Transfer taxes
Japan does not have a single transfer tax. Instead, you pay three separate government charges:
Registration and License Tax (登録免許税): Paid when registering ownership at the Legal Affairs Bureau. The standard rate is 2% of the assessed value (not the purchase price). Assessed value is typically 50-70% of market value, so the effective rate is roughly 1.0-1.4% of what you actually pay. Reduced rates of 0.15-1.5% may apply for owner-occupied residences.
Real Estate Acquisition Tax (不動産取得税): A one-time prefectural tax billed 3-6 months after purchase. 3% of assessed value for residential property (4% for commercial). Effective rate: approximately 1.5-2.1% of market value. New residential buildings may qualify for up to 12 million yen deduction from assessed value.
Stamp Duty (印紙税): Fixed amounts based on contract value. For a 50 million yen property, stamp duty is 10,000 yen (reduced rate through March 2027). Electronic contracts eliminate stamp duty entirely.
Combined, these transfer-related taxes typically cost 2.5-3.5% of the purchase price for an investment property.
Closing costs
Beyond transfer taxes, expect the following:
- Judicial Scrivener (司法書士): The professional who handles ownership registration at the Legal Affairs Bureau. Typically 100,000-200,000 yen flat fee.
- Agent Commission: Both buyer and seller pay their own agent. The legal maximum is (price x 3% + 60,000 yen) x 1.1 (including 10% consumption tax). On a 50 million yen property, that is approximately 1,716,000 yen (~3.4%).
- Mortgage Registration Tax: 0.4% of loan amount (reduced to 0.1% for qualifying owner-occupied homes).
- Loan Guarantee Fee: Approximately 2% of loan amount, paid upfront to the guarantee company.
- Bank Administrative Fee: 30,000-55,000 yen processing fee.
Total closing costs (including transfer taxes and agent commission) typically run 6-10% of the purchase price. Cash buyers avoid the mortgage-related fees, reducing total costs to roughly 5-7%.
Ongoing costs
Annual holding costs for Japanese investment property:
- Fixed Asset Tax (固定資産税): The main property tax, charged at 1.4% of assessed value annually. Since assessed value is ~60% of market value, the effective rate is approximately 0.84% of market value. New residential buildings get a 50% reduction for 3-5 years.
- City Planning Tax (都市計画税): Up to 0.3% of assessed value in urban areas. Combined with Fixed Asset Tax, the effective rate is roughly 1.0% of market value in most cities.
- Fire Insurance: 10,000-20,000 yen/year. Required by mortgage lenders.
- Earthquake Insurance: 6,500-32,600 yen/year depending on prefecture and structure. Optional but strongly recommended. Tax deductible up to 50,000 yen/year.
- Maintenance: Budget 0.5-1% of building value per year.
- Condominium Fees: For mansions (condos), monthly management fees of 10,000-30,000 yen plus repair reserve fund of 5,000-20,000 yen. Both tend to increase as the building ages.
Annual holding costs for a detached house total approximately 400,000-500,000 yen. For a condominium, add 180,000-600,000 yen in management and repair reserve fees, bringing the total to 580,000-1,100,000 yen per year.
Capital gains tax
Japan’s CGT depends entirely on how long you hold the property:
| Holding Period | Tax Rate | Components |
|---|---|---|
| 5 years or less (short-term) | 39.63% | 30% income + 9% residential + 0.63% surtax |
| Over 5 years (long-term) | 20.315% | 15% income + 5% residential + 0.315% surtax |
Critical timing note: The 5-year period is measured as of January 1 of the year you sell, not from the actual purchase date. A property bought in March 2021 and sold in February 2027 would still be “short-term” because it has not been held for 5 full years as of January 1, 2027.
Primary residence exemption: A 30,000,000 yen deduction from capital gains. Properties held 10+ years as primary residence qualify for a reduced rate of 14.21% on the first 60 million yen of gain.
Non-residents: Pay reduced rates (no residential tax portion): 30.63% short-term, 15.315% long-term. A 10.21% withholding is deducted at sale and credited against the final tax.
When selling, expect to pay agent commission of ~3.4% (same formula as buying) and judicial scrivener fees of 30,000-80,000 yen for mortgage discharge registration.
What does this mean in practice?
For a 50,000,000 yen investment condominium in central Tokyo with a 20% deposit:
Upfront costs:
- Deposit: 10,000,000 yen
- Registration Tax (~1.2% effective): ~600,000 yen
- Acquisition Tax (~1.8% effective): ~900,000 yen
- Stamp Duty: 10,000 yen
- Agent Commission (~3.4%): ~1,716,000 yen
- Scrivener + other fees: ~200,000 yen
- Loan guarantee (2% of 40M): 800,000 yen
- Total cash needed: ~14,226,000 yen
Annual holding costs:
- Fixed Asset Tax + City Planning Tax: ~500,000 yen
- Insurance (fire + earthquake): ~40,000 yen
- Maintenance: ~100,000 yen
- Management fee: ~180,000 yen
- Repair reserve: ~144,000 yen
- Total: ~964,000 yen/year
Mortgage (40,000,000 yen at 1.5% over 35 years):
- Monthly payment: approximately 122,500 yen
To cover monthly costs, you would need rent of at least 203,000 yen per month. Tokyo rental yields are typically 3-5% for condos, making this achievable in many central wards.
Japan’s ultra-low interest rates make financing remarkably cheap. The key to profitability is holding beyond 5 years (to access the 20.315% long-term CGT rate) and choosing reinforced concrete buildings in appreciating urban areas.
Run the numbers for your property
Use our Japan property ROI calculator to model the full picture — transfer taxes, closing costs, mortgage payments, rental income, and projected capital growth. For a step-by-step overview of the buying process, read our guide to buying property in Japan.