Japan Tax & Accounting provides investors with accounting and tax information about the real estate investment in Japan.

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2. Taxes at the time of Real Estate purchase in Japan – Real Estate Acquisition Tax (continued)

2.3.3.1 Reducing measures for house

Condition Detail Note
  1. Building reducing measure qualified house
    • Building qualified house less than 2 years after the acquisition*2 (If the land was acquired during the period of 1 April, 2004 to 31 March, 2016, less than 3 years. Additionally, if there are other compelling reasons, it will be extended to 4 years.)
    • Acquiring the land after less than 1 year building the qualified house
  2. Acquiring land with new construction house for sale on it
    • Acquiring the land with the house less than 1 year after the house which qualified the reducing measure was built
  3. Acquiring qualified new construction house for sale or qualified existing house to live (other than the case 2.)
  4. Buying the house on the land less than 1 year before acquiring the land or less than 1 year after acquiring the land (qualified new construction house for sale should be built after 1 April, 1998)

  • Amount of tax = (Tax base x 3%) – amount of deduction
  • Amount of deduction is selected from either the bigger number
    • 45,000 yen
    • Appraised value of land by 1 square meters*3 x (floor space of the house x 2) (no more than 200 square meters) x 3%
  • The house on the land should be qualified as reducing measure.
  • If there is a plan of building a new house within 2 years (If the land was acquired from 1 April 2004 to 31 March 2016, 3 years) after acquired the land, the collection of reduced tax will be postpone by declaration.

*2: To apply the reducing measure, acquirer should be the one to build the house, though there are exceptions such as following.

  1. The acquirer will keep the land as owner until other build a new house, it is applicable if other than acquirer is the one to build the new house.
  2. It is applicable if the acquirer transfer the land to someone and the one who transferred the land from the acquirer is the one who is willing to build the qualified house.

*3: Until 31 March 2015, it shall be equal to 1/2 of its original value.

2.3.4 How to apply reducing measure

To apply the reducing measure, it is necessary to declare at the jurisdictional provincial tax office. Some jurisdictional provincial tax office gives reduced tax notice without applying.
However, the tax notice will be sent after 3 month you registered the land, or on June to July of next month after you build a house.

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