Japan property tax includes several types, and one of them is the Fixed Asset Tax. This tax applies to people who own land, houses, or depreciable assets. It covers a wide range of properties. Foreigners must also pay it if they own taxable assets in Japan, regardless of where they live. The key point is whether the person owns the fixed asset as of January 1 each year. This article explains Japan’s Fixed Asset Tax in detail, focusing on residential land and houses.
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Table of Contents
Profile of Writer
Yukako Yamazaki
Representative of FP Office MIRAI;
Experienced as a Registered Customs Specialist, a bank teller, and transitioned to the path of a financial planner. Founded the financial planning office “FP Office MIRAI” in 2022.
With the motto “Changing the future through reviewing the household budget,” actively engages in household budget consultations, financial article writing, and book supervision, etc.
1st grade Certified Skilled Professional of Financial Planning, Certified Financial Planner®.
If you’re interested in other articles about finance in Japan, such as NISA and taxes, you might find this article helpful.
Chapter 1: Japan Property Tax
In Japan, different types of taxes apply to real estate depending on the situation. Here’s a simple overview of when you need to pay Japan property tax and what kinds of taxes are involved:
1. When you purchase real estate
When you purchase real estate, you will pay these taxes.
| English | Kanji | Romaji |
|---|---|---|
|
Stamp Duty |
印紙税
|
Inshi-Zei
|
|
Registration and License Tax |
登録免許税 |
Touroku-Menkyo-Zei |
|
Real Estate Acquisition Tax |
不動産取得税 |
Fudōsan shutokuzei |
Find article below about Stamp Duty.
2. While you own real estate
Taxes below are included;
| English | Kanji | Romaji |
|---|---|---|
|
Fixed Asset Tax |
固定資産税 |
Kotei Shisan-Zei |
|
City Planning Tax |
都市計画税 |
Toshi Keikaku-Zei |
3. When you inherit or are given real estate
When you inherit or are given real estate, you will pay these taxes.
| English | Kanji | Romaji |
|---|---|---|
|
Gift Tax |
贈与税 |
Zōyo-Zei |
|
Inheritance Tax |
相続税 |
Sōzoku-Zei |
4. When you sell real estate
When you sell real estate, you will pay income tax and resident tax on capital gains.
| English | Kanji | Romaji |
|---|---|---|
|
Income Tax |
所得税 |
Shotoku-Zei |
|
Resident Tax |
住民税 |
Jūmin-Zei |
Chapter2: What is Fixed Asset Tax?
Fixed Asset Tax is a tax for people who own real estate or depreciable assets as of January 1. The tax is based on the value of the property, and the owner must pay it to the local municipality.
Taxes When You Own a House or Land in Japan
If you buy or build a house, you’ll start getting a fixed asset tax notice the following year. This happens because the tax applies to the person who owns the property on January 1. Usually, the tax notice arrives between April and May each year, but the exact timing can vary depending on the area.
Even if you no longer own the property when the notice arrives, you still need to pay the tax for the property you owned on January 1. If you don’t pay on time, you’ll have to pay late fees.
If your property is in an urban area, you’ll also pay the City Planning Tax. This tax will be listed with the fixed asset tax on the same notice.
Uses of Fixed Asset and City Planning Taxes
Fixed Asset Tax helps fund public services like schools, parks, and welfare programs. The City Planning Tax helps pay for land used in building or moving public facilities.
Chapter 3: Properties Subject to Fixed Asset Tax
When you think of Fixed Asset Tax on real estate, you might imagine residential land or buildings, like a home. However, the tax also applies to various types of property. For land, it includes not only residential areas but also rice fields, farms, forests, and ranches. Buildings are also subject to the tax, including not just homes, but shops, factories, warehouses, and other types of buildings.
For Foreigners
As mentioned earlier, Fixed Asset Tax is levied on the owner of the property as of January 1. Therefore, even foreigners must pay the tax if they own taxable property in Japan. This applies even if they have moved abroad and no longer live in Japan.
Additionally, if a foreigner lives abroad and cannot physically pay the tax, they must appoint a tax agent to handle all tax procedures on their behalf.
Chapter4: How to Calculate Fixed Asset Tax and City Planning Tax
Both Fixed Asset Tax and City Planning Tax are calculated by multiplying the taxable base amount by the tax rate. The taxable base amount is determined by calculating the fixed asset value for land and buildings separately and then combining the values.
How to Determine the Taxable Base Amount
Residential land: About 70% of the publicly announced land price
Buildings: The reconstruction cost of the building, adjusted by a certain rate based on its age
Fixed Asset Tax Calculation
Fixed Asset Tax = Taxable base amount × 1.4% (standard tax rate)
City Planning Tax Calculation
City Planning Tax = Taxable base amount × 0.3% (maximum rate)
The fixed asset value is reassessed every three years.
Chapter5: Tax Reductions for Fixed Asset Tax
Fixed Asset Tax and City Planning Tax are usually based on the taxable base amount. However, there are reductions for residential land and new homes.
a. Residential Land Tax Reduction (Fixed Asset Tax & City Planning Tax)
This reduction lowers the taxable base for residential properties, including homes and apartments. See the table below for details.
| Land Area per Unit | Fixed Asset Tax | City Planning Tax |
|---|---|---|
|
Up to 200㎡ |
Taxable base × 1/6 |
Taxable base × 1/3 |
|
Over 200㎡ |
Taxable base × 1/3 |
Taxable base × 2/3 |
b. Tax Reduction for Newly Built Homes
This tax reduction applies to homes built by March 31, 2026. The details differ for standard homes and long-term quality homes. See the table below for details.
| No. | Type of Home | Tax Reduction Period | Tax Reduction Rate | Eligible Floor Area |
|---|---|---|---|---|
|
No.1 |
Standard Homes (excluding No.2) |
3 years |
50% |
Up to 120㎡ of the residential floor area (If it exceeds 120㎡, the reduction applies to 120㎡ only) |
|
No.2 |
Fire-Resistant Homes with 3 or More Floors |
5 years |
||
|
No.3 |
Standard Long-Term Quality Homes (excluding No.4) |
5 years |
||
|
No.4 |
Fire-Resistant Long-Term Quality Homes with 3 or More Floors |
7 years |
To receive these special provisions, you must submit a declaration to the local municipality by January 31 of the year following the construction or purchase of the building. Note that the taxable base will not automatically be reduced, and the fixed asset tax will not be automatically reduced.
Important Note:
Losing Tax Reduction for Vacant Houses
If your property is marked as a “Specified Vacant House, 特定空家” by the local government because it’s poorly maintained or at risk of collapsing, you won’t get the residential land tax reduction. Without the reduction, your fixed asset tax could increase by up to six times. So, if you own vacant land, make sure to take care of it regularly.
Chapter6: Fixed Asset Tax Payment Schedule and Methods
Payment Schedule
Pay the fixed asset tax by the deadlines on the payment slip your municipality sends. Each municipality sets its own deadlines, but generally, you’ll make payments four times a year. You can also pay the entire year’s tax at once, but make sure to pay by the first deadline. If you miss the deadline, you may have to pay a late fee.
Payment Methods
You can pay fixed asset tax using several methods. The main options are:
Bank counter
Convenience store
Smartphone payment (QR code on the payment slip)
Credit card
Pay-easy
eLTAX (local tax portal system)
Paying from home is convenient, but some methods may charge a fee or offer rewards like points. It’s a good idea to check the options before paying.
Chapter7: Summary
If you own property on January 1st, you must pay the fixed asset tax. Properties in city planning areas also have a city planning tax. These taxes apply to land, buildings, and depreciable assets. This guide focuses on residential land and houses. There are tax relief options available, so be sure to apply to your local municipality if you qualify.
Foreigners who own property in Japan must pay these taxes, even if they don’t live in Japan. If you can’t pay the tax yourself, you need to appoint a tax representative.
If your property is left unmanaged and becomes a “Specified Vacant House,” you will lose your tax relief, and the tax will increase. Be sure to manage vacant properties carefully.
References
Source: All Japan Real Estate Association
Source: Ministry of Internal Affairs and Communications
Source: Ministry of Land, Infrastructure, Transport and Tourism
