This article is part of Zagdim’s Japan property wiki series. It sets out the taxes a non-resident owner (for Japanese tax purposes) must pay when selling property in Japan, written for readers trying to estimate what they will actually net from a sale. For the full sale process, see Zagdim’s guide, Foreigners Selling Property in Japan: Buyers, Taxes, Overseas Signing, and Fund Transfers.
Why Is It Easy to Get This Wrong?
The short-term and long-term capital gains rates published by Japan’s National Tax Agency, once resident tax is added, come to 39.63% and 20.315%. Those figures are for residents of Japan. Non-resident sellers also face a withholding tax that residents do not: the buyer withholds 10.21% of the sale price at the time of payment. On top of that, the line between short-term and long-term ownership is drawn at January 1 of the year of sale, not the actual sale date. These three elements often get blended together, which makes it easy to miscalculate the tax, or to assume the 10.21% withheld amount is the final tax bill.
The Short Answer
Non-resident sellers in Japan deal with two separate amounts:
- Withholding: the buyer withholds 10.21% of the sale price at the time of payment. This is waived when the buyer is an individual purchasing the property for their own residence and the sale price is 100 million yen or less.
- Capital gains tax (transfer income tax): calculated on the profit. The rate is 30.63% for ownership of five years or less, measured as of January 1 of the year of sale, and 15.315% for ownership beyond five years. Sellers with no residence in Japan as of January 1 of the year after the sale generally do not owe resident tax.
The two amounts are reconciled when you file your final tax return between February 16 and March 15 of the following year: any amount over-withheld is refunded, and any shortfall must be paid.
Does the Buyer Have to Withhold 10.21%?
Anyone who buys land or a building located in Japan from a non-resident, and pays for it within Japan, must withhold 10.21% of the sale price (10% income tax plus a surtax) at the time of payment. The withholding is based on the sale price, not your profit. The withholding obligation applies to every payer: corporate buyers must always withhold, and individual buyers, whether or not they are in business, must in principle withhold as well.
| Buyer | Withholding required? |
|---|---|
| Individual, buying for their own or a family member’s residence, sale price 100 million yen or less | Exempt |
| Individual, buying as a rental investment, or sale price over 100 million yen | 10.21% withheld |
| Corporate buyer (including a business that buys to resell) | 10.21% withheld |
A few details:
- The buyer must pay the withheld tax to the tax office by the 10th day of the month following the month of payment.
- If the buyer pays from outside Japan but has a residence, place of abode, or office in Japan, the payment is treated as made within Japan and withholding still applies, with a deadline of the end of the following month.
- Whether withholding applies when the buyer is also a non-resident with no residence or office in Japan and pays the full amount from outside Japan is not clearly addressed in current guidance and remains unconfirmed. Either way, you must still file your own tax return.
- From January 1, 2027, the 2.1% surtax is restructured into a 1% special defense income tax and a 1.1% special reconstruction income tax, with the combined rate unchanged; the 10.21% calculation itself does not change.
A tax treaty does not exempt you from this tax. Japan’s tax treaty with Hong Kong, and its tax arrangement with Taiwan, both provide under Article 13 that Japan may tax gains from selling real property located in Japan. Readers covered by a different bilateral tax treaty should check the equivalent article in their own treaty, since the general principle — that Japan retains the right to tax gains on Japanese real property — is common to these agreements.
What Is the Capital Gains Tax Rate?
Non-residents are taxed only on Japan-source income, and selling land or a building in Japan counts as Japan-source income. There are two tax brackets, based on how long the property was held as of January 1 of the year of sale:
| Holding period as of January 1 of year of sale | Income tax + surtax | Additional resident tax (Japan residents) | Combined (residents) | Typical non-resident seller |
|---|---|---|---|---|
| 5 years or less (short-term) | 30% + 2.1% = 30.63% | 9% | 39.63% | 30.63% |
| More than 5 years (long-term) | 15% + 2.1% = 15.315% | 5% | 20.315% | 15.315% |
The surtax is 2.1% of the income tax amount, so 30% × 1.021 = 30.63% and 15% × 1.021 = 15.315%.
Why do non-residents generally not pay resident tax? Resident tax is levied based on where you lived as of January 1 of that year; if you were living overseas on January 1 and have no resident registration in Japan, it is not levied. For a property sale, what matters is January 1 of the year after the sale, so a seller living outside Japan with no residence there on that date generally pays only the national tax portion. If a trip abroad was only temporary in nature, you are still treated as living at your original address. Individual cases are best confirmed with a certified tax accountant (zeirishi).
How is January 1 calculated? The holding period is based on January 1 of the year of sale, not the actual sale date. For example, if you bought the property in March 2021: as of January 1, 2026 you have held it for only 4 years and 10 months, so any sale during 2026 counts as short-term; it only becomes long-term from January 1, 2027 onward. In practice, you need to cross the sixth January 1 after your purchase date.
How Is the Profit Calculated? What Expenses Can Be Deducted?
Capital gain = sale price − (acquisition cost + transfer expenses) − special deduction.
Acquisition cost includes:
- The purchase price, the brokerage fee paid at purchase, and equipment and improvement costs.
- Registration license tax (including registration fees), real estate acquisition tax, and stamp duty paid at the time of purchase — but if the property is used for business, such as being rented out, these taxes are not included in the acquisition cost.
- The portion of mortgage interest that corresponds to the period before you actually began using the property.
The building portion must be depreciated; land is not. So the purchase price of a condominium must be split between land and building, and a tax accountant should confirm the split method. How depreciation is calculated depends on whether the property was rented out:
- Not rented out: building acquisition value × 0.9 × depreciation rate × years elapsed. The depreciation rate is 0.015 for reinforced-concrete (including steel-frame) construction, 0.031 for wood construction, and 0.034 for wood-and-mortar construction; any period of 6 months or more rounds up to a full year; depreciation is capped at 95% of the building’s acquisition value.
- Rented out: the sum of the annual depreciation amounts from acquisition to sale; even in years when depreciation was not actually claimed as a deductible expense, it must still be included in the total.
What if you cannot establish the acquisition cost? If the acquisition cost is unknown, or the actual acquisition cost is less than 5% of the sale price, you may use 5% of the sale price as the acquisition cost instead. So keep your original purchase contract and receipts.
Transfer expenses are costs directly incurred to make the sale — for example, the brokerage fee paid at the time of sale, stamp duty borne by the seller, and relocation payments made to a tenant to vacate the property for the sale. Repair costs and fixed asset tax, which are ongoing maintenance costs, do not count.
For the sale contract’s own stamp duty, a reduced rate applies to contracts executed on or before March 31, 2027: 10,000 yen for contract amounts over 10 million up to 50 million yen; 30,000 yen for over 50 million up to 100 million yen; 60,000 yen for over 100 million up to 500 million yen (5,000 yen for amounts over 5 million up to 10 million yen).
The brokerage fee for a sale has a statutory cap (including consumption tax): 5.5% of the portion of the sale price up to 2 million yen, 4.4% of the portion from 2 million to 4 million yen, and 3.3% of the portion above 4 million yen. When the sale price exceeds 4 million yen, this is commonly simplified to “sale price × 3.3% + 66,000 yen.” For lower-priced properties of 8 million yen or less, a broker may charge above the normal cap, up to a maximum of 330,000 yen, if this is explained and agreed to in writing when the brokerage agreement is signed.
Worked Example: Selling the Same Property in 2026 vs. 2027
The following is a hypothetical example calculated by Zagdim based on National Tax Agency rules. It is not a real case.
Assumptions: a condominium in Tokyo, purchased in March 2021 for 50,000,000 yen (30,000,000 for the land, 20,000,000 for the building, reinforced-concrete construction); brokerage fee at purchase of 1,716,000 yen and purchase taxes and judicial scrivener fees of 1,000,000 yen; never rented out (kept as a second home); the seller lives outside Japan; sold to a corporate buyer for 60,000,000 yen. For simplicity, the purchase cost is not split between land and building.
| Item | Calculation | Yen |
|---|---|---|
| Building depreciation | 20,000,000 × 0.9 × 0.015 × 6 years (5 years 7 months, rounded up to 6 full years) | 1,620,000 |
| Acquisition cost | 50,000,000 + 1,716,000 + 1,000,000 − 1,620,000 | 51,096,000 |
| Transfer expenses | brokerage cap 60,000,000 × 3.3% + 66,000 = 2,046,000, plus stamp duty 30,000 | 2,076,000 |
| Capital gain | 60,000,000 − 51,096,000 − 2,076,000 | 6,828,000 |
| **A: Sold October 2026 (short-term)** | 6,828,000 × 30% = 2,048,400; surtax 2.1% = 43,016 | approx. 2,091,400 |
| Withholding by corporate buyer | 60,000,000 × 10.21% | 6,126,000 |
| Refund after filing (A) | 6,126,000 − 2,091,400 | approx. 4,034,600 |
| **B: Sold February 2027 (long-term)** | 6,828,000 × 15% = 1,024,200; surtax 2.1% = 21,508 | approx. 1,045,700 |
| Refund after filing (B) | 6,126,000 − 1,045,700 | approx. 5,080,300 |
Two takeaways. First, selling the same property after January 1, 2027 saves about 1,045,700 yen in tax. Second, when selling to a corporate buyer, roughly 4 to 5 million yen is held by the tax office first and only refunded after you file. If the buyer is instead an individual purchasing for their own residence at 100 million yen or less, there is no withholding, but you must pay approximately 2,091,400 yen (A) or 1,045,700 yen (B) yourself by March 15 of the following year. If you do not reside in Japan as of January 1 of the following year, resident tax is zero.
This depends on your own holding period, rental history, and the type of buyer.
Can Non-Residents Use the 30 Million Yen Special Deduction?
When you sell a home you live in, Japan offers a special deduction for owner-occupied property of up to 30,000,000 yen from the capital gain, regardless of how long you held it. It applies to a home you currently live in, or one you used to live in and sell by December 31 of the third year after you moved out; if you own more than one qualifying residence, it applies only to your main one; supporting documents must be attached when filing your tax return.
It does not apply to: a home acquired or occupied only to qualify for this special treatment; a vacation home or similar property held mainly for leisure; a sale to a parent, child, spouse, or other “specially related person”; or a case where you already used this special deduction within the previous two years.
For sellers now based outside Japan:
- An investment property you never lived in, or used only as a vacation base: this does not meet the “your own residence” requirement, so it does not qualify.
- A property where you used to live in Japan as your main residence, and later moved abroad: the National Tax Agency’s published guidance does not list a residency requirement for this, but there is also no official guidance specifically addressing non-residents, so whether it applies is unconfirmed and should be judged by a tax accountant. Separately, if your registered address differs from the property’s address when you apply, you must attach a residence certificate such as a certified copy of your family register with address history; what documents a foreign national can use in its place is also unconfirmed.
Do You Need to Pay Consumption Tax?
Generally, when an individual sells a home used for personal residence or vacation purposes, it falls outside the scope of consumption tax: consumption tax applies only to transactions carried out by a business as part of its business activity. The National Tax Agency’s own example is that a salaried employee occasionally selling their personal car is not a business transaction. The transfer of land itself is always tax-exempt.
A rented-out building is different: it counts as a building used for business, and selling it can fall within the scope of consumption tax, though whether tax is actually due depends on whether you are a taxable business operator. If your taxable sales in the base period (two years before the relevant year) were 10,000,000 yen or less, you are generally exempt — unless you are registered as a qualified invoice issuer, in which case the exemption no longer applies. Residential rental income (leases of one month or longer with residential use stated in the contract) is tax-exempt, so an owner with only residential rental income generally has low taxable sales; if you have retail, guesthouse, or hotel-type income, or are a registered invoice issuer, you should confirm your position with a tax accountant.
A separate change concerns the brokerage fee itself: a 2026 consumption-tax revision reclassifies the brokerage fee a broker charges for selling a non-resident’s Japanese property from export tax-exempt to taxable. Contracts signed on or before March 31, 2026 remain under the old rules; the exact start date for the new treatment is unconfirmed. The statutory cap on brokerage fees already includes tax, and the cap amount itself is unchanged.
How Do You File? How Do You Get Back Over-Withheld Tax?
- Appoint a tax administrator: anyone with no residence or place of abode in Japan must appoint a tax administrator who lives in Japan — for example a relative or a tax accountant — by filing a notification of appointment with the tax office for your place of taxation, either via e-Tax or on paper.
- File between February 16 and March 15 of the following year: you must file if you made a profit, even if the buyer did not withhold anything (for example, an individual buyer purchasing for their own residence at 100 million yen or less).
- Settle up: the amount already withheld is credited against your filed tax; any excess is refunded, and any shortfall must be paid.
Whether a refund can be paid directly into an overseas bank account was not verified in this research round and remains unconfirmed; receiving the refund into a Japan-based account belonging to the seller or the tax administrator is the approach described by tax offices and tax accountants. For the documents needed to file (sale and purchase contracts, expense receipts), see Zagdim’s guide, Document Checklist Before Selling Property in Japan: Registration Identification Information, Address Change Registration, and Management Documents. For details on the tax administrator, see Zagdim’s guide, Selling Japanese Property From Abroad: Notarized Affidavits, Tax Administrators, and Domestic Contacts.
Japan Property Sale Tax FAQ
As a non-resident owner, do I have to pay resident tax when selling property in Japan?
Generally, no. Resident tax depends on whether you have a residence in Japan as of January 1 of the year after the sale; if you have no residence and no resident registration in Japan on that date, you generally pay only the national tax portion. Individual cases should be confirmed with a tax accountant.
I had 10.21% withheld when selling in Japan — can I get it back if I made a loss?
Withholding is not the final tax. If you file your tax return by March 15 of the following year, any amount withheld in excess of your actual tax liability is refunded; filing is also how you recover the withheld amount if you made no profit at all.
Can I use the 30 million yen special deduction on an investment property in Japan?
No, not if you never lived in the property or used it only as a vacation base. Whether it applies if you used to live there and later moved abroad is unconfirmed and should be judged by a tax accountant.
Dictionary of Terms
- Withholding at source (源泉徴収): the buyer deducts the tax from the payment and remits it on the seller’s behalf.
- Capital gain / transfer income (譲渡所得): the profit from selling a property.
- Acquisition cost (取得費): the cost of acquiring the property, with the building portion reduced by depreciation.
- Transfer expenses (譲渡費用): costs directly incurred to make the sale, such as the brokerage fee.
- Special reconstruction income tax (復興特別所得税): the 2.1% surtax added to income tax; from 2027 part of it becomes the special defense income tax (防衛特別所得税).
- Resident tax (住民税): a local tax levied by the municipality where you resided as of January 1.
- Final tax return (確定申告): the annual individual income tax filing made between February 16 and March 15.
- Tax administrator (納税管理人): a person who handles tax matters for someone who does not live in Japan.
- Qualified invoice issuer (適格請求書発行事業者): a registered business entitled to issue qualified invoices; once registered, the small-business exemption no longer applies.
About This Research
This article was compiled by Zagdim research. The legal and regulatory sections have been checked against the primary statutory text (Verified by Zagdim); market-practice points are labeled separately. Information was checked as of October 9, 2026. Tax rates, withholding, acquisition cost, and the special deduction are based on National Tax Agency guidance and the original text of the Order for Enforcement of the Income Tax Act; resident tax follows guidance published by Edogawa Ward, Tokyo. The following conclusions are not stated directly in official documents and are inferred from this verification: non-resident sellers generally do not pay resident tax (also supported by industry sources, though tax offices recommend confirming individual cases); an investment property never used as a personal residence does not qualify for the 30 million yen special deduction; an individual selling their own residential property is generally outside the scope of consumption tax; a condominium’s purchase price must be split between land and building. The following points remain unconfirmed: withholding when a non-resident buyer pays entirely from outside Japan; whether a former resident who has moved abroad can use the 30 million yen special deduction, and what documents a foreign national can use as proof of residence; the start date for the consumption-tax change on brokerage fees; and whether refunds can be paid into an overseas account. The worked example is a hypothetical case built by Zagdim from the rules above; actual tax liability depends on your tax accountant’s calculation and the tax office’s assessment.
Have a question about this guide? Leave a comment below, or ask Zagdim directly.
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Sources
National Tax Agency — No.2879 When You Purchase Land, etc. From a Non-Resident: https://www.nta.go.jp/taxes/shiraberu/taxanswer/gensen/2879.htm
e-Gov — Order for Enforcement of the Income Tax Act, Article 281-3: https://laws.e-gov.go.jp/law/340CO0000000096
National Tax Agency — Overview of Withholding for the Special Defense Income Tax and Special Reconstruction Income Tax: https://www.nta.go.jp/publication/pamph/pdf/0026005-024_02.pdf
Ministry of Finance — Japan-Hong Kong Tax Treaty: https://www.mof.go.jp/tax_policy/summary/international/press_release/sy221109ho_a.pdf
Interchange Association Japan-Taiwan — Japan-Taiwan Tax Arrangement: https://www.koryu.or.jp/Portals/0/images/news/20160615/sozei-J.pdf
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National Tax Agency — No.3211 Calculating Tax on Short-Term Capital Gains: https://www.nta.go.jp/taxes/shiraberu/taxanswer/joto/3211.htm
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Important Notice
This article is general information and does not constitute individual tax advice. Information was checked as of October 9, 2026. Tax rates and special treatments may be updated; refer to current announcements from Japan’s National Tax Agency and individual municipalities, and consult a tax accountant before filing.
