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What are the costs involved to buying a property in Japan? How much are the brokerage commissions and scrivener fees in Japan? What about other costs I should be aware of?

 

 

PROPERTY BUYING PROCEDURES

1 Offer and sign a Letter of Offer & Acceptance.
2 Upon seller acceptance, a contract signing appointment is arranged. A Juyoujikou Setsumeisho (Property Disclosure Statement or Seller’s Real Property Disclosure Statement) and a purchase contract is prepared by the realtor.  

  1. You will need a translator to sit in with you to explain the Juyoujikou Setsumeisho, which can take a while as this is a book by itself. It can take anything from half an hour to a whole hour. This is usually carried out by another person other than the realtor you deal with.
  2. After this, the realtor then sits with you to begin the signing procedure which requires about 20 minutes or so if you’re clumsy with applying the seal and inserting your official address onto several documents.
  3. Pay the 10-20% deposit that is expected plus stamp fee. 
 3  At closing, the title is transferred. Both parties should have certificates of their seal impressions. Stamps are obtained, and government fees and taxes are calculated and paid to register the title. Pay the remaining balance.
Please note: You can start negotiations once property has been chosen. If you do not engage the services of a translator, it is important to hire the services of a real estate agent, who can also act as your translator. Also, an offer or a letter of intent is not legally binding.

 

 

DOCUMENTS YOU NEED

  • Registered personal seal or signature, otherwise, you will need to prepare a Seal or signature certificate
  • Identification document (drivers license, passport)
  • Certificate of residence (affidavit / declaration)
Different proofs of personal identification may be requested depending on your nationality.

 

 

TRANSACTION COSTS

These are the related costs paid by you, as the buyer.

BROKERAGE 3% of sale price + ¥60,000 + 8% consumption tax
STAMP DUTY Tax payable when exchanging sales contracts, loan agreements, etc.
The total amount varies depending on the value of the contract.
DEPOSIT 10 – 20%  upon signing the purchase contract.
MAKING & REGISTERING A PERSONAL SEAL You need a Seal that has been registered with the municipality. Costs varies from around¥3,000. Visit this Inkan maker for an idea of the prices to expect. You should be looking at the Registered Seal category.
CERTIFICATE OF SEAL REGISTRATION Depending on the municipality, registrations may be free or you pay a small fee of¥100.  Certificates generally cost around ¥300.
OUTSTANDING BALANCE  BALANCE = SALE PRICE – DEPOSIT
TAXES YOU WILL BE REQUIRED TO PAY Taxes applicable:

  • REGISTRY LICENCE TAX
  • REAL ESTATE ACQUISITION TAX
  • FIXED ASSETS TAX
  • CITY PLANNING TAX

Please look at the Tax Notes below for details.

 

 

 

································  TAX NOTES   ································

CONSUMPTION TAX

Sales of buildings and construction attract consumption tax.  This is 8%. Sales of land are exempted from consumption tax.

 

REAL ESTATE ACQUISITION TAX

Building, Purchasing or Renovating a residential property
Appraisal Value* x 3%
Reducing Measures : (Appraisal Value – Special Deduction of JPY12M) x 3%
Case of Pre-owned Residence
Appraisal Value* x 3%
Reducing Measures : (Appraisal Value – Deduction Amount below) x 3%

  • 1 April 1976 – 30 June 1981:  JPY3.5M
  • 1 July 1981 – 30 June 1985:  JPY4.2M
  • 1 July 1985 – 31 March 1989: JPY4.5M
  • 1 April 1989 – 31 March 1997:  JPY10M
  • 1 April 1997 or afterwards:  JPY12M

 

REGISTRY LICENCE TAX

Tax for registering ownership or mortgage on a property. Separate registrations required for land and building. Generally, the appraisal value is calculated at around 50-70% of construction cost for building a property and around 70% of a purchasing price for land.

Category Tax Rate Necessary Registration(Reg.) Reducing Measures*
New Residence Land Appraisal Value* x 2.0% (Reg. of Ownership Transfer) x 1.5%
Building Appraisal Value x 0.4% (Reg. of Ownership Retention) x 0.15%
Pre-owned Residence Land Appraisal Value x 2.0% (Reg. of Ownership Transfer) x 1.5%
Building Appraisal Value x 2.0% (Reg. of Ownership Transfer) x 0.3%
Loan Borrowing Loaned Amount x 0.4% (Reg. of Mortgage Setup) x 0.1%
* Buildings and Land are subject to different sets of criteria in order for a Reducing Measure to be applied. Reducing rates valid until end of March 2017. 

 

STAMP DUTY

Price on Contract Construction Contract Property Sales Contract Loan Contract (if applying for loan)
Less than ¥1M ¥200 ¥500 ¥1,000
Less than ¥5M ¥200-1,000 ¥1,000 ¥2,000
Less than ¥10M ¥5,000 ¥5,000 ¥10,000
Less than ¥50M ¥10,000 ¥10,000 ¥20,000
Less than ¥100M ¥30,000 ¥30,000 ¥60,000
Less than ¥500M ¥60,000 ¥60,000 ¥100,000
Less than ¥1B ¥160,000 ¥160,000 ¥200,000
Valid till 31 Mar 2018

 

JUDICIAL SCRIVENER FEES

A judicial scrivener (shiho shoshi) is a paralegal who settles and registers property transactions. Judicial scrivener fees are negotiable but are typically around 0.10% of the property value. However, it should be noted that there is no unified standard.  Judicial scrivener fees are freely determined and the amount differs materially depending upon the judicial scrivener.

 

 

Sources:  Global Property Guide, Property Buying Costs and Taxes, Real Estate Related Taxes and Fees in Japan

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