Do I have to pay any yearly taxes on my property?

If you own a house or apartment in Japan as of January 1^st of any given year, you are required to pay annual fixed asset and city taxes on the land and building for the previous year. The amount of tax is determined by the government valuation of the land and the house or individual unit. Because of constant changes in economic conditions, the evaluations are conducted every 3 years. The latest valuation was conducted in 2009. These valuations are typically much lower than actual market prices.

When and how do I pay these taxes?

An invoice from the Metropolitan Tax Office is sent once yearly around early June.

Asset and city taxes are payable yearly and can be paid by bank transfer. The taxes are payable in four installments made across the year (June, September, December and the following February), or can be made once yearly. When purchasing a house or apartment, you will be required to pay the pro-rated amount of the annual property taxes to the seller on the closing date.  For example, if you close on a property on July 1st, 2010, you will be required to pay approximately half of the yearly property taxes to the seller (the July~December portion of the taxes). This amount is usually required to be paid in cash directly to the seller who will then issue you with a receipt.

How is the annual tax calculated?

Fixed Asset Tax = 1.4% of the Standard Taxable Value
City Tax = 0.3% of the Standard Taxable Value

*Deductions may also apply (see below)

Tax Reductions & Exemptions:

To make residential acquisitions easier, there are special exemptions that can lower the Standard Taxable Value of the residential-use land. Exemptions are applied by the Government prior to receiving your tax bill. If you are eligible for exemptions, the tax you are charged has already been reduced.

- Small-scale residential land: Applied to the portion of land up to 200sqm in size with one house. The registered land value is multiplied by 1/6 to get the Standard Taxable Value for Fixed Asset/Property Tax.

- General residential land: Applies to the portion of land over 200sqm with one house. The registered land value is multiplied by 1/3 to get the Standard Taxable Value for Fixed Asset/Property Tax. Eg. For a site of 300sqm, the first 200sqm will be taxed as small-scale residential land, and the remaining 100sqm will be taxed as general residential land.

*For land exceeding 200sqm, if the total size of the house exceeds 10 times the land size, this exemption will not apply.

There are also special exemptions that can lower the amount of tax payable:

- For residential properties built up until March 31^st, 2012, that are up to 120sqm in floor size, the fixed asset and land tax is halved for the first three years following construction. For properties over 3 stories tall that are fireproof and semi-fireproof, the tax benefit is for the first five years following construction. For residential and commercial properties that include residential areas, if the residential part makes up more than half of the property then the tax benefit can be applicable. To be eligible for this benefit, the following requirements must be met:

• The residential area must make up more than half of the total floor area.
• The residential area must be between 50~280sqm. Residential property for rental purposes between 40-280sqm (excluding detached houses).

- For high-grade residential rentals made for the aged population (over 60) that are constructed up until March 31^st, 2011, the fixed asset and land tax amount is 2/3rds for the first 5 years following construction.

- For residences that have been earthquake-retrofitted a tax benefit may apply. For properties constructed prior to January 1^st, 1982, and have been earthquake-retrofitted between January 1^st, 2006 and December 31^st, 2015, the taxable amount that is applied against the residence is halved. The duration of the tax benefit is as follows:

• Retrofitted between 2006 and 2009: Tax reduction for the following 3 years*.
• Retrofitted between 2010 and 2012: Tax reduction for the following 2 years*.
• Retrofitted between 2012 and 2015: Tax reduction for the following 1 year*.

*Following the retrofit.

Examples of annual asset & city taxes:

The following are some examples of the 2009 Annual Fixed Asset and City Taxes for some apartments in central Tokyo:

- Minamiaoyama 2 Chome Apartment (Built 1970)
Annual Asset Tax: 123,028 Yen
Annual City Tax: 26,363 Yen
Total: 149,391 Yen

- Hiroo 5 Chome Apartment (Built 1978)
Annual Asset Tax: 104,800 Yen
Annual City Tax: 23,800 Yen
Total: 128,600 Yen

- Akasaka 6 Chome Apartment (Built 1978)
Annual Asset Tax: 152,925 Yen
Annual City Tax: 32,768 Yen
Total: 185,693 Yen

- Roppongi 4 Chome Apartment　(Built 1979)
Annual Asset Tax: 241,900 Yen
Annual City Tax: 53,900 Yen
Total: 295,800 Yen

- The Tokyo Towers Mid Tower Apartment (Built 2008)
Annual Asset Tax: 14,056 Yen
Annual City Tax: 3,009 Yen
Total: 17,065 Yen

Please be advised that the annual property taxes are different for every property, and vary between apartments in the same building.

Key terms:

Koteishisanzei (固定資産税) – Fixed Asset/Property Tax
Toshikeikakuzei (都市計画税) – City Asset/Property Tax
Kazeihyojungaku (課税標準額)- Standard Taxable Value