How do I pay my property taxes in Japan?

There are a few different taxes you’ll need to handle after closing on your home, and then you’ll be responsible for annual property taxes. Let’s start with the taxes associated with buying.

The main tax you’ll pay after purchasing your home is called the Property Acquisition Tax. It’s a straightforward formula, 3% of the assessed value of your home and land. This bill typically arrives in your mailbox within six months of closing. If you’re living in Japan, it’s easy: just take the bill to your local 7-Eleven and pay it right there.

But what if you’re not living there full time and only plan to use the house as a vacation home?

In that case, you can appoint someone to act as your Tax Manager. If you already know someone in Japan, great, you can appoint them. But if not, no worries, you can appoint us. That gives us the legal authority to handle and pay your taxes on your behalf. We’ll then reach out to you for reimbursement.

Now, on to the annual property taxes.

Annual property taxes come in two forms: Fixed Asset Tax and City Planning Tax. These usually combine to around 1.7% to 2% of the assessed value of the home. Cheap homes = cheap taxes. Our annual tax bill? Just $600 USD a year.

If you’re planning to apply for a longer-term visa and live in Japan, you’ll receive your tax bill by mail each April. Just like the acquisition tax, you can pay it at your local 7-Eleven. If you’re not living in Japan, we can handle this for you as your appointed Tax Manager.

What if I plan to Airbnb my Japanese home? Do I need to pay income taxes in Japan?

Yes, you do. If you’re earning income from Airbnb, you’ll be required to file income taxes with the Japanese government. The tax rate for non-residents is 20.42%. If your Airbnb brings in over 10 million yen per year (around $68,000 USD), you’ll also be subject to an additional 10% Consumption Tax.

As your Tax Managers, we can take care of this too. We’ll prepare your Japanese tax returns and send them to you so you can provide them to your home country’s accountant.

Japan has tax treaties with 78 countries, including the U.S., Canada, Australia, France, Germany, and many others. These treaties help you avoid double taxation through foreign tax credits.

Here’s how it works in the U.S.: you take your Japanese tax return to your American accountant, and every dollar you’ve paid in Japanese taxes gets credited toward your U.S. tax bill. That means no double taxation. If the Japanese tax rate is higher than your U.S. rate, you won’t owe anything additional back home.

Our goal is to make owning a home in Japan completely seamless. So don’t stress about the nitty-gritty of taxes, you can appoint us as your Tax Manager and we’ll handle it all. You just focus on enjoying your home.

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