Total Cost of Japanese Property: Buying, Holding, Renting, Selling

This article is part of the Zagdim Japan property series on transaction costs. It is written for overseas buyers who purchase property in Japan, may rent it out, and may sell it some years later, and it answers one question: how do the costs at the buying, holding, renting and selling stages connect? How each fee is calculated is covered in the main article, “Buying Property in Japan Costs More Than the Price: Agent Fees, Registration, Taxes, Insurance and Holding Costs”. This article uses one table to show at which stage each cost is paid and where it is counted afterward.

The total cost of Japanese property should not be kept as four separate sets of books for buying, holding, renting and selling. The agent fee paid at purchase, and the taxes paid when buying a home you live in or leave vacant, are counted in the acquisition cost (取得費) when you sell, which reduces the taxable gain. (For a property bought to rent out, those taxes are not part of the acquisition cost and are generally treated as expenses during the rental period.) On the other hand, the depreciation you claim each year while renting reduces the acquisition cost when you sell.

Why Are Costs from Purchase to Sale So Hard to Add Up?

When you buy, you receive one list of costs; when you rent out, you keep a different set of income and expense records; when you sell, you calculate tax again. Looked at separately, these three sets of records hide two links. The same purchase receipts are used again at the time of sale, and how you handle the rental period changes the tax on the sale.

If you wait until the year of sale to organize things, the purchase receipts may be gone. When the acquisition cost is unknown, 5% of the sale price can be used as the acquisition cost; keeping the documents is what allows you to use the actual cost instead.

The Short Answer: How Do the Four Stages Connect?

• Tax on a sale is calculated on the gain, not on the sale price: the sale price minus the acquisition cost and transfer expenses, minus any special deduction.
• The acquisition cost comes mainly from the buying stage: the price, the agent fee paid at purchase, and, for a home you live in, the registration and license tax (登録免許税), real estate acquisition tax (不動産取得税) and stamp duty (印紙税) paid at purchase. For a property bought to rent out, those taxes are not part of the acquisition cost and are generally treated as expenses during the rental period.
• Buildings depreciate: depreciation claimed during the rental period must be deducted from the building’s acquisition cost when you sell.
• Fixed asset tax (固定資産税) and repair costs during ownership are not transfer expenses at sale; during the rental period they are expenses against rental income.
• For an owner living overseas, both rent and sale proceeds may have part withheld at source (源泉徴収) first, and the account is settled later through a filing in Japan made via a tax administrator (納税管理人).

One Table: Where Is Each Cost Paid, and Where Does It Count Later?

Three terms in the table first. The acquisition cost is the buying cost that can be deducted from the sale price when you sell. Transfer expenses (譲渡費用) are costs paid directly to carry out the sale. Necessary expenses (必要経費) are costs that can be deducted from rental income.

Costs already treated as expenses against other income cannot also be counted in the acquisition cost.

Which Purchase Costs Come Back at the Time of Sale?

The transfer income (譲渡所得) on a sale is the sale price minus the acquisition cost and transfer expenses, minus any special deduction. It is calculated separately from salary and other income. The more fully the acquisition cost is counted, the smaller the taxable gain.

What can be counted in the acquisition cost includes the price or construction cost, purchase commissions (such as the agent fee paid when buying), later equipment and improvement costs, and interest on a loan taken to buy, up to the date you actually start using the property. For a home you live in, the registration and license tax paid at purchase (including the cost of handling the registration), the real estate acquisition tax and the stamp duty are also counted.

For a property bought to rent out, these taxes are not counted in the acquisition cost and are generally treated as expenses against rental income during the rental period. The same registration and license tax is classified differently for a home you live in and a rental, so decide the property’s use before you buy.

If you cannot find the receipts and the acquisition cost is unknown, 5% of the sale price can be used as the acquisition cost, known as the estimated acquisition cost (概算取得費). If the actual acquisition cost is lower than 5% of the sale price, you can also use 5%. Keep the purchase contract, receipts and registration cost details together with the documents from the rental period until the sale filing is complete.

Depreciation applies only to the building, not the land. At purchase you need to know how much of the price is land and how much is building; if the contract does not state them separately, have a tax accountant (税理士) help allocate them before you file for rental income or sell. When you buy a new home from a developer or a company, consumption tax in the price applies only to the building portion; as of September 2026, the price of a home bought from an individual who lived in it does not include consumption tax.

How Do Holding and Rental Costs Affect Rental Tax and Sale Tax?

Rental income is gross income minus necessary expenses. Gross income includes not only rent but also renewal fees, the part of deposits (敷金, 保証金) that does not have to be returned, and electricity, water and cleaning charged as common-area fees.

The main necessary expenses listed officially are fixed asset tax on the rental property, damage insurance premiums, depreciation and repair costs. The National Tax Agency’s filing guidance also lists interest on a loan taken to acquire the rental property (the principal portion does not count), and taxes on the rental property such as real estate acquisition tax, registration and license tax and stamp duty. The repair reserve is, in principle, deducted in the year the repairs are actually completed, or in the year paid if the conditions listed by the National Tax Agency are met. The agency does not list management fees or the fees of a rental management company item by item, so ask a tax accountant whether they can be treated as expenses.

Building depreciation (減価償却) is spread over the statutory useful life using the straight-line method (定額法). The useful life is 47 years for a newly built reinforced concrete residence and 22 years for a wooden residence; used buildings have a separate way of calculating useful life.

Depreciation reduces the tax on rental income during the rental period, but it reduces the acquisition cost at sale. A rented property is generally treated as a “building used for business”: depreciation for every year from acquisition to sale is added up and deducted from the building’s acquisition cost, and a year in which it was not claimed as an expense is added in the same way.

For a building you live in that is not used for business, depreciation follows a different formula: building acquisition price x 0.9 x depreciation rate x years elapsed. The depreciation rate is 0.031 for wood, 0.034 for mortar-coated wood, and 0.015 for reinforced concrete (including steel-framed reinforced concrete). Years elapsed count 6 months or more as 1 year and fewer than 6 months as nothing, and the deduction is capped at 95% of the building’s acquisition price.

A newly built property adds a cost a few years after purchase. For homes newly built before March 31, 2031, fixed asset tax is halved for 3 tax years from the start of taxation, or 5 years for fireproof or quasi-fireproof buildings of 3 floors or more, up to 120 sq m of living area per unit. From the 4th year (or the 6th year) it returns to the normal amount. When estimating holding costs and rental income and expenses, include this increase.

When an owner living overseas rents out the property, 20.42% is in principle withheld when the tenant pays rent; no withholding applies when the tenant is an individual renting for their own or their family’s residence. This is a prepayment, not the final tax. When income from Japanese sources exceeds the total of income deductions, a final tax return (確定申告) must in principle be filed through the tax administrator between February 16 and March 15 of the following year, with any difference refunded or paid, calculated in the same way as for people living in Japan. From January 1, 2027, the name of the tax item withheld changes, but the total remains 20.42%.

Long-term rental of a residence is not subject to consumption tax, except for rentals of less than 1 month.

Which costs can be claimed as rental expenses, and from which year depreciation starts, depend on when you start renting and whether the property is new or used.

Which Dates and Conditions Change the Tax in the Year You Sell?

Long-Term or Short-Term Is Decided by January 1 of the Year of Sale

The holding period is measured to January 1 of the year of sale: more than 5 years is long-term, and 5 years or less is short-term. The long-term income tax rate is 15% and the short-term rate is 30%, with a surtax of 2.1% of the income tax amount added. From 2027 the surtax name changes, but the total remains 2.1%.

**Example:** Someone buys a condo in October 2022 and plans to sell it after “5 years”. In October 2027 they have actually held it for 5 years, but on January 1, 2027 they had held it for only a little over 4 years, so a sale that year is still short-term, at an income tax rate of 30%. Only on January 1, 2028 will they have held it for more than 5 years, so a sale in 2028 is long-term, at 15%. They should count back from January 1 of the sale year, not add 5 years to the handover date.

There is also resident tax (住民税): 5% for long-term and 9% for short-term gains, charged only on people who have an address in Japan on January 1 of the year after the sale. As of September 2026, a seller who is no longer living in Japan on that date is generally not charged resident tax on this transfer income; a person who was still living in Japan in the year of sale and moved out after January 1 of the following year is still charged.

Transfer Expenses and the Sale Price: What Counts and What Does Not

Transfer expenses are costs paid directly to carry out the sale: the agent fee paid at sale, stamp duty borne by the seller, survey costs, and payments to a tenant to move out for the sale. Maintenance costs during ownership such as repairs and fixed asset tax, and the costs of collecting the sale proceeds, are not included.

The cap on the agent fee at sale is calculated on the transaction price in the same way as at purchase, and applies to the buyer and the seller each. For details, see “How Are Japanese Property Agent Fees Calculated? What the Buyer Pays and When”.

At handover, if the buyer pays you an amount equal to the fixed asset tax and city planning tax from the sale date to the end of the year, that money counts as part of the sale price. Splitting fixed asset tax by day is a trade custom, not a legal rule; how it is divided depends on the sales contract.

If a mortgage is still outstanding, the registration and license tax to remove the mortgage after repayment is JPY 1,000 per real estate unit, with land and building each counted as one; the judicial scrivener’s (司法書士) fee is separate.

The JPY 30 Million Deduction: It Depends on Whether You Ever Lived There

When you sell a home you live in, up to JPY 30 million can be deducted from the transfer income regardless of how long you have held it (マイホームを売ったときの特例). It can be the home you live in now, or one you lived in before, if you sell it by December 31 of the third year after you stopped living there.

There are other conditions as well: the buyer is not a parent, child, spouse or other specially related person; the special rule was not used in the previous year or the year before; and a home taken up only to qualify for the rule, a temporary residence, or a home used mainly as a vacation home does not qualify. Documents must be attached to the final tax return. The deduction may also not be usable at the same time as the mortgage tax credit.

A property that was never lived in and was only rented out does not, as of September 2026, meet the residence condition for this deduction. A person who lived in it first and rented it out afterward needs to watch the deadline of December 31 of the third year after moving out.

The 10.21% Withholding and Consumption Tax: What Affects the Money You Actually Receive

When a person living overseas sells, and the buyer pays within Japan, 10.21% of the price is in principle withheld first. The withholding is calculated on the sale price, not on the gain, and is settled up when you file. When planning funds, allow for the money that is temporarily unavailable. No withholding applies when the buyer is an individual buying to live in with their family and the price is JPY 100 million or less, but your own filing obligation is unchanged.

A seller living overseas must in principle file for the transfer income between February 16 and March 15 of the year after the sale, calculated in the same way as for people living in Japan; a tax administrator must be appointed beforehand.

When a rental property is sold, the building portion is subject to consumption tax (消費税) and the land is not. Whether it actually has to be paid depends on conditions such as whether taxable sales two years earlier were JPY 10 million or less, and whether the seller is registered as a qualified invoice issuer, so check with a tax accountant. As of September 2026, when an individual sells their own home, it is not a transaction carried out as a business and does not include consumption tax.

**Example:** A buyer living overseas buys a newly built reinforced concrete condo from a developer to rent out, never lives in it, and sells it a few years later. The agent fee paid at purchase is counted in the acquisition cost; registration and license tax, real estate acquisition tax and stamp duty are not counted in the acquisition cost and are generally expenses during the rental period. During the rental period depreciation on the building is claimed each year on a 47-year straight-line basis, and when selling those amounts must be deducted from the building’s acquisition cost. The agent fee paid at sale is a transfer expense, and the rest of the year’s fixed asset tax passed on by the buyer counts as part of the sale price; the JPY 30 million deduction is not available. What this owner needs to do is keep the documents for each stage separately, confirm the number of years held as of January 1 of the year of sale, and file through the tax administrator between February 16 and March 15 of the year after the sale.

Claims to Treat with Caution

• “Once tax is withheld, no filing is needed.” The 20.42% and 10.21% are both prepayments, and in principle you still file in Japan, with any difference refunded or paid.
• “Holding for 5 years makes it long-term.” The test is January 1 of the year of sale, not the handover date plus 5 years.
• “Taxes paid when buying can all be deducted when selling.” For a rental property, registration and license tax, real estate acquisition tax and stamp duty are not counted in the acquisition cost.
• “If depreciation wasn’t claimed as an expense, it doesn’t have to be deducted at sale.” A rented property is generally treated as a building used for business, and every year’s depreciation is added up and deducted.
• “The JPY 30 million deduction also works for a property that is only rented out.” The deduction requires that you have lived in the property.
• “Selling Japanese property means paying 10% consumption tax.” Land is not taxed; an individual selling a home they lived in is not carrying out a business transaction; only the building portion of a rental property is taxable, and then only subject to the conditions for tax liability.

How Do You Decide What to Do Next?

1. Before buying: decide whether the property is to live in, to rent out, or to live in first and rent later. This determines whether the taxes at purchase go into the acquisition cost or into rental expenses, and whether the JPY 30 million deduction can apply.
2. At signing: confirm the land and building prices in the contract, and file the purchase contract, receipts and registration cost details.
3. When you start renting: appoint a tax administrator for national tax, and submit the appointment notice to the tax office when you appoint one or before you leave Japan. A tax administrator for local taxes such as fixed asset tax is registered separately with the municipality or prefecture, and the domestic administrator for condo management is yet another system.
4. Before selling: count the holding years as of January 1 of the year of sale, estimate how the 10.21% withholding affects your funds, and add up the depreciation from the rental period.

For how each cost itself is calculated, return to the main article, “Buying Property in Japan Costs More Than the Price: Agent Fees, Registration, Taxes, Insurance and Holding Costs”. For the details of purchase costs, see “What Else Do You Pay When Buying Property in Japan? A Transaction Cost List for Foreign Buyers”; for taxes and fees, see “Registration and License Tax, Real Estate Acquisition Tax and Fixed Asset Tax: How to Read Japan’s Property Taxes”; for monthly costs, see “Monthly Costs of Owning a Japanese Condo: Fees, Reserves, Insurance and Management Services”.

Japan Property Total Cost FAQ

If I did not claim depreciation while renting out Japanese property, do I still deduct it from the acquisition cost when I sell?

Generally yes. For a building used for business, the National Tax Agency adds up the depreciation for every year from acquisition to sale and deducts it from the building’s acquisition cost; a year in which it was not claimed as an expense is added in the same way. Check with a tax accountant before filing how a rental property is classified.

If I live in the property for a few years and then rent it out, can I still use the JPY 30 million deduction when I sell?

Possibly. You must sell by December 31 of the third year after you stopped living there and meet the other conditions, for example that the buyer is not a specially related person and the special rule was not used in the previous year or the year before. After the deadline, it no longer applies.

I cannot find my receipts for a Japanese property purchase. How is the acquisition cost calculated when I sell?

When the acquisition cost is unknown, 5% of the sale price can be used as the acquisition cost; if the actual acquisition cost is lower than 5% of the sale price, you can also use 5%. That is why the purchase contract, receipts and registration cost details should be kept until the sale filing is complete.

Data Notes

• The information was checked on September 30, 2026, based on official documents and Japanese laws from the National Tax Agency, the Ministry of Internal Affairs and Communications, the Ministry of Land, Infrastructure, Transport and Tourism, the Tokyo Metropolitan Bureau of Taxation, and the Edogawa and Chuo ward offices of Tokyo.
• The following conclusions are drawn from official documents; no official source states them in a single sentence.
• That a rented building is calculated under depreciation for a “building used for business”: the National Tax Agency’s guidance has two categories, “used for business” and “other”, and placing rentals in the former is inferred from their business use.
• That property never lived in does not qualify for the JPY 30 million deduction is inferred from the requirement that the seller lives, or previously lived, in the home; the documents consulted do not distinguish residents from non-residents for this deduction.
• That an individual’s sale of their own home is not a business transaction is inferred from the National Tax Agency’s definition, which gives assets used for daily living as an example.
• That a seller who is no longer living in Japan on January 1 of the year after the sale is generally not charged resident tax on this transfer income is inferred from the Local Tax Act (resident tax on transfer income targets those liable for the per-capita-based income levy) and the Edogawa and Chuo ward explanations of general resident tax; no official source uses a property sale as the example.
• Not checked this time: whether management fees and rental management fees can be treated as rental expenses; whether the cost of removing a mortgage counts as a transfer expense; how to calculate the useful life of a used building; and the relationship between the mortgage tax credit and the JPY 30 million deduction.

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

Sources

• 国税庁－タックスアンサー No.1440 譲渡所得（土地や建物を譲渡したとき）: https://www.nta.go.jp/taxes/shiraberu/taxanswer/shotoku/1440.htm
• 国税庁－タックスアンサー No.3202 譲渡所得の計算のしかた（分離課税）: https://www.nta.go.jp/taxes/shiraberu/taxanswer/joto/3202.htm
• 国税庁－タックスアンサー No.3208 長期譲渡所得の税額の計算: https://www.nta.go.jp/taxes/shiraberu/taxanswer/joto/3208.htm
• 国税庁－タックスアンサー No.3211 短期譲渡所得の税額の計算: https://www.nta.go.jp/taxes/shiraberu/taxanswer/joto/3211.htm
• 国税庁－タックスアンサー No.3252 取得費となるもの: https://www.nta.go.jp/taxes/shiraberu/taxanswer/joto/3252.htm
• 国税庁－タックスアンサー No.3258 取得費が分からないとき: https://www.nta.go.jp/taxes/shiraberu/taxanswer/joto/3258.htm
• 国税庁－タックスアンサー No.3261 建物の取得費の計算: https://www.nta.go.jp/taxes/shiraberu/taxanswer/joto/3261.htm
• 国税庁－タックスアンサー No.3255 譲渡費用となるもの: https://www.nta.go.jp/taxes/shiraberu/taxanswer/joto/3255.htm
• 国税庁－タックスアンサー No.3302 マイホームを売ったときの特例: https://www.nta.go.jp/taxes/shiraberu/taxanswer/joto/3302.htm
• e-Gov法令検索－租税特別措置法: https://laws.e-gov.go.jp/law/332AC0000000026
• 国税庁－タックスアンサー No.1370 不動産収入を受け取ったとき（不動産所得）: https://www.nta.go.jp/taxes/shiraberu/taxanswer/shotoku/1370.htm
• 国税庁－タックスアンサー No.2100 減価償却のあらまし: https://www.nta.go.jp/taxes/shiraberu/taxanswer/shotoku/2100.htm
• e-Gov法令検索－減価償却資産の耐用年数等に関する省令: https://laws.e-gov.go.jp/law/340M50000040015
• 国税庁－タックスアンサー No.2880 非居住者等に不動産の賃借料を支払ったとき: https://www.nta.go.jp/taxes/shiraberu/taxanswer/gensen/2880.htm
• 国税庁－タックスアンサー No.1926 海外勤務中に不動産所得などがある場合: https://www.nta.go.jp/taxes/shiraberu/taxanswer/shotoku/1926.htm
• 国税庁－タックスアンサー No.2879 非居住者等から土地等を購入したとき: https://www.nta.go.jp/taxes/shiraberu/taxanswer/gensen/2879.htm
• 国税庁－タックスアンサー No.1932 海外勤務中に不動産を売却した場合: https://www.nta.go.jp/taxes/shiraberu/taxanswer/shotoku/1932.htm
• e-Gov法令検索－所得税法: https://laws.e-gov.go.jp/law/340AC0000000033
• e-Gov法令検索－所得税法施行令: https://laws.e-gov.go.jp/law/340CO0000000096
• 国税庁－防衛特別所得税及び復興特別所得税の源泉徴収のあらまし（令和９年１月以後の源泉徴収）: https://www.nta.go.jp/publication/pamph/pdf/0026005-024_02.pdf
• e-Gov法令検索－国税通則法: https://laws.e-gov.go.jp/law/337AC0000000066
• 国税庁－所得税・消費税の納税管理人の選任届出又は解任届出手続: https://www.nta.go.jp/taxes/tetsuzuki/shinsei/annai/shinkoku/annai/07.htm
• 総務省－地方税制度：個人住民税: https://www.soumu.go.jp/main_sosiki/jichi_zeisei/czaisei/czaisei_seido/150790_06.html
• e-Gov法令検索－地方税法: https://laws.e-gov.go.jp/law/325AC0000000226
• 総務省－地方税制度：固定資産税: https://www.soumu.go.jp/main_sosiki/jichi_zeisei/czaisei/czaisei_seido/150790_15.html
• 東京都主税局－固定資産税・都市計画税（土地・家屋）: https://www.tax.metro.tokyo.lg.jp/kazei/real_estate/kotei_tosi
• e-Gov法令検索－登録免許税法: https://laws.e-gov.go.jp/law/342AC0000000035
• e-Gov法令検索－建物の区分所有等に関する法律: https://laws.e-gov.go.jp/api/2/law_data/337AC0000000069
• 国土交通省－宅地建物取引業者が宅地又は建物の売買等に関して受けることができる報酬の額（昭和45年建設省告示第1552号）: https://www.mlit.go.jp/totikensangyo/const/content/001750229.pdf
• 国税庁－タックスアンサー No.6105 課税の対象: https://www.nta.go.jp/taxes/shiraberu/taxanswer/shohi/6105.htm
• 国税庁－タックスアンサー No.6303 消費税および地方消費税の税率: https://www.nta.go.jp/taxes/shiraberu/taxanswer/shohi/6303.htm
• 国税庁－消費税法基本通達 5-1-1 事業としての意義: https://www.nta.go.jp/law/tsutatsu/kihon/shohi/05/01.htm
• 国税庁－タックスアンサー No.6201 非課税となる取引: https://www.nta.go.jp/taxes/shiraberu/taxanswer/shohi/6201.htm
• 国税庁－タックスアンサー No.6225 地代、家賃や権利金、敷金など: https://www.nta.go.jp/taxes/shiraberu/taxanswer/shohi/6225.htm
• 国税庁－質疑応答 建物と土地を一括譲渡した場合の建物代金: https://www.nta.go.jp/taxes/shiraberu/taxanswer/shohi/6301_qa.htm
• 国税庁－タックスアンサー No.3240 個人が事業用建物等を譲渡した場合の消費税: https://www.nta.go.jp/taxes/shiraberu/taxanswer/joto/3240.htm
• 国税庁－タックスアンサー No.6501 納税義務の免除: https://www.nta.go.jp/taxes/shiraberu/taxanswer/shohi/6501.htm

Important Notice

This article is a general summary of information and is not individual tax, legal or investment advice. The information was checked on September 30, 2026. Tax rates, deadlines and rules may change, so rely on the current notices of the relevant Japanese authorities and consult a qualified tax accountant (税理士) or other professional where needed.