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The number of non-Japanese people purchasing a Japanese real estate has been increasing. The purpose can be classified into 3 categories; for residential, business, and investment.
Is it possible for non-Japanese people to buy and sell the Japanese real estate?
Many people might have the same question.
In Japan, even non-Japanese people can purchase real estate as well as Japanese people. In some countries, it is not allowed for foreigners to purchase the domestic real estate due to various regulations, but it is not so strict in Japan; of course you must pay taxes including acquisition tax and property tax as well as Japanese must pay.
Regardless of the type of your visa, even if you have not got the right of permanent residence in Japan, you can purchase a Japanese real estate. However, please note that you won’t neither be given the right of permanent residence nor change the type of your visa, even if you purchase real estate in Japan.
Now you know that even non-Japanese can purchase a Japanese real estate, so how can you actually purchase it?
Procedure to Purchase Property
There is no big difference between Japanese and non-Japanese people when buying real estate in Japan. The first thing you should do is, just like Japanese people usually do when they are about to purchase real estate, visiting real estate agency and viewing the property that you are interested. When you have finally chosen the real estate to purchase, you will make brokerage contract with the real estate agency.
A brokerage contract is a contract that you agree with purchasing real estate through the agency. Under this contract, non-Japanese people can take mediation services by the agency, and pay the same amount of brokerage fee as Japanese pay (trading price times 3% plus 60,000 yen, plus consumption tax 10%)
If you completely agree with the contract, sign and stamp it with your seal.
Then you have to decide how you will pay for the property. Please note that only non-Japanese people who have the right of permanent residence are allowed to apply for a mortgage loan. If you don’t have the right of permanent residence, you can pay only by cash.
Next, you will make transaction contract, and you will have to pay a part of the total price as a deposit. Please remember to prepare for the cost of a revenue stamp to put on the contract. In most cases, you are required to pay the deposit by cash, even if you have planned to pay the total price by a mortgage loan without a down payment. Basically, the amount of deposit is not exactly decided, but sometimes depends on a standard set by real estate agency or a demand from seller, so please remember to confirm.
You can pay brokerage fee when you conclude the contract and the property is delivered to you. Please also confirm the price of your revenue stamp, as it depends on the purchase price for real estate.
In addition, purchasing real estate, you must register the real estate, so you will need to pay for a judicial scrivener and fire insurance, and so on. In total, all expenses depend on the purchase price of real estate.
Before making a sales contract, the real estate agency will explain the disclosure statement of the real estate that you would purchase. Please check the disclosure statement carefully, because it includes how to pay the transaction costs, rights existing on the real estate, legal restrictions, and what happens if by any chance the contract is canceled. As the sales contract is an official contract that transfers the property right from the seller to the buyer, please check all the necessary documents if everything is fine.
Necessary Documents
If you don’t currently live in Japan, you cannot neither resister a seal nor obtain a certificate of registered seal. However, as an alternative document, you can use “an affidavit” and “a certificate of signature” issued by the courts in each country or Embassy of Japan.
Besides of the above cases, power of attorney and identification of a deputy, a certificate of seal-expression are required, in case a deputy makes a contract instead of non-Japanese who don’t understand Japanese or who don’t come to Japan.
Property Handover
When you conclude the contract and payment, finally your property can be delivered to you and you can begin to reside there. You must register the transfer of ownership in the legal affairs bureau, because the ownership of the real estate should be also transferred when the real estate is delivered. In general, you should request a judicial scrivener for this procedure. Also, according to the Foreign Exchange Law, when non-Japanese acquires Japanese real estate, it is demanded that you report it to the Ministry of Finance from the Bank of Japan within 20 days after acquisition.
However, there are some exceptions. You don’t have to report in the following cases:
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When you purchase real estate from non-Japanese who already lives in Japan
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When you purchase real estate for your relative or employee
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When you purchase real estate for non-residential purpose from non- Japanese who don’t live in Japan
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When you purchase real estate for office use
Real estate acquisition tax is imposed according to the purchase price of real estate. In general, the tax is calculated by the following formula:
The amount of tax base for acquired property × tax rate
Real estate acquisition tax
Registration and license tax is imposed when you register real estate. Usually, 20 / 1000 of the amount of tax base for property equals the amount of tax to pay, but the registration tax imposed on land has been reduced until March 31, 2020, so now the tax rate is 15 / 1000.
Registration license tax
Taxes that must be paid every year
Fixed assets tax
Fixed assets tax is imposed every year on those who own the property as of January 1. In case of residence, the tax rate is one third of the amount of tax base for property.
City planning tax
City planning tax is also imposed every year on those who own the property as of January 1, and used for city planning projects. The tax rate is one third of the amount of tax base for property, and you are required to pay with Fixed assets tax.
Taxes Required When Purchasing Property
Basically, it is the same as when Japanese people purchase real estate, except for the payment method. In case of real estate transactions, it might be difficult for those who don’t speak Japanese fluently to understand the procedure, as high expertise and terminology are necessary. If you are not so confident in your Japanese, you should ask someone to interpret. In addition, it is highly important to choose a reliable real estate agency, especially when you are non-Japanese who don’t currently live in Japan but try to purchase the Japanese real estate. There is possibility that you will be introduced property in bad condition or overcharged.
The tax introduced above can be paid at bank, post office or convenience store by the deadline stated in a statement of payment that will be sent to your house. However, non-Japanese who don’t live in Japan cannot pay. In such a case, you can appoint a tax agent and have them pay instead of you. When you appoint a tax agent, a statement of payment will be directly sent to them. You can appoint anyone as a tax agent, but most people leave it to a lawyer or accountant. If you don’t have any reliable friends, you should leave to such experts.
We have explained a procedure when non-Japanese people purchase Japanese real estate.
