Overview of Property Taxes in Japan
Property owners in Japan are subject to several taxes, both recurring annual taxes and one-time taxes at the point of purchase. Understanding these taxes is essential for accurately calculating the total cost of ownership and for budgeting your annual expenses as a property owner.
The two main recurring taxes are the Fixed Asset Tax and the City Planning Tax, both assessed and collected by the local municipality. At the time of purchase, you will also face the Real Estate Acquisition Tax and Registration and License Tax. If you earn rental income from the property, income tax obligations apply as well.
| Tax | Rate | Frequency | Collected By |
|---|---|---|---|
| Fixed Asset Tax | 1.4% | Annual (4 installments) | Municipality |
| City Planning Tax | Up to 0.3% | Annual (with fixed asset tax) | Municipality |
| Acquisition Tax | 3% / 4% | One-time at purchase | Prefecture |
| Registration Tax | 0.4% – 2% | One-time at registration | National |
Fixed Asset Tax (固定資産税)
The fixed asset tax (固定資産税, kotei shisan zei) is the primary recurring property tax in Japan. It is assessed on the owner of record as of January 1 each year and applies to both land and buildings. The standard rate is 1.4% of the property's assessed value (課税標準額), though municipalities have the authority to set slightly different rates.
The tax is calculated separately for land and buildings. For land, the taxable base is the assessed value of the land parcel. For buildings, it is the assessed value of the structure, which depreciates over time according to a schedule based on the building's construction type and age. Wooden residential buildings, for example, depreciate faster than reinforced concrete apartment buildings.
The tax is paid annually in four installments, with payment dates varying by municipality. Most municipalities send the tax notification in April or May, with the first installment due in June and subsequent installments due in September, December, and February. You also have the option of paying the full annual amount at once with the first installment.
City Planning Tax (都市計画税)
The city planning tax (都市計画税, toshi keikaku zei) is an additional tax assessed alongside the fixed asset tax. It applies only to properties located within urbanization promotion areas (市街化区域), which covers most urban and suburban land in Japan. The maximum rate is 0.3% of the assessed value, though some municipalities apply a lower rate.
This tax funds urban infrastructure — roads, sewers, parks, and other municipal services. It appears on the same tax bill as the fixed asset tax and is paid on the same schedule. If your property is located outside an urbanization promotion area (for example, in a designated rural area), you will not be charged this tax.
How Assessed Value Works
Both the fixed asset tax and the city planning tax are based on the assessed value (評価額, hyoka gaku) determined by the municipality, not on the market value or purchase price of the property. The government conducts a reassessment every three years (the most recent was in 2024, with the next in 2027), and the assessed value is typically significantly lower than the current market value.
As a general rule, the assessed value of land is approximately 70% of the publicly posted land price (公示地価), which is itself often below actual transaction prices. For buildings, the assessed value reflects the theoretical cost to rebuild the structure new, minus depreciation for age. In practice, the total assessed value of a property is usually 50 to 70 percent of what you would pay on the open market.
You can verify your property's assessed value by obtaining a Fixed Asset Evaluation Certificate from the municipal tax office. This document shows the assessed value for both land and buildings and is essential for understanding your tax liability.
Residential Reductions and Exemptions
Japan offers significant tax reductions for residential property, which can substantially lower your annual tax bill.
Small Residential Land Reduction
For land used for residential purposes, the taxable base for fixed asset tax is reduced to one-sixth of the assessed value for the portion of the lot up to 200 square meters (approximately 2,150 square feet). For the portion exceeding 200 square meters, the reduction is one-third. For city planning tax, the reductions are one-third for the first 200 square meters and two-thirds for the remainder.
This residential land reduction is one of the most impactful tax benefits in Japan. A small residential lot with an assessed land value of 10 million yen would have a taxable base of only about 1.67 million yen for fixed asset tax purposes, resulting in annual land tax of approximately 23,000 yen rather than 140,000 yen.
New Building Reduction
Newly constructed residential buildings receive a 50% reduction in the building portion of the fixed asset tax for a limited period. Standard residential buildings receive this reduction for the first 3 years after construction. Earthquake-resistant buildings of 3 stories or more receive the reduction for 5 years. Certified long-life superior housing (長期優良住宅) receives the reduction for 5 years (standard) or 7 years (3+ stories).
Real Estate Acquisition Tax (不動産取得税)
The real estate acquisition tax (不動産取得税, fudosan shutoku zei) is a one-time prefectural tax charged when you acquire property, whether through purchase, gift, or new construction. It is not charged on inheritance.
- Residential land and buildings: 3% of the assessed value
- Commercial and other non-residential: 4% of the assessed value
The tax is assessed by the prefectural government, and you will typically receive a tax notice several months after the acquisition is registered. For residential land, an additional deduction may apply, effectively reducing the tax further. For new residential buildings meeting certain floor area requirements (50 to 240 square meters), a deduction of 12 million yen from the assessed building value is available.
Because the acquisition tax is based on assessed value rather than purchase price, the actual tax burden is lower than the headline rate might suggest. For a residential apartment with a total assessed value of 15 million yen, the acquisition tax would be approximately 450,000 yen before any applicable deductions.
Registration and License Tax (登録免許税)
When property ownership is registered at the Legal Affairs Bureau, you pay the registration and license tax (登録免許税, toroku menkyozei). The rate depends on the type of registration:
- Ownership transfer (purchase): 2% of the assessed value (reduced to 1.5% for residential land through March 2026)
- Ownership transfer (inheritance): 0.4% of the assessed value
- Mortgage registration: 0.4% of the loan amount (reduced to 0.1% for qualifying residential purchases through March 2026)
- New building registration: 0.4% of the assessed value (reduced to 0.15% for qualifying residential buildings through March 2026)
This tax is paid at the time of registration, typically handled by the judicial scrivener (司法書士) who processes the paperwork. The reduced residential rates are temporary measures that have been repeatedly extended by the government, so check the current rates at the time of your purchase.
Income Tax on Rental Income
If you rent out your property, the rental income is subject to income tax. For Japanese residents, rental income is combined with other income and taxed at progressive rates. For non-residents, rental income from Japanese property is subject to a 20.42% withholding tax, though this can be reduced through a tax treaty between Japan and your home country.
Non-resident property owners who earn rental income in Japan are required to file a Japanese tax return. Many non-resident owners appoint a tax representative (納税管理人) in Japan to handle tax filings and payments on their behalf.
Key Tax Documents
Two official documents are particularly important for understanding and managing your property tax obligations.
Fixed Asset Evaluation Certificate
Shows the government's assessed value for your land and buildings. This is the basis for calculating your fixed asset tax and city planning tax. Essential for verifying your tax bill is correct and for estimating taxes on a potential purchase. Available from the municipal tax office.
Property Tax Payment Certificate
Official proof that property taxes have been paid. Shows the tax amounts assessed and the amounts paid for each fiscal year. Required when selling property to demonstrate there are no outstanding tax obligations, and often requested by lenders during mortgage applications.
How to Pay
The municipality sends a tax notification (納税通知書) each year, typically in April or May. The notification includes payment slips for each of the four installments plus a slip for full annual payment.
- Bank transfer — pay at any bank or post office using the payment slip
- Convenience store — pay at major convenience stores (7-Eleven, Lawson, FamilyMart) using the barcode on the payment slip, subject to amount limits
- Automatic debit (口座振替) — set up automatic payment from a Japanese bank account at the municipal tax office
- Online payment — many municipalities now accept credit card or smartphone payment through services like eLTAX or PayPay, though convenience fees may apply
For property owners living outside Japan, setting up automatic debit or appointing a tax representative to handle payments is strongly recommended. Missing payments results in late fees and, eventually, a tax lien on the property.
Tax Calendar
While exact dates vary by municipality, the general annual pattern for property taxes in Japan follows this schedule.
The assessment date of January 1 is critical. Whoever is the registered owner on January 1 is liable for the full year's property tax. If you purchase a property in March, the seller will have already been assessed for the full year. It is standard practice in Japan for the buyer to reimburse the seller for the portion of taxes covering the remainder of the year from the date of purchase onward. This proration is handled at closing.