Before You Buy Property in Japan: Purpose, Budget and Loan

This article is part of the Zagdim wiki series on Japanese property and its “transaction process” group. It answers one question: what do you need to think through before you make an offer on a home in Japan? The full purchase sequence is covered in the main article, “How Does Buying a Home in Japan Work? From Viewing and Offer to Explanation of Important Matters and Title Registration”.

When buying property in Japan, settle three things before you bid: what you will use the property for, which costs belong in your total budget, and whether you will pay in cash or with a loan. These three decisions shape later steps: whether the registration tax can be reduced, whether the contract must include a loan clause, whether short-term rentals are possible, and what filings you must make after you acquire the property.

Which area to choose depends on your purpose and on the property itself. This article does not compare areas. It only explains what to watch for in area selection under each purpose.

Why Settle These Points Before Bidding?

Once you find a property, the next step is to submit a purchase application (申込み, an offer telling the seller what price you intend to pay) through the agent. Next come the explanation of important matters and the sales contract. If you use a loan, how a refusal of the loan will be handled has to be written into the contract at signing.

Reduced tax rates for an owner-occupied home also have a timing limit. The municipal certificate must be attached when you apply for registration. If you submit it only after registration, the reduction does not apply.

All of these steps happen after the offer, but the answers must be ready before it. Before you bid on property in Japan, work through the points below.

Which Points Should You Settle Before Bidding?

Each point is explained below.

What Does Your Purpose Change?

Living in It Yourself: A Lower Rate Is Possible, but You Must Qualify at Registration

When an individual buys a home to live in, the registration and license tax (登録免許税, the tax paid when registering the transfer) can be reduced. For the building, the rate drops from 2% to 0.3%, for homes acquired by purchase before March 31, 2027. The land portion does not get this reduction and is taxed at 1.5% (until March 31, 2029).

The conditions are that you live there yourself, the floor area is at least 50 square meters, you register within 1 year of acquisition, and you attach a certificate from the municipality where the home is located (住宅用家屋証明) when you apply for registration.

Taking Meguro Ward in Tokyo as an example, the application for this certificate has further conditions:

• A condominium must be a fire-resistant or semi-fire-resistant building.
• A used home must have been built on or after January 1, 1982. For earlier buildings, you must attach other documents, such as a certificate of conformity to the seismic standard.
• A copy of the resident record (住民票, the Japanese address registration certificate) is attached to the application.
• If you have not moved in by the time of registration, you must submit a separate written statement. Meguro Ward generally accepts a move-in period of within 2 weeks.

If you do not live in Japan and buy for holidays or rental, there is currently no way to qualify for this reduction, and the ordinary rate applies. If you plan to move in only later, ask a judicial scrivener (司法書士, a legal professional who handles registration on commission) or the municipal office before bidding whether the certificate can be obtained at registration.

If you buy an owner-occupied home with a loan and meet the conditions, the registration tax on the mortgage can also fall from 0.4% to 0.1% (until March 31, 2027).

If the property you like already has a tenant and you intend to take it back for your own use, first check the type of lease. Under an ordinary lease, a tenant generally cannot be required to leave merely because the owner has changed. There must be a legally justified reason. A fixed-term lease (定期借家, a lease that ends at expiry without renewal) ends when the term expires, and for terms of 1 year or longer, the landlord must give notice between 1 year and 6 months before expiry. Before bidding, ask whether a lease exists, which kind it is, and how long it has left to run.

Long-Term Rental: Rent Is Taxed at the Source, and Someone Must File for You

If you are a non-resident under the Income Tax Act, the tenant must withhold 20.42% tax when paying you rent. Withholding is required when the tenant is a company. An individual who rents the home for themselves or a relative to live in does not need to withhold.

If you live overseas and need to report income in Japan, pay tax or receive a refund, you must appoint a tax representative (納税管理人, a person who handles tax matters on your behalf) and submit a notification of the appointment to the tax office. The representative can be an individual or a corporation.

A resident under the Income Tax Act is someone who has a domicile in Japan or who has had a residence there continuously for 1 year or more. Everyone else is a non-resident. This test differs from the one under the Foreign Exchange Act, and it is not decided by the name of your visa.

Renting out a property is not owner-occupation, so registration is taxed at the ordinary rate and Flat 35 cannot be used.

Minpaku: 180 Days a Year Is the Cap, and Localities Can Restrict Further

This article covers only two ways to rent out a home for short stays:

• Accommodation business for private residences (住宅宿泊事業, commonly called minpaku): The number of nights is capped at 180 per year, and you must notify the prefectural governor or equivalent for each residence before starting. Where the host is absent during guest stays, the operation must be entrusted to a licensed management company, with some exceptions.
• Hotel and inn business (旅館業): This requires a permit from the prefectural governor or equivalent.

Prefectures and other authorities may use ordinances to designate areas and limit the periods in which operation is allowed. So 180 days is the legal ceiling. Whether you can operate, and for how long, still depends on where the property is.

If you live overseas and will be absent during guest stays, you must, apart from the exceptions, entrust management to a company. Include this in your plan and budget.

When you buy a condominium, the management rules (規約, the building’s own rules) can restrict how a unit is used, for example residential use only or no business use. The content of these rules must be explained in the explanation of important matters. If you plan to run minpaku, ask the agent for the rules to read before you bid.

Whatever the Purpose: A Report Is Due Within 20 Days of Acquisition

Under the Foreign Exchange Act (外国為替及び外国貿易法), a non-resident who acquires Japanese real estate from April 1, 2026 must, regardless of purpose, report to the Minister of Finance through the Bank of Japan within 20 days of acquisition. This applies to owner-occupied homes too. Who counts as a non-resident and how to file are covered in the main article, in the section “What Else Must You Do After the Purchase?”

Besides the Price, What Else Goes Into the Budget?

The budget can be split into four stages: payments at signing, taxes and fees at acquisition, extra costs if you use a loan, and the yearly cost of holding the property. The full table of tax rates is in the main article. Here we only note what to watch for when estimating a budget.

At Signing

• Earnest money (手付金, money handed to the seller at signing): When you buy from an ordinary owner, the law sets no cap, and the amount follows the contract. When you buy from a business operator itself, for example a new condominium sold directly by the developer, it cannot exceed 20% of the price.
• Stamp duty (印紙税): This is generally payable on a sales contract made in Japan. For contracts made before March 31, 2027 with a stated amount above 100,000 yen, a reduced amount applies. For example, a contract amount above 10 million and up to 50 million yen is 10,000 yen, and there are other brackets.
• Agent’s commission: The law sets a ceiling, and you can agree the figure when you sign the brokerage agreement. For prices above 4 million yen, the ceiling for a taxable business can be estimated quickly as (price excluding consumption tax x 3% + 60,000 yen), plus consumption tax. This is a shortcut derived from the official tiered rates, not the official wording. For properties priced at 8 million yen or less, if the agent explains in advance and you agree, the ceiling for a taxable business can rise to 330,000 yen (tax included).

At Acquisition

• Registration and license tax: 1.5% for land, 2% for buildings, and 0.3% for an owner-occupied building that qualifies.
• Real estate acquisition tax (不動産取得税): The prefecture where the property is located charges this after acquisition, and it applies equally to foreigners and people living overseas. The rate is 3% for homes and land (until March 31, 2027) and 4% for non-residential buildings. For residential land acquired before March 31, 2027, a special rule halves the tax base.
• Judicial scrivener fees: Each scrivener sets their own fees, must state the amount and the calculation method, and agrees them with you. Before bidding, you can ask for a written quotation.
• Property tax apportionment: Whether that year’s fixed asset tax is split by period, and how, depends on the sales contract.

Registration tax and real estate acquisition tax are, in principle, calculated on the assessed value recorded in the fixed asset tax ledger, not on the sale price. You therefore cannot simply multiply the sale price by the rate. Before bidding, ask the agent or the judicial scrivener to help estimate them.

If You Use a Loan

• Registration tax on the mortgage: 0.4% of the loan amount, or 0.1% for an owner-occupied home that qualifies (until March 31, 2027).

After the Purchase

• Fixed asset tax (固定資産税): Paid each year by the person registered as owner on January 1. An owner with no domicile or similar link in the municipality where the home is located must appoint a tax representative and notify the mayor. If the mayor recognizes that collection will not be affected, the appointment can be waived.
• Condominium management fees and repair reserve fund: The explanation of important matters must state the management fee, the rules on the repair reserve fund, and the amount already accumulated. Under the Ministry of Land, Infrastructure, Transport and Tourism’s interpretation, any arrears must be disclosed with the amount.

There is more than one way to build up a repair reserve fund (修繕積立金, a long-term repair fund). Ministry guidelines mention a stepped plan that starts low and rises in stages, and a practice of collecting a repair reserve fund at purchase. So do not budget only on today’s monthly figure. Before bidding, ask the agent for these numbers.

Should You Borrow, and From Whom? Why Decide First?

Because whether you can get a loan, and from whom, determines what the contract must say and whether the budget must include mortgage registration costs. Which channels a foreign buyer can use depends on status and purpose.

• Flat 35: The Japan Housing Finance Agency’s Flat 35 (【フラット35】) accepts only applicants of Japanese nationality, permanent residents and special permanent residents. The applicant must be under 70 at application, with some exceptions. The repayment burden ratio (the share of annual income going to repayments) must be 30% or less for annual income under 4 million yen and 35% or less for 4 million yen or more.
• Flat 35 use restriction: It is limited to a home where the borrower or relatives live, and cannot be used for investment such as renting out. The agency periodically checks actual occupancy. If use for investment or any other purpose is found, the full balance must be repaid at once. A foreign applicant later found ineligible must also repay in full.
• Private banks: For mortgages to foreigners and non-residents at private banks, no uniform official standard has been found, so confirm bank by bank. If you have no permanent residence status or live overseas, ask the bank you plan to apply to before bidding. For the conditions the banks publish themselves, see the related article “Can Foreigners Get a Mortgage in Japan? Permanent Residents, Work Visas and Non-Resident Buyers”.

What Should the Loan Clause Say?

According to industry explanation, a loan clause (ローン特約) is an agreement that if the loan is refused in whole or in part, the contract can be cancelled and the earnest money returned. When agreed, it should state the financial institution applied to, the loan amount, the approval deadline, and how a refusal is handled.

The law does not require every contract to have this clause. So which institution you apply to and how much you borrow must be settled before the offer, so that they can be written in at signing.

Using a loan also adds a document. Generally, a buyer who is simply acquiring ownership submits proof of address. If a mortgage is also registered against the property, a seal certificate or a substitute document is generally needed. Which documents you must prepare should be confirmed with the judicial scrivener before signing.

Paying Cash: How Does the Money Enter Japan?

A buyer who is a resident under the Foreign Exchange Act and remits the purchase price from overseas must file an after-the-fact payment report when a single remittance exceeds the equivalent of 30 million yen. A non-resident under the Foreign Exchange Act is exempt from this report.

Under the Foreign Exchange Act, foreigners are in principle presumed to be non-residents. A person who works at an office in Japan, or who has been in the country for 6 months since entry, is presumed to be a resident.

When Choosing an Area, What Does Your Purpose Make You Check?

Which area to choose depends on your purpose and on the property itself, and this article does not compare areas. Two purpose-related points can be checked before bidding:

• If you want to run minpaku: Localities can limit areas and periods by ordinance, so first confirm that operation is possible in that area.
• If flood risk matters to you: During the explanation of important matters, the agent or business operator must indicate where the property sits on the flood hazard map (ハザードマップ) published by the municipality. Not being in a designated inundation area does not mean there is no flood risk. If you want to look before bidding, check the map published by the municipality where the property is located.

When You Hear These Claims, Pause

• “A holiday home can also use the owner-occupier rate”: The 0.3% rate requires that you live there yourself, with the municipal certificate attached when you apply for registration. In Meguro Ward, for example, a copy of the resident record must also accompany the certificate application.
• “Foreigners can use Flat 35 too”: Only Japanese nationals, permanent residents and special permanent residents can, and only for a home where the borrower or relatives live.
• “If I live there, I don’t need to report to the Ministry of Finance”: For acquisitions up to March 31, 2026, reports covered investment purposes and similar. From April 1, the report applies regardless of purpose, including owner-occupation.
• “Minpaku can run 180 days a year”: 180 days is the ceiling for the accommodation business for private residences. Local ordinances can limit areas and periods further, and condominium rules can limit use.
• “Just calculate the taxes on the sale price”: Registration tax and real estate acquisition tax are in principle based on the assessed value.
• “Once I buy it, I can live in it”: For a property with an ordinary lease, the tenant cannot be required to leave merely because the owner has changed.

Once It Is Settled, What Is the Next Step?

When all three points have answers, you can instruct an agent, sign a brokerage agreement (媒介契約, a contract that commissions an agent to introduce properties and bring about a sale, which must be made in writing) and start bidding. The details of offers, the explanation of important matters and signing are in the related article “Japan Property Purchase Contract Process: Application, Explanation of Important Matters, Sales Contract and Earnest Money”.

If any of the following applies, settle it before you bid:

• You plan to use a loan, but no financial institution has confirmed that you can apply.
• You plan to run minpaku, but have not confirmed that local ordinances and condominium rules allow it.
• You plan to live there and use the 0.3% rate, but are not sure you can obtain the municipal certificate at registration.
• The property you like has a tenant, and you intend to live in it yourself.

Frequently Asked Questions

Can a Foreigner Get a Mortgage When Buying a Home in Japan?

It depends on the lender. Flat 35 accepts only Japanese nationals, permanent residents and special permanent residents, and only for a home where the borrower or relatives live. For private banks, no uniform official standard has been found, so confirm with the bank before bidding.

How Many Days a Year Can Japanese Property Be Used for Minpaku?

Under the accommodation business for private residences, the number of nights is capped at 180 per year, and you must notify the prefectural governor or equivalent before operating. Localities can further limit areas and periods by ordinance, and condominium rules can limit use. Running a hotel and inn business requires a separate permit.

Can a Holiday Home Use the 0.3% Owner-Occupier Registration Rate?

Currently there is no way to qualify. The 0.3% rate is limited to a home where an individual lives, and the municipal certificate must be attached when applying for registration. In Meguro Ward, for example, a copy of the resident record must also accompany the certificate application. A building for holiday use is taxed at the ordinary rate of 2%.

About the Information

• The information in this article was checked on September 30, 2026, based on current Japanese laws and regulations, explanatory documents from competent authorities and local governments, and explanations from some professional bodies.
• The following conclusions are drawn from official documents and are not stated directly by the authorities: there is no way for an overseas buyer who does not live in the home to qualify for the owner-occupied-home rate reduction (checked against the Act on Special Measures Concerning Taxation and the certificate requirements of Meguro Ward, Tokyo); there is no uniform official standard for private bank mortgages (only the Japan Housing Finance Agency’s Flat 35 conditions were found, and individual banks were not checked); whether a buyer needs a seal certificate (a cross-reading of the Real Property Registration Regulations); that an ordinary lease cannot be ended merely because the owner changes (a combination of Article 605-2 of the Civil Code and Article 28 of the Act on Land and Building Leases); and that the fixed asset tax apportionment is agreed between the parties (Kobe City’s explanation). The agent’s commission formula of “3% + 60,000 yen” is a shortcut derived from the tiered rates in the Ministry of Land, Infrastructure, Transport and Tourism’s fee notice.
• The loan clause content comes from the explanation of the Real Estate Transaction Promotion Center, and the explanation of judicial scrivener fees comes from the Japan Federation of Shiho-Shoshi Lawyers’ Associations. Neither is statutory text. The certificate requirements for an owner-occupied home use Meguro Ward, Tokyo as an example, and the rules of other municipalities may differ.
• This article has no area-comparison data. It also did not check the content of local minpaku ordinances, short-stay systems other than the accommodation business for private residences and the hotel and inn business, or the loan conditions of individual private banks.
• The registration tax reductions for owner-occupied homes and mortgages, the 3% real estate acquisition tax and the stamp duty reduction run to March 31, 2027. The land registration tax reduction runs to March 31, 2029. Whether they are extended afterward depends on the tax reform at that time. From the 2027 tax year, the tax item for withholding on rent changes to income tax, special defense income tax and special reconstruction income tax. The National Tax Agency states that the combined rate is unchanged at 20.42%.

Have a question about this guide? Leave a comment below, or ask Zagdim directly.

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Important Notice

This article is a general information summary and does not constitute individual legal, tax, financial or real estate transaction advice. The information was checked on September 30, 2026. Rules may change, so rely on the current announcements of Japanese authorities, local governments and financial institutions, and consult a qualified professional where needed.