Additional cost for buying properties in Japan

September 7, 2018

Are you looking forward to purchase a property in Japan? Did you plan your expenses? Yes, this is a very important step. There are a number of apartments in Japan for Foreigners, but paying just for the apartment will not complete the deal. There will be other charges and taxes involved as part of the transaction, and you should be ready for all that as well.

Have a look at the additional costs that you need to pay.

Agent Fee

3 percent of the purchase price plus 60,000yen . There will be also consumption tax applied to the agent fee. According to current consumption tax rate 8 percent, the total amount including consumption tax is 3.24 percent of purchase price + 64,800yen.

Acquisition Tax

Approximately, after a few months of purchasing the property, you will have to pay the Acquisition Tax. This tax is going to be different for a house, a land or a commercial building. You need to pay 3 % for land, 4 % for both house and commercial building.

Consumption Tax

This kind of tax is also called a VAT in many countries. In Japan, it is called as a Consumption tax, and it is 8 percent at present. Earlier, it was just 5 percent but has been increased recently. It may again increase to 10 percent in the future. If it is a land purchase, you need not have to pay any kind of consumption tax. Please notice that the apartments are combined by land and building so have to pay tax for building part. However usually the Consumption Tax is included in the asking price so you don’t need to think about it separately.

Registration tax

This tax is calculated by the Government of Japan based on the property’s taxable fixed asset value. There are no different charges for the commercial buildings and residential building. It is going to be common for all, and it is 2 percent of the value. Please notice that taxable fixed asset value is different with purchase price. Usually taxable fixed asset value is much lower than purchase price.

Stamp Tax

The stamp tax is going to depend on the purchase value of the property. That means the price that is specified in the purchase agreement. It has to be between ¥10,000 and ¥480,000.

City Planning and Fixed asset Tax

This City Planning and Fixed asset Tax is usually calculated by the local Municipality, and they are going to calculate it based on the fixed asset valuation. It is usually 1.7 percent of the fixed asset value. City planning tax and fixed asset tax are prorated by the closing day of the purchase between seller and buyer.

It is quite complicated to understand how much is final total additional cost. According to my experience, it is about 5~6 percent of purchase price.

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