Real Estate Investment


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Question:

How much is needed in total when purchasing a property?

Answer:

About 5% to 8% of the property price.

Upon purchase

Stamp duty 15,000 yen - 180,000 yen
(・Applies when the purchase price is less than 1 billion yen.
・Determined according to property price.)
*Relief measure until March 31, 2018
Registration and license tax Total of 1.5% of land valuation amount issued by a public agency and 2% of building valuation amount issued by a public agency
Remuneration for
judicial scrivener
Approx. 100,000 yen to approx. 150,000 yen
Brokerage fee (Property price × 3% + 60,000 yen) ×consumption tax
Real estate acquisition tax Total of 1.5% of land valuation amount issued by a public agency and 3% of building valuation amount issued by a public agency.
*This may be reduced in cases where the property is purchased as a personal residence should certain conditions be fulfilled.

*Valuation amounts issued by a public agency are generally lower than market prices.

Under possession

Income tax
(In cases where the property is rented out on
a lease basis)
In cases of non-residents:
  1. When the lessee is a corporation, 20.42% of rent is deducted every month in the form of withholding tax.
  2. When the lessee is an individual, income tax is incurred after the final income tax return for the year is filed.
The amount of income tax in this case is a progressive tax that corresponds to total income within Japan (including real estate income).

In cases of residency in Japan: a progressive tax corresponding to total income within Japan (including real estate income) is imposed.
Fixed asset tax/
City planning tax
Fixed asset tax: 1.4% of the fixed asset tax valuation amount issued by the Japanese government
City planning tax: 0.3% of the urban planning tax valuation amount issued by the Japanese government
*Relief measures separately exist.
Maintenance fees and repair reserve fund
(In cases of condominiums)
Differs according to factors such as the size of the condominium and age of the building.

Upon sale

Mortgage settlement expenses Approx. 18,000 yen (including judicial scrivener's fee)
Stamp duty 15,000 yen - 180,000 yen
(・Applies when the purchase price is less than 1 billion yen.
・Determined according to property price.)

*Relief measure until March 31, 2018
Income tax and resident tax Income tax and resident tax are imposed in cases where taxable income calculated as “[selling price] ? [*price upon purchase - building depreciation + selling expenses]” is positive.

The (combined) tax rate for income tax and resident tax is as follows.
Period of ownership is 5 years or less: 39% of taxable income
Period of ownership is greater than 5 years: 20% of taxable income

However, in cases where the seller is a non-resident, withholding tax in the amount of 10.21% of the selling price is paid regardless of whether or not taxable income is present.
(Adjustments are administered the following year depending on the actual amount of taxable income.)
Brokerage fee (Property price × 3% + 60,000 yen) ×consumption tax

Actual example:

Purchase of a 10 year-old, 100m2-condominium for residential purposes for a price of 120 million yen through receiving 100 million yen in financing.
(Land valuation amount issued by a public agency: 23,713,244 yen Building valuation amount: 19,924,000 yen)

Upon purchase

Stamp duty 80,000 yen
Registration and license tax Approx. 420,000 yen
Mortgage settlement expenses Approx. 100,000 yen
Remuneration for
judicial scrivener
Approx. 140,000 yen
Brokerage fee 3,843,000 yen
Fixed asset tax, maintenance fees and other settlement amounts Approx. 400,000 yen
Real estate acquisition tax Approx. 240,000 yen
Fire insurance premiums (5-year coverage) Approx. 400,000 yen

Under possession

Fixed asset tax and
urban planning tax
Approx. 400,000 yen
Maintenance fees
(Do not apply to detached houses)
Approx. 57,000 yen
Question:

What documents are necessary?

Answer:

Upon purchase

  • Seal impression (Certificate of Signature for non-residents)
  • Identifying documents (Driver’s license/passport/residence card)
  • Certificate of Residence (Proof of Address for non-residents)
  • Registered seal (for people taking out a home loan)

Upon home loan application

  • Withholding tax certificates or final tax returns for 3 fiscal years (For business managers, financial statements for 3 fiscal years)
  • Residence card
  • Proof of identity (Passport/driver’s license/health insurance card)
  • Certificate of Residence/Certificate of Seal Impression

*Documents to be separately submitted may differ according to the bank.

Upon sale

  • Registered deed or Notice of Information for Registration Identification
  • Survey map/Confirmation of Boundaries (for detached houses)
  • Items for transfer that pertain to the property
  • Registered seal (Signature for non-residents)
  • Certificate of Residence (Proof of Address for non-residents)
  • Certificate of Seal Impression (Certificate of Signature for non-residents)
  • Identifying documents (Passport or driver’s license)
  • Other (Pamphlet for property/completion drawings, etc. for property)
  • Keys
Question:

What is a process of purchasing in Japan?

Answer:

Searching/Viewing ⇒ Negotiation/Application ⇒ Sign a contract/Pay a down payment ⇒ Settlement

Contract Process for Purchase

Above is a normal process in Japan. Basically, the buyer has to come to Japan when they view the property, signing on the contract, and settlement. Please keep in mind that it is difficult to skip some of the steps, yet, if you have any concerns, please consult us.

Question:

What kind of things is needed to be aware of before viewing properties?

Answer:
  • Wednesdays should be avoided, since most of the real estate agents are closed.
  • The agents have to be notified at least 2 days before the actual viewing date. A lot of properties are occupied by the owners and time has to be arranged in advance so that they can be at home then. If it is a short notice, there is a possibility that properties cannot be arranged.

*If the schedule cannot be changed or any other matters occur, please consult with us.

Question:

Is it possible to purchase a property without viewing it in person?

Answer:

It could be possible, but we do not recommend it.
There is a high risk if you buy a property without viewing (eg; the interior is not as good as what you expected, there are some damages in a property and the view is not same as the photos etc…). Moreover, please keep in mind that you cannot easily cancel the application, in case you would like to purchase without viewing it in person.

Question:

Is it possible to hold the property until buyer visit Japan?

Answer:

No, it is not. It is too risky for the owner to hold the property because the owner may loss his/her opportunity to get a better deal.
However, there are some cases that you can consult the owner to hold it if you are sure that you buy the property after visiting it.

Question:

Is it possible to make a contract without coming to Japan?

Answer:

It could be possible in some cases but basically they cannot.
As it is mentioned previously, the buyer has to be in Japan when the Viewing, Signing and Settlement. If you can not make it, please consult us.

Question:

What kind of documents is necessary?

Answer:

Please prepare the following before applying.

  • Certificate of signature
  • Certificate of resident
  • Copy of passport

* In case the form of certificate of signature and the certificate of resident is different from Japanese form in your country, please go to a notary public and issue an affidavit. ID cards cannot be a substitute for this. If you can not prepare these documents, you can not proceed to purchase.

Question:

Is it possible to wire the money (deposit) after signing on the contract?

Answer:

No. To avoid risks and make transaction smoothly, we will ask you to wire the money to our company's bank account before signing on the contract. After signing, our company will take responsibility to send the money to the owner’s account as soon as both the owner and the buyer sign on the contract.
"Deposit" should be withdrawn imminently or in hand when a buyer and seller sign a contract. Due to the oversea remittance, it takes 3 to 7 business days and the currency rate may change. If you have a bank account in Japan, you do not have to wire the money in advance.

Question:

What should foreign investors prepare after purchase?

Answer:

If you buy a property in Japan and live overseas, you have to make a contract with a management company.

Necessary things to do
Owner's responsibilities (regardless the property is occupied or vacant)

  • pay monthly management fee, repairing fund.
  • pay tax

Tenant management

  • arrange the professional repair when facilities are broken
  • correct the monthly rent from tenants

Most management companies do only tenant management part; however, some of them do all of those instead of you.

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