Buying an older property in Japan to rent out raises questions that a new-build purchase does not: how much a bank will actually lend against an aging building, how depreciation is calculated on a secondhand asset, and how reliable the national vacancy-rate figures are for judging a single property. This article works through those points one at a time, starting with the loan-term question that comes up most often.
Does a Building’s Age Directly Shorten the Loan Term?
Yes, at the two banks checked for this article, Sumitomo Mitsui Trust Bank and 77 Bank. A building’s age and its statutory legal useful life directly limit the loan period, not just the bank’s maximum term on paper. As of October 21, 2026, Sumitomo Mitsui Trust Bank’s apartment loan runs up to 35 years and as little as 1 year in principle, in one-month units, but is also subject to the remaining period on any refinanced loan and the building’s statutory legal useful life; the bank’s loan period is, in principle, limited to within that statutory legal useful life.
Also as of October 21, 2026, 77 Bank calculates the term for purchasing or refinancing a secondhand property as the maximum term for that structure type minus the building’s age, and no grace period can be set; financing for wooden buildings runs up to 22 years, or up to 35 years when the bank’s specified conditions are met. The same older building can therefore get a different approved term depending on the bank and the building’s structure. The actual term available depends on the property’s useful life, its age, and the individual bank’s loan terms.
Are Loans Available for Repairs, Renovation, or Refinancing a Rental Property?
Yes, at least at Sumitomo Mitsui Trust Bank. As of October 21, 2026, that bank’s apartment loan can be used for constructing, purchasing, extending or rebuilding, repairing, renovating, and refinancing rental real estate; this is listed among the loan’s stated purposes by the bank itself. For the broader approval logic behind this kind of loan, see the related article on how banks assess these loans together with rental cash flow and exit risk.
Can Rental Income Alone Be Treated as Repayment Capacity?
Not simply by subtracting expenses from rent. Japan’s National Tax Agency calculates real estate income as total revenue minus necessary expenses, which is an income-tax formula, not a cash-flow formula; principal repayment and actual out-of-pocket costs have to be calculated separately from that figure. The full calculation covering rent, vacancy, and management fees is covered in the related article on whether rental income can support a Japan mortgage.
How Is Depreciation Calculated on a Secondhand Building, and Does It Affect Tax on Sale?
For a secondhand asset, depreciation does not have to follow the statutory legal useful life directly; it can instead use an estimated useful life based on how many years of use remain after acquisition. Under the filing guide for 2025 individual income tax returns (Reiwa 7), a secondhand asset that has already passed its entire statutory legal useful life can have its useful life calculated by multiplying that statutory legal useful life by 0.2. This simplified method, however, is limited to cases where the usable years remaining after acquisition are difficult to estimate and no large-scale improvement has been made to the property, and it comes with a minimum of 2 years and a rule to round down any period under 1 year.
It does affect the tax calculated on sale. When the property is sold, calculating the acquisition cost of the building requires subtracting an amount equivalent to the depreciation accrued over the holding period. If the acquisition cost is unknown, or the actual acquisition cost works out to less than 5% of the sale price, 5% of the sale price can be used as an estimated acquisition cost instead. How exchange rates and resale liquidity affect what an owner actually recovers is covered separately in the related article on leverage, foreign exchange, tax, and resale liquidity for Japanese investment property.
Can “New Seismic Standard” Be Judged From the Year a Building Was Completed?
No. The relevant date is when the building’s construction was officially confirmed, not the year it was completed. Japan’s new seismic standard took effect on June 1, 1981. For a building whose construction confirmation was obtained before that date, the existing structural calculation documents cannot be used to check whether it meets the new standard. When buying an older property, if the seller emphasizes that it meets the “new seismic standard,” the figure to confirm is the construction confirmation date, not the year the building was completed.
Does a Building Condition Survey Before Purchase Guarantee There Are No Defects?
No. The building condition survey (inspection) defined by Japan’s Ministry of Land, Infrastructure, Transport and Tourism (MLIT) checks an existing home’s foundation, exterior walls, and similar parts for cracks, leaks, and deterioration using visual inspection and measurement; it is not a comprehensive structural assessment. MLIT itself states that this building condition survey does not guarantee that a property has no defects.
Can the National Vacancy Rate Be Used to Estimate Vacancy on My Own Rental Property?
Not directly. The 2023 Housing and Land Survey recorded 9,002,000 vacant houses nationwide, a vacancy rate of 13.8%. This is a nationwide total across all vacant housing, not the vacancy probability for any individual rental property. This figure should not be applied directly when estimating vacancy for a specific city, a specific type of rental housing, or a single property. Vacancy and cash-flow calculations at the level of an individual property are covered in the related article on whether rental income can support a Japan mortgage.
Does Hiring a Management Company Involve a Registration Threshold to Check?
Yes. A rental housing management operator in Japan is, in principle, required to register once it manages at least 200 units of rental housing; units the operator owns and manages itself are not counted toward that total. Before hiring a management company, this threshold can be used to check whether the company is one that is required to be registered.
Frequently Asked Questions
How is the loan term calculated for an older property in Japan? At 77 Bank, the term for purchasing or refinancing a secondhand property is calculated as the maximum term for that structure type minus the building’s age. At Sumitomo Mitsui Trust Bank, the apartment loan period is, in principle, limited to within the building’s statutory legal useful life.
The seller says the property meets the “new seismic standard.” What should I check? Check the construction confirmation date, not the year the building was completed. Japan’s new seismic standard took effect on June 1, 1981.
If a building condition survey has been done, does that mean the property has no problems? No. MLIT states that the building condition survey does not guarantee that a property has no defects.
Can a 13.8% national vacancy rate be used as my own property’s vacancy rate? No. That figure is the 2023 nationwide statistic for all vacant housing, not the vacancy probability for an individual rental property.
Glossary
- Statutory Legal Useful Life (法定耐用年数): the number of years an asset is set to remain usable under Japanese tax law, for the purpose of calculating depreciation.
- Construction Confirmation (建築確認): the procedure by which the responsible authority confirms, before construction begins, that a building complies with the Building Standards Act and related rules; its date is the key factor in judging compliance with seismic standards.
- Building Condition Survey (インスペクション): a survey using visual inspection and measurement to check an existing home’s foundation, exterior walls, and similar parts for cracks, leaks, and deterioration.
- Necessary Expenses (必要経費): in the calculation of real estate income, costs that can be directly attributed to earning the rental income and distinguished from personal household expenses.
Data Notes
Information was checked as of October 21, 2026. The loan terms and purposes described here are drawn only from the public product descriptions of two banks, Sumitomo Mitsui Trust Bank and 77 Bank, and do not represent the terms of all Japanese banks; Sumitomo Mitsui Trust Bank has an additional limit tied to the remaining period of a refinanced loan that is not covered in detail here. On repairs, this article only notes that the loan’s stated purposes include repair and renovation; it does not cover repair costs or the scope of work. The national vacancy-rate figure comes from the Statistics Bureau’s 2023 Housing and Land Survey and is a nationwide statistic; it should not be treated as the vacancy rate for any individual property, and this article did not obtain vacancy data at the level of a specific region or specific rental property. The scope and effect of the building condition survey is drawn from MLIT’s public documents. The estimation method for depreciation on secondhand assets follows the National Tax Agency’s filing guide for 2025 individual income tax returns; filers should still check the latest year’s guide and their own circumstances when filing.
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Sources
- Sumitomo Mitsui Trust Bank – Apartment Loan (PDF)
- 77 Bank – Apartment Loan
- National Tax Agency – No.1370 Real Estate Income
- Ministry of Land, Infrastructure, Transport and Tourism – How to Register for Rental Housing Management Business
- Statistics Bureau of Japan – 2023 Housing and Land Survey, Basic Summary (PDF)
- National Tax Agency – 2025 (Reiwa 7) Income Tax and Special Reconstruction Income Tax Filing Guide: Depreciation and Secondhand Assets (PDF)
- Ministry of Land, Infrastructure, Transport and Tourism – Q&A on the Seismic Resistance of Condominiums
- Ministry of Land, Infrastructure, Transport and Tourism – Building Condition Survey (PDF)
- National Tax Agency – No.3202 How to Calculate Capital Gains (Separate Taxation)
Important Notice
This article is a general information summary and does not constitute tax or legal advice for any individual case. Information was checked as of October 21, 2026. Rules in Japan may be updated; please check the current announcements of the relevant authorities, and consult a qualified professional for individual cases.
