million yen),
prices have been on an upward trend since April of the previous year.
On the other hand, prices in Saitama Prefecture decreased slightly by 0.4% to 30.49 million yen,
marking the first decline in six months.
The average price in the Kinki region increased for the first time in two months,
with a slight increase of 0.2% to 29.14 million yen, due to the strength of the Osaka area.
In Osaka Prefecture, the price showed a similar movement with a 0.2% increase to 31.28 million yen,
but it did not surpass the level reached in December of the previous year.
Competitive Landscape in Japan’s
Home Loan Industry
: Unraveling the Impact of
Internet-Only Banks
The Japanese home loan market is witnessing fierce competition, with internet-only banks
such as au Jibun Bank and SBI Sumishin Net Bank leading the charge.
These banks leverage their lower operating costs to offer attractive interest rates
on variable-rate home loans.
Recently, au Jibun Bank expanded its preferential rates, reaching as low as 0.196%
for some customers. Meanwhile, SBI Sumishin Net Bank,
which has a market share of around 5%, reduced its refinancing rate to 0.299%.
Traditional banks are also competing by lowering their expenses through digitization
and offering competitive interest rates.
(View from the property)
Beautiful property with full Mt. Fuji view is now for sale in Fujigane, Fujikawaguchiko-cho,
Minamitsuru-gun, Yamanashi prefecture.
Estate
House 165m2
Resident lot(land) 990m2
Agri land 19800m2 (massive land)
Access
20min to the shopping mall
20min to Kawaguchiko Station/Fuji Q Highland
Rural pastoral town, Expansive views
2hrs to Tokyo – door to door
Business opportunity
You can turn the house into a hotel and get a hotel license.
(*Additional investment is required)
The area receives tens of thousands of foreign tourists every year and it could be
a lucrative business.
View
Mt Fuji views 90% visibility.
360-degree panorama view
Tax matters.
In fact, the most expensive item in our life is not ‘real estate’ but ‘our government’.
And the government is the tax.
So what kinds of taxes are imposed on real estate in Japan?
Real estate-related taxis include personal income tax, corporate tax, fixed-asset tax, city planning tax, real estate acquisition tax, registration tax, stamp duty, and consumption tax
Personal income tax related to real estate is the tax on individuals who gain rental income or capital gain through the sales of real estate.
Corporate tax is a tax on companies that have taxable income. Therefore, their real estate rental income and any profit from a real estate sale have an impact on their total taxable income level.
The corporate tax rate in Japan is currently about 37% (as of July 2019) so if you have a very profitable property, it is wise to hold the title under a corporate name rather than an individual name.
Fine-looking market?
TOKYO KANTEI Monthly report June 2019
Remarks:
Source: Tokyo Kantei (June 2019) The market in central districts in Tokyo is starting to show the downtrend.
Red : Market movement (sellers listing price)
Tokyo Kantei (real estate think tank) just announced the latest report on the price movement of the second-hand condominium market.
The price of second-hand apartment buildings in major metropolitan areas continued to fall at ¥ 45.59 million in the 23 wards of Tokyo, down 1.5% from the previous month.
It is thought that this is due to the case share reduction in the central Tokyo area and weakness in the surrounding area.
In addition, Saitama City (-1.7%, 27.74 million yen) and Chiba City (-2.8%, 18.32 million yen) are also negative, and the rate of decline in Chiba City, where the number of cases from old buildings increased, was compared It became huge.
On the other hand, Yokohama City has maintained its upward trend, with + 0.9% at 31.12 million yen.
The average prices of major cities in the Kinki region (Osaka area) rose for three months in a row to 32.84 million yen, which is + 1.1% from
the previous month.
What is the purpose of the city planning law ?
The city planning law which is set by the Ministry of land infrastructure transport and tourism (MLIT)
exists to regulate urban development.
The law divide Japan into mainly two parts :
1.The city planning area which is regulated by the city planning law
2. The non-city planning area which is not regulated by this law
City planning area is mainly divided into urbanization promotion areas where development is promoted and urbanization restricted areas where the development is restricted.
Urbanization restricted areas consist of agricultural, forestry and fishery projects.
Urbanization restricted areas are not allowed to build residential, office and retail properties.
*
For example, if you want buy a land in the agricultural areas, you may not able to build your own house.
Don’t forget to check the relevant law and regulation before you purchase such land.