I would like to summarize a basic point
for several times from this time about taxes which are charged to purchasing
real estate in Japan mainly for people overseas. There are various types of
purchasing real estate by foreigners in Japan. For example, foreigners who have
permanent residence in Japan, they purchase real estates as their residencies.
Also, improvement of the Japanese economy is recently seen due to a
depreciation of the yen and rising of stock prices. And, the Tokyo Olympics
will be held in 2020. These cases cause land values to be raised in urban
areas, and some foreigners consider purchasing real estate such as condominiums
or apartment houses for purposes as their investments.
However, on the other hand, there is a
characteristic of having many taxes
being related to real estate in Japan and said as “real estate is the mass of
tax”. Therefore, it is important to understand about tax management in order to
purchase and manage real estate without worries.
So, basic information about real estate
and the taxes in Japan will be summarized several times. I am happy for
foreigners to understand about real estate taxes in
Japan in this series starting at this time.
Of course, as this is basic information
about real estate taxes in Japan, it is useful to read this for Japanese people
who are interested in real estate taxes also. At first, a tax which is occurred
at the time of a real estate purchase is described.
3
types of necessary taxes of a real estate purchase in Japan
There are basically 3 types of taxes at
the time of a real estate purchase in Japan. They are real estate acquisition
tax, stamp duty, and registration license tax. The real estate acquisition tax
is duty. And stamp duty and registration license tax do not always occur
legally. In terms of whether a legal obligation, there are two groups of real
estate acquisition tax, and stamp duty and registration license tax. However,
in order to have legal protection about real estate that has been purchased or
traded, stamp duty and registration license tax are essentially generated
virtually. After all, 3 types of taxes will be occurred for a real estate
purchase. So, what are the 3 taxes specifically?
Real Estate Acquisition
Tax
At first, a real estate acquisition tax
will be charged for a real estate acquisition. The real estate acquisition tax
is charged as a legal obligation for a real estate acquisition, and foreigners
are necessarily obligated to pay. The real estate acquisition tax is calculated
by a formula as [tax base x tax rate].
The base tax is specifically an amount
of fixed assets accounting records by being entered in the Tax Administration
of Japan. (However, it is the amount multiplied by the 1/2 of the fixed assets
accounting records regarding residential land [a tax reduction step until March
31, 2015].)
The tax rate is three-100ths (that is 3
percent) in the case of housing and land, and four-100ths (that is 4 percent)
in other cases. This is also the tax reduction step until March 31, 2015.
Although the real estate acquisition tax
is the case in which taxing by seeking ability to pay for a real estate
acquisition, some tax reduction steps are also the features for residential
cases. Having housings are relatively tolerant in Japan, and there are various tax
reduction steps. Because to the real estate acquisition tax is never avoided
for a real estate acquisition, it is important to be ready for the tax payment
at the purchase.
Stamp
Duty
A stamp is seemingly something like a
sticker. The stamp duty is the tax which relates to the documents of contracts
or agreements being generated at the time of real estate purchase. The paper
documents have also taxes focusing on the importance in papers socially. The
stamp duty has a structure which proves to perform the tax liability by
affixing a purchased stamp on a paper document for creating an agreement or a
contract of 10,000 yen or more. Therefore, for example, the stamp of 15,000 yen
needs to be purchased and affixed for a document in case of a real estate
purchase in the amount of 30,000,000 yen.
By the way, free agreement between
parties is very strongly guaranteed for a sales contract in Japan, and a public
regulation has less legal system. The trading process has generally less legal
system in a public regulation except certain farmland. Accordingly, a sales
contract for real estate is effective without creating and affixing a stamp on
a contract document. It never performs to be invalid by not creating or
affixing a stamp on a contract. Therefore, in an extreme case, an agreement or
a contract document by a verbal promise never have a stamp duty. This means
that the stamp duty is not legally obligated for a real estate trading
business.
However, it is unrealistic for a realtor
not to create a contract for a real estate business, and it causes tax evasion
by not affixing a stamp on a created contract. So, the stamp duty is
practically occurred in a process of a real estate trading business. Besides,
there is an approach to make one copy of a created contract, and record a tax
separately from the trading amount. This is an appropriate system.
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