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Real Estate Property: An Introduction to Taxes

If you have read some research on buying property in Japan, then you will know about the process for buying when you live overseas. However, you might not have been told about the extra cost for taxes.

Buying guides tend to concentrate of the process of going through with the purchase of a property. They will tell you how to get a mortgage and then how to complete the sale. But, they generally don’t go into the cost of the taxes.

The aim of this article is to provide some education about the taxes for buying property in Japan. Once you have read it, you will find that there are no nasty surprises that could prevent you from going through with the purchase of the property.

Acquisition Tax

The first tax that you will come across will be the acquisition tax. This is a tax that is paid to the government within 6 months of the purchase of the property. The cost of this tax is based on 1.5% of the cost of the government’s valuation of the land, and 3% of the cost of the property itself.

This might seem like a lot of money, but the government valuation of property is different to the price that you have paid for the property. In fact, it is usually between 20-40% less than the market price.

Registration Tax

When you register the fact that you now own the property and the paperwork has transferred from the previous owner, to you; you will be subject to a registration tax. The calculation for the cost of the tax is on 2% of the government valuation of the land and then 1.3% of the value of the property.

Therefore, this tax is significantly less than the acquisition tax. Sometimes, the value of the registration tax is calculated by using the mortgage instead. Then, the tax will be calculated at a rate of 0.4% of the full mortgage amount.

Stamp Duty

Then you will have to pay a fee for the stamp duty on the property. The value of the duty depends upon the price of the property and the mortgage agreement. Therefore, the cost of this tax varies from sale contract to sale contract, but you should be made aware of the price as soon as the sale is made final.

Judicial Scrivener Fees

A Judicial Scrivener is the same as a solicitor in other countries. They will oversee the sale of the property and make sure that any problems are dealt with promptly so that there is no delay in the process. They will also make sure that all contracts are legal and binding.

You will have to pay fees for a Judicial Scrivener and these fees will vary from client to client. The complexity of the transfer and the amount of work hours spent on the transaction will be calculated and then presented to you as an invoice. You then have to come to an agreement with the Scrivener to make sure that you pay the fees.

Agents Fees

Finally, the last fee that you will have to pay will be the agent’s fees. You will usually have to pay a base fee of 63,000 Yuen, and then there will be an extra payment based on 3.15% of the sale price. This is like commission fees on sales. Basically you are paying for the agent that found you the property and completed the process of the sale.

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