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    July 13, 2021

    6 Point:What’s Important to Remember When Buying Real Estate in Japan

    This article explains six points to keep in mind when buying real estate in Japan for foreigners.

    In recent years, an increasing number of foreigners have been investing or considering investing in real estate in Japan.

    The conclusion is that they can, but there are some caveats for foreigners who want to buy Japanese real estate.

    Let’s begin.

    Obtaining real estate information

    Real estate information in Japan cannot be obtained entirely through foreign systems.

    Therefore, when a foreigner purchases real estate in Japan, it is necessary to start from the process of obtaining real estate information and appoint a real estate brokerage company.

    Information on properties for sale is posted on the Real Estate Information System and private portal sites by real estate brokers and real estate trading companies.

    Since bilingual support is lacking, it is recommended that you start by gathering information from the real estate brokerage company.

    Selecting a real estate brokerage company

    While some real estate companies in Japan can handle all kinds of cases such as buying, selling, renting, inheritance, etc., many real estate companies limit themselves to one service such as buying, selling only, renting only, or managing only.

    Among them, when a foreigner wants to buy real estate in Japan, he or she needs to ask a real estate company that caters to foreigners.

    Since foreigners need to prepare necessary documents, remit money overseas, etc., in a different way than Japanese, it is necessary to select a real estate company that has a lot of experience in helping foreigners purchase real estate.

    If you choose an inexperienced real estate company, not only will the purchase not go smoothly, but in some cases, you may have to re-select the real estate company.

    By selecting a real estate company that is familiar with foreigners purchasing real estate, you can proceed to the selection of the property to be purchased and the negotiation of the purchase price, thus avoiding unnecessary man-hours and allowing you to purchase real estate with peace of mind.

    Some Japanese real estate companies can handle all kinds of cases, such as buying, selling, renting, inheritance, etc., while many others limit themselves to one service, such as buying, selling, renting, or management only.

    Among them, when a foreigner wants to buy real estate in Japan, he or she needs to ask a real estate company that caters to foreigners.

    Since foreigners need to prepare necessary documents, remit money overseas, etc., in a different way than Japanese, it is necessary to select a real estate company that has a lot of experience in helping foreigners purchase real estate.

    If you choose an inexperienced real estate company, not only will the purchase not go smoothly, but in some cases, you may have to re-select the real estate company.

    By selecting a real estate company that is familiar with foreigners purchasing real estate, you can proceed to the selection of the property to be purchased and the negotiation of the purchase price, thus avoiding unnecessary man-hours and allowing you to purchase real estate with peace of mind.

    Payment of purchase price from overseas

    Purchasing real estate involves a lot of money.

    When foreigners purchase real estate in Japan, they use overseas remittances.

    When remitting money overseas, you will have to pay handling fees for the bank sending the money and the bank receiving it, as well as foreign exchange handling fees.

    When remitting the money in foreign currency, you will also have to consider the exchange rate when deciding when to send the money.

    Also, concerning the purchase price at the time of settlement, in most cases, foreigners who do not live in Japan do not have an account in Japan, so how to remit the purchase price to the seller is an issue.

    In many cases, the real estate company will specify the remittance destination, but it is recommended that you obtain a “remittance request statement” before remitting the money and a “foreign exchange statement” from the recipient after remitting the money.

    Selecting a Tax Manager

    When a foreigner moves to a foreign country, he/she needs to go through the procedures for filing and paying income tax.

    The main taxes to be paid after purchasing real estate are fixed asset tax, city planning tax, and real estate acquisition tax.

    If you are late in paying either of these taxes, you will be charged an overdue fee, so be careful.

    A “tax agent” is necessary for foreigners who do not live in Japan to pay the aforementioned fixed asset tax, city planning tax, and real estate acquisition tax.

    Property tax and city planning tax are levied on people who own land and buildings in each municipality on January 1 of the same year.

    Real estate acquisition tax is charged only when you purchase real estate, and you will receive a tax notice and pay it about three months after the purchase.

    A tax agent is responsible for filing income tax returns and paying taxes on behalf of the individual, so when a foreigner purchases real estate in Japan, it is necessary to select a tax agent.

    Tax returns

    If you are earning rental income as an investment property, you are required to file a tax return if your income, together with other income, is over 200,000 yen.

    If you own real estate for investment, the rental income is considered real estate income, and the amount of taxable income is the amount of rental income for the year minus the expenses required to manage the real estate.

    For example, if your annual rental income is 5 million yen and you incur 3 million yen in annual expenses to repair and maintain the facilities and common areas of your real estate, 2 million yen will be taxable.

    If you have notified the tax office of your selection of a tax manager, it is recommended that you also request the tax manager to file your tax return, as you will be taking a huge risk if your tax return shows that you have not paid your taxes.

    Real estate title deeds

    A real estate deed is an important document that proves that you are the rightful owner of the subject property.

    It states where the land or building is located and who owns it.

    In case of loss, the registered right certificate and registration identification information cannot be reissued.

    There is no immediate cancellation of ownership after loss, but you should keep them in a safe place and make sure you know how to manage them.

    It is also recommended that you decide in advance with the real estate company whether you will have the management company keep the real estate deeds or whether you will keep them yourself since the real estate deeds will be ready in about one week after the purchase of the real estate.

    Summary

    When purchasing real estate in Japan, there are many differences from when dealing in Japan.

    ・Select a real estate company that has a proven track record and experience in purchasing real estate for foreigners.

    ・Make a request to the tax administrator.

    ・Decide how to manage important documents such as a certificate of title.

    At a minimum, try to keep the above three things in mind.

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