Japanese Property Taxes for Non-Resident Individuals and Foreign Companies

01 | Individual or company?

Japanese tax residence is not decided by nationality alone. Non-resident individuals and foreign corporations may be taxed in Japan on income sourced from Japanese real estate.

Individuals generally calculate gains from selling land and buildings under the real estate capital-gains rules. Foreign corporations are subject to the corporate tax framework and cannot apply an individual's long- or short-term capital-gains rates.

• Individuals: establish whether you are non-resident for Japanese tax purposes.
• Companies: confirm head-office location, any Japanese permanent establishment (PE), and ownership structure.
• Choose the ownership structure before buying and consider future filing and cash-flow needs.

02 | Taxes when buying

Budget for stamp duty on applicable paper contracts, registration and license tax on title transfer, and real estate acquisition tax assessed after purchase. The tax base is not necessarily the contract price; certain housing and land reliefs may apply.

Consumption tax is treated differently for land and buildings. Transfers of land are generally exempt; building transactions depend on the seller's tax status and the nature of the sale.

When purchasing from a non-resident or foreign corporation, the buyer generally must withhold 10.21% of the consideration. An exception may apply where an individual buys for their own or a relative's residence and the price is ¥100 million or less, with all conditions met.

• Budget for acquisition costs and later tax assessments, not only the asking price.
• Confirm the buyer's withholding responsibility before closing.

03 | Ownership and rental income

Fixed asset tax generally applies to the owner as of January 1 each year. City planning tax may also apply to properties in designated areas.

Rent paid for Japanese property owned by a non-resident or foreign corporation may require the payer to withhold 20.42%. A qualifying individual tenant renting for their own or a relative's residence is exempt from this withholding requirement.

Withholding does not itself determine the owner's final taxable income. Keep records of rent, management fees, repairs and depreciation for any required returns. Consumption tax treatment also differs between residential and commercial leases.

• Property management and tax-return preparation are separate services.
• Keep assessment notices, rental statements and expense receipts.

04 | Why is 10.21% withheld on sale?

When a non-resident or foreign corporation sells Japanese real estate, the buyer generally withholds 10.21% of the sale consideration and remits it to the tax authority. A specific exception may apply to qualifying residential purchases by individuals.

If ¥30 million is fully subject to withholding, the amount withheld is ¥3.063 million and the remaining payment is ¥26.937 million, before brokerage fees, loan repayment and other closing costs.

The 10.21% deduction is an advance withholding, not the final tax rate. It is generally credited through the required tax filing, and a refund may be available when conditions are met.

• Check withholding requirements and exemptions before settlement.
• Separate advance withholding, transaction costs and final income tax in the closing statement.

05 | Sale gains: individual vs company

For individuals, taxable gains generally equal sale proceeds less acquisition costs, selling expenses and applicable reliefs. Building costs must reflect depreciation. Holding period is assessed on January 1 of the sale year: more than five years is long-term, five years or less is short-term.

For 2026, the general national income tax component is 15.315% for long-term gains and 30.63% for short-term gains, including special reconstruction income tax. Any local inhabitant tax depends on residence-related rules; home-sale reliefs have separate eligibility tests.

A foreign corporation's gain generally falls under Japan's corporate income tax rules, not the personal five-year distinction. Relevant issues include PE status, tax basis, depreciation, local taxes and consumption tax on taxable building sales.

• Individuals: retain original purchase and depreciation records.
• Companies: confirm the Japanese tax base and filing entity with a qualified adviser.

06 | Filing deadlines and preparation

For nonresident individuals with reportable income, the ordinary income tax filing period is 16 February to 15 March of the following year; check the annual notice for holidays or special extensions. Foreign corporations generally file within two months of their financial year-end, with separate checks for business cessation or applicable extensions.

Arrange a national-tax representative through the competent tax office. Check separate appointments and notifications for fixed asset and other local taxes with the property’s municipality. Appointing a rental manager does not automatically complete these tax appointments.

Keep records by property and year, and have a Japanese tax accountant confirm calculations and filing. TUKISUMI can assist with transactions, rental management and document organisation according to the case. Specify any tax-representative tasks you need. Filing and foreign tax credits in your country of residence follow its own rules.