Effect of Tax #2

  • Tokyo Property News

    Effect of Tax #2

    When purchase the property, there are several taxes coming from the real estate.
    Such as
    /Property acquisition tax
    /Stamp duty
    /Fix asset tax
    /City planning tax
    /Consumption tax

    But the tax above differ by “What kind?” and “How?” you going to purchase apartments or house and others, needs to confirm some item below and figure out what kind of benefit you may have.


    /Type of property
    This is pretty ordinary when you purchase the property, there are few category which you can consider.
    Such as
    1>Used property(Apartment, detached house,etc..)
    2>Brand new development(Apartment, detached house,etc..)
    3>Buy land and build by your own

    First item we can say that in Japan, property to purchase land is non-consume asset.
    Because the land won`t move and depreciate, this is the property which recognized as “Non-consume asset”.
    When purchase the property, you will see the total property price will separate into land and building and if the building is aged, total ratio of land price become bigger than the building. Higher aged of the Building makes the price ratio of land more higher.
    Building is recognized into depreciation and the tax effect only to this part.



    /”Who is the seller”
    Upon above as a premise, the second part of “Who is the seller?” becomes important.
    As basic understanding from real estate law in Japan, it try to protect the non-professional from professional when making the property deal.(ex. real estate company).
    This effect to the number of part inside contract procedure when deal the property and tax also effect into this part as well.

    When non-professional(Ordinary buyer) purchase the property, tax will not effect to any of land and building price if the seller is individual.
    But if the seller is the company, seller needs to include tax into the price part of building because they are in taxation to underway their business.
    Individual basically recognized that they are not underway their company to buy/sell the property by their business.

    From these system and reasons, we may expect that below may become one phenomenon after the tax increase from April 2014.


    /Price of newer development increase
    For example, if there is building now in construction and complete after April, this development needs to calculate the price with 8% and make the contract between buyer.
    Because the seller of most of newer development is the real estate company, they cannot ignore the cost of consumption tax.


    /Price increase of building cost
    If purchase the land and to build afterwards, cost to purchase land won`t have consumption tax but the cost to build or renovate, remodel will be taxed.
    Builder or the remodeling should be better not to increase this tax.
    Therefore, number of building company is now in a hurry to catch up their construction by Apirl 2014.


    /Potential increase of used property.
    Because most of used property is owned by individual, we may expect number of buyer is start looking for a property without tax and the deal between individual and individual is the only case which we can avoid tax when deal the property.
    What may expect is how much used property will appear into the market in this few months and we are now try not to dry up the number of property for the people who is planning to purchase these days.

    From the next column, we would like to introduce what is the changes of benefit when you purchase the property after the tax become 8%.



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