Even Non-Japanese can trade Japanese real estate in Japan. If you purchase domestic real estate in a country where you stay, there are some countries that place regulations on real real estate trading and that give you no permission for its trading but you can trade real estate in Japan. Real estate acquisition tax and fixed property tax will be imposed on you same as Japanese.
In addition, no matter what kind of visa status you are granted and regardless of weather you possess permanent residency rights, there is no restriction to foreigners trading real estates in Japan. However, just because you buy a real estate in Japan doesn’t mean you are granted special permanent visa or permission to change your status.
Contents
Flow of trading and acquisition of real estate in Japan
Decide what you buy and make a contract with a real estate agent
It is not big difference of flow of trading real estates between when you do it and when a Japanese does it. Firstly, you have to decide which real estate you are going to buy so you are going to repeat inspecting real estates until you find the best one which satisfies your conditions. When you decide, you conclude intermediary agreement with a real estate agent
Intermediary agreement is a contract that you buy a real estate through a real estate broker. Intermediate fee which you pay when concluding a contract mutually and intermediate service provided by a broker are disclosed on a agreement. If you have no objection against contents of an agreement, you sign up or stamp Inkan on a agreement
Payment confirmation and application for a housing loan
If you conclude intermediary agreement with a real estate agent, you will have to decide how you can make a payment for a contract. In case of Japanese, people generally apply for a housing loans to buy a real estate. You can of course go directly to a bank to build housing loan but you can also apply to a real estate agent.
However, one thing you have to notice about a housing loan is that a person who build a housing loans must possess special permanent residency rights. If you are not permanent resident, you are compelled to pay by cash.
A deposit, intermediary fee and revenue stamp
After the decision of payment and passing housing loan screening, the next step is contracting each other. In that case, as a Japanese trading custom, you are required to pay a part of the bill in the form of deposit to a real estate agency.
This deposit is called “Tetsuke-kin (手付金)”. Originally, this deposit is not a part of a real estate bill but is the one to be left to a seller for the time being and when you pay a real estate bill, this deposit should be returned back by a seller.
However, these procedures confuse us prior to trading between you and a broker so that you will firstly have to allot a part of a real estate bill on the spot after concluding a contract and to pay the rest of a bill at settlement time as a custom.
This is why a contract says “this deposit is allotted to a part of the bill when the rest of bill is paid”
Moreover, you need to pay a part of an intermediary fee to a real estate agent and also burden revenue stamp to be put on top of a contract. Revenue stamp is a kind of tax you must pay that the Japanese government requires trading parties to burden in the name of economical benefit you gain through this trading.
Even if you think about paying all the bills with a housing loan without a deposit, you have to pay a deposit by cash in most of cases. Basically a deposit price is not fixed but some real estate agent set a deposit standard and some sellers have a request to a deposit so you must make sure it before concluding a contract.
A payment of revenue stamp differs depending on the bill of a real estate, you will also need to make sure it though.
In addition, for the next step after buying a real estate, it must be registered at Regional Legal Affairs Bureau. You will ask its processing for a judicial scrivener naturally. You will have to pay retaining and consultation fee to a judicial scrivener. Moreover, you will also need to burden expenses like guarantee fee when using a hosing loan and fire insurance. The summation of these fees gives you around the payment of 10% of a real estate bill.
Conclude a contract
Before concluding a contract, a real estate agent hand out a document of “disclosure statement” to you. “Disclosure statement” mentions legal restriction, real estate rights
payment methods and also the situation where you cancel this contract just in case. You must read and understand what it says.
If a document is written in Japanese and you don’t understand Japanese, you should rely on a judicial scrivener to translate all the contents into English. A contract transfers its right of a real estate from a seller to a purchaser so there must be various documents you need to prepare to process the contract legally. What you need is
- Inkan or Jitsuin (registered stamp if you use a housing loan )
- Inkan registration certificate (if you use a housing loan)
- Your passport
- Documents which identify your address
- Deposit (Testuke-kin)
In your country, when concluding a contract, you may only sign up on a contract but as you obey a Japanese trading custom, you have to prepare your own Inkan(stamp). You should order Inkan at Inkan specialty store which you could find anywhere in urban area.
If you don’t live in Japan, you can’t get these Inkans but instead, there is an affidavit made by your country’s embassy in Japan which can be substitute for a registered Inakan. An affidavit also can use as a document which proves your address where you live. You may have to send an inquiry about this to an embassy even when you don’t know weather or not you need it beforehand.
In most of cases, it is enough for you to prepare your resident card as a document that identifies your address if you live in Japan. But if you don’t live in Japan, you must request an embassy to issue an affidavit.
If you buy as a corporation, you need to prepare corporate registration certificate
Other than that, if you don’t understand Japanese and use an agent to go through procedure of buying a real estate without coming to Japan, you will also have to prepare authorization documents and ID card of your agent.
Receive a real property
After you conclude a contract and finish payment, the real property is released from seller’s possession to yours and it is possible to dwell in at this point. At the time you receive the property, because real property right needs to be transferred from a seller to you, you register ownership transfer at a Regional Legal Affairs Bureau. Generally this procedure should be left entirely to a judicial scrivener.
If non-Japanese acquires a real estate in Japan, Foreign Exchange and Foreign Trade Control Law regulates that you should report this acquisition to Ministry of Finance of Japan through a bank teller within 20 days from the day you made a contract.
However, you are not obliged to report in the following cases
- When you bought from a foreigner who had already lived in Japan
- When you bought for employees of a company you manage
- When you bought a real estate possessed by a foreigner who doesn’t live in Japan
- When you bought for your office
When you bought for non- profit purposes
Payment method
If you want to use a housing loan
As I said previously, if you don’t possess permanent residency rights, you are not able to use a housing loan. Therefore, you need to prepare cash but if it’s impossible, you look into weather or not a housing loan provided by banks in your country corresponds to acquisition of foreign real properties.
However, if you have a stable income and can afford to prepare a deposit for the property, who have lived in Japan for over 7 years continuously, there are some banks which provide you a housing loan.
Or there is a case where foreign non-bank organizations provide you a housing loan, you should look into the information but these organizations don’t provide all the nationalities in the world. Countries that allow nation’s domestic credit information to go around overseas are only the United States, England Canada. This loan system is available to people who have citizenship of these countries.
Pay by Remittance
Most of you don’t have bank account in Japan. In this case, you can remit payment to an agent’s bank account. You should choose an agent as carefully as possible, who is credible enough to deposit your big payment.
The points that protect yourself from fraud just in case is receiving and keeping payment statement from an agent , and remittance recipets from a remitter bank and foreign exchange statement from a receiver bank
Pay by cheque
It is possible to pay by cheque to buy a real property in Japan. Transaction amount is very big so that only bank cheque is allowed to use for the payment.
However, cheque is preferred by a seller because it is not cleared very soon. You should choose a payment method of either paying by cheque or paying by remittence which makes you transact smoothly with a agent or a seller.
Tax imposed on acquisition of a real estate
Types of tax imposed on a real estate transaction
a real estate acquisition tax
A tax is imposed on a real estate trading. A tax rate is basically in proportion to the size of the transaction. Tax is computed by multiplying standard taxable value of the property (property tax valuation) you bought by tax rate on a real estate acquisition.
A real estate acquisition tax rate is basically 4% towards standard taxable value of the property. For a real estate you bought until 31, March in 2018, its tax rate is deducted to 3%. In addition, if you satisfy a certain condition and buy a newly built house, up to 12,000,000 yen is deducted from property tax valuation.
Registration licese tax
Registration license tax is a transfer tax which is imposed on certification, permission, registration, patent. This is a tax imposed when you register your real estate to at Regional Legal Affairs. Generally its tax rate is 20/1000 but registration license tax imposed on a real estate or a land is deducted to 15/1000 until 31st March in 2020.
Types of tax which you need to pay annually
Fixed property tax
This tax is imposed to your possessed real estate on first January every year. Tax rate is 1/3 of a property tax valuation in case of housing. The Japanese government take tax deduction measure to reduce taxation burden that if you satisfy a required condition, property tax rate is a half of the present tax rate.
Municipal tax
This tax is also imposed to your possessed real estate on first January every year same as a fixed property tax. Its tax rate is 1/3 of property tax valuation and pay it with a fixed property tax. “Property tax valuation” is the amount of value which is listed on a property tax ledger kept by municipality
Income tax
When you buy a real estate for your investment, income tax is imposed in proportion to how much you gain from the investment.
How to pay taxes
For the above taxes payment, payment statement will be sent to your place by a municipality. You need to pay these taxes at a convenience store, a post office or a bank until the deadline indicated by the payment statement .
But it is impossible to pay taxes if you don’t live in Japan. In that case, you need to designate someone living in Japan who is substitute for you to pay taxes. If you decide a person to manage tax for you real estate, payment statement will be directly sent to a him/her. You can choose anyone for a tax payment agent but if you don’t know anyone whom you can trust in Japan, you should reply on a lawyer or an accountant.