Japan Rental Income Tax for Non-Resident Landlords

This article is part of the Zagdim wiki series on buying property in Japan. It explains how rent from a Japanese property is taxed in Japan when the owner lives outside the country: who withholds tax first, whether a return must still be filed, how the income is calculated, and who must handle the paperwork in Japan. It is written for overseas owners who already rent out a Japanese apartment, or plan to.

The short answer is yes. Japan can tax this rent, and even if 20.42% was withheld when the tenant paid, a Japanese tax return is still required in principle.

Why Is It Hard to Tell Whether You Must File?

The first reason is withholding. Part of the rent is deducted before it reaches you, which looks like the tax has been settled. Withholding is not the final tax amount.

The second reason is that treatment depends on the tenant. For the same apartment, a company tenant must withhold tax, while an individual renting it as their own home does not. An owner whose rent is not withheld is more likely to assume no return is needed.

The third reason is that the paperwork runs on two separate tracks. Income tax is handled with the tax office (税務署), and fixed asset tax is handled with the municipality (市町村) where the property sits. Both require someone in Japan to act on your behalf.

The Short Answer: How Is Rent Taxed in Japan?

“Withholding” in this article is what Japan calls 源泉徴収 (gensen choshu): the party paying the rent deducts tax at the time of payment and remits it on the owner’s behalf. In general, if the tenant is a company (for example, one renting the unit as staff housing), or an individual renting for business purposes, 20.42% must be withheld when the rent is paid. If the tenant is an individual renting for themselves or a relative to live in, nothing is withheld.

Whether or not tax was withheld, the owner must in principle file a final return (確定申告, kakutei shinkoku) between February 16 and March 15 of the following year, through a tax representative living in Japan (納税管理人, nozei kanrinin). Income is calculated as rent minus necessary expenses, and tax already withheld is refunded or topped up accordingly. As of September 2026, an owner who had no address in Japan on January 1 is generally not charged the income-based portion (所得割) of resident tax on this rent. Rent for housing that people live in is not subject to consumption tax, except for rentals of less than one month.

If a tenant pays from outside Japan but has an address, residence or office in Japan, the tenant must still withhold, and the remittance deadline is the end of the following month.

Are You a “Non-Resident”?

Under the Income Tax Act (所得税法), an individual who has an address in Japan, or who has had a residence there continuously for one year or more up to now, is a resident. All other individuals are non-residents (非居住者). An address means the base of a person’s life, judged on objective facts. A residence means a place where the person actually lives but which is not their base of life.

An owner who lives overseas and only visits Japan occasionally is generally a non-resident, though this is still decided on the individual facts. Where Japan and another jurisdiction define residents differently, a tax treaty may provide its own tie-breaker, and the treaty’s rules apply.

If the property is held in a company’s name, what matters is where the company’s head office or main office is located. A company based outside Japan is a foreign corporation, and the tenant must withhold on rent paid to it in the same way. A corporation’s own return is handled under corporate tax, which this article does not cover.

Who Withholds the Tax First, and When Is There No Withholding?

The tenant who pays the rent does the withholding. Anyone in Japan who rents property owned by a non-resident or a foreign corporation and pays the rent in Japan, whether a company or an individual and whether or not they run a business, must in principle withhold 20.42% at the time of payment and remit it by the 10th of the month after payment. The exception is an individual who rents the home for themselves or a relative to live in: no withholding is required on their rent.

The 20.42% rate is the statutory income tax rate of 20% multiplied by 102.1%. For income arising on or after January 1, 2027, the name of the tax withheld changes from “income tax and special reconstruction income tax” to “income tax, special defense income tax and special reconstruction income tax”. A new special defense income tax of 1% of the income tax amount is introduced, and the special reconstruction income tax falls from 2.1% to 1.1%. The two still add up to 2.1%, so the withholding rate remains 20.42% and the calculation is unchanged.

What this means for owners: Who the tenant is decides whether tax is withheld before rent reaches you. When a property management company collects the rent, the official explanation consulted for this article does not say who is responsible for withholding. Before renting out, confirm with the management company and a tax accountant (税理士, zeirishi) who withholds and who remits.

If 20.42% Was Withheld, Must You Still File?

In principle, yes. For a non-resident, income from renting out real estate in Japan is real estate income (不動産所得, fudosan shotoku), taxed on a comprehensive basis (総合課税, sogo kazei), and a final return must be filed. When the Japan-source income exceeds the total of the applicable income deductions, the return must in principle be filed through the tax representative between February 16 and March 15 of the following year.

Withholding is a prepayment, not the final tax amount: tax already withheld is refunded or topped up when you file. When the tenant is an individual living in the home and no tax is withheld on the rent, you must still file as required. How much tax is actually due depends on the calculation made at filing, and this article does not provide a worked tax estimate.

**Example: Ms. Lee, who lives in Hong Kong**

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Ms. Lee lives in Hong Kong and owns an apartment in Tokyo, rented to an office worker who lives in it. Because the tenant is an individual renting as their home, no tax is withheld, and Ms. Lee receives the full rent every month.

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That does not mean no tax is due. She is generally a non-resident, and this rent is Japanese real estate income, so in principle she must file a final return between February 16 and March 15 of the following year, through a tax representative living in Japan, and pay the tax. What she needs to do is choose a tax representative before renting out and notify the tax office, and keep records of the rent and all expenses throughout the year.

How Is the Income Calculated When You File?

Real estate income is “total revenue minus necessary expenses (必要経費, hitsuyo keihi)”. Non-residents and residents calculate it the same way.

Total revenue is more than the rent. Amounts collected as renewal fees (更新料, koshinryo), fees for a change of name, consent fees or up-front payments, the non-refundable part of deposits (敷金, shikikin), and electricity, water and cleaning charges collected as common-area fees (共益費, kyoekihi) all count as revenue.

Necessary expenses must be clearly separable from household spending. These are costs directly needed to earn the rent and clearly distinguishable from household expenses. The main items listed by the National Tax Agency (国税庁) are fixed asset tax on the rental property, casualty insurance premiums, depreciation and repair costs. The Agency’s filing guidance also lists interest on a loan taken out to acquire the rental property (principal repayments do not count), and taxes on acquiring the property such as real estate acquisition tax, registration and license tax, and stamp duty. A repair reserve fund (修繕積立金, shuzen tsumitatekin) is in principle expensed in the year the repairs are actually completed. It can be expensed in the year it is paid if the building’s rules follow the Ministry of Land, Infrastructure, Transport and Tourism (国土交通省) model and meet the four conditions the National Tax Agency lists. The Agency does not list management fees or a rental management company’s commission item by item, so confirm these with a tax accountant.

Only the building can be depreciated. The purchase price must be split between land and building. Land is not a depreciable asset, so only the building portion can be depreciated (減価償却, genka shokyaku). The building’s acquisition cost is not expensed in full in the year of purchase. It is spread over the statutory useful life (法定耐用年数, hotei taiyo nensu), and for buildings acquired now the straight-line method (定額法, teigakuho) is used.

For a newly built residential building, the statutory useful life is 47 years for reinforced concrete or steel-reinforced concrete construction and 22 years for wood. For an apartment, the construction type follows what is shown in the property register. A used building has its own method for calculating useful life, so 47 or 22 years cannot simply be applied; confirm with a tax accountant.

The blue return gives an extra deduction, with a cap that depends on scale. An owner who chooses the blue return (青色申告, aoiro shinkoku) and meets the bookkeeping and other requirements can claim the blue return special deduction (青色申告特別控除). For tax years up to 2026, when the rental activity is of business scale, keeping proper books (generally double-entry) allows a deduction of up to JPY 550,000, and electronic book retention or e-Tax electronic filing raises it to JPY 650,000. In other cases the maximum is JPY 100,000. The JPY 550,000 and JPY 650,000 deductions require the return to be submitted by the final filing deadline (March 15 of the following year).

How business scale is judged: it is decided in principle on substance, by social convention. For rented buildings, roughly 10 or more independently rentable rooms, or roughly 5 or more detached houses, are in principle treated as business scale. An owner with only one or two apartments generally falls short of this benchmark. Using the blue return requires applying to the tax office in advance; confirm the procedure and deadline with a tax accountant.

Changes from 2027. For tax years from 2027, the rules for the blue return special deduction change. For owners below business scale (業務規模), the maximum remains JPY 100,000, even if they switch to double-entry bookkeeping. For deduction amounts and conditions in other cases, rely on the National Tax Agency’s latest guidance or a tax accountant’s advice.

Which income you must report, which expenses count, and whether the blue return suits you depend on who the tenant is, that year’s rent and costs, and how many units you hold.

Living Overseas: Who Files and Pays for You?

National tax: the tax representative. When you have no address or residence in Japan and must file a return or pay tax, you must choose a tax representative (納税管理人) from among people living in Japan who can conveniently handle it. The representative submits returns and pays tax for you. An individual or a corporation can serve. After choosing, you must notify the tax office, and the notification is submitted at the time of selection or before you leave Japan.

What happens if no return is filed: The tax office can send a written demand to file by a specified date, which may not be more than 60 days away. It can also demand in writing that a person living in Japan who can conveniently handle it act as your tax representative. If you still have not filed by the specified date, then from January 1, 2022 the tax office can designate a qualifying person as a specified tax representative (特定納税管理人). Examples include an adult spouse or relative who shares your living expenses, or a person with a close contractual relationship with you, and a management company may also be designated. A specified tax representative handles matters such as receiving and forwarding documents. It does not take over your obligation to file and pay.

Fixed asset tax: a separate tax representative procedure. Fixed asset tax (固定資産税, charged together with the city planning tax) is levied by the municipality where the property is located, or by the Tokyo metropolitan government for Tokyo’s 23 wards. If you have no address in that municipality, you must either choose a representative who lives in the area set by the local ordinance and notify the municipality, or choose someone outside the area who can conveniently handle it and obtain approval. The requirement can be waived if you apply and it is recognized that tax collection would not be affected.

The national tax representative and the fixed asset tax representative are two separate procedures. The same person can generally serve as both, but each must be handled separately.

Do Resident Tax and Consumption Tax Apply Too?

Resident tax: Individual resident tax (個人住民税) is charged on people who have an address in a municipality on January 1 of the year. The part calculated on the previous year’s income is called the income-based portion (所得割, shotokuwari), with a standard rate of 10%. As of September 2026, an overseas owner with no address in Japan on January 1 is generally not charged this portion because of rental income. Anyone who moved out of or back to Japan during the year needs to check separately. Whether the per-capita portion (均等割, kinto-wari) of resident tax is owed by someone who owns a home in Japan but has no address there is not covered here; confirm with the municipality where the property is located.

Consumption tax: Rent for housing is not subject to consumption tax (消費税), provided the lease states that the property is for residential use, or the lease does not state a use but the actual circumstances clearly show residential use. Rentals of less than one month are excluded from this exemption. Non-refundable key money, deposits or renewal fees collected when a residential lease is signed or renewed are also not subject to consumption tax. Rent for offices and similar buildings is taxable.

Does Minpaku (Home-Sharing) Change the Calculation?

Not necessarily the same. The National Tax Agency’s 2018 explanation assumes a person running a home-sharing business (住宅宿泊事業, jutaku shukuhaku jigyo) from the home they live in. That income is in principle miscellaneous income (雑所得, zatsu shotoku). For someone who runs a rental business, income from short-term home-sharing between two leases can be included in real estate income. Where home-sharing is clearly a business, for example the main source of a person’s livelihood, it is business income (事業所得, jigyo shotoku).

The same explanation lists examples of expenses, including fees paid to agents, management fees paid to management companies, utilities, depreciation of the building and fixed asset tax. As of September 2026, the explanation does not directly answer which category applies when an overseas owner runs home-sharing in an investment apartment they do not live in; confirm with a tax accountant. Rentals of less than one month fall outside the consumption tax exemption described above. Whether home-sharing is permitted and what local restrictions apply is covered in the series’ main article.

Living Elsewhere: Do You Report Again Where You Live?

Japan can tax this income, and tax treaties recognize that. Article 6 of both the Japan-Hong Kong income tax agreement (signed November 9, 2010; based on the English text) and the Japan-Taiwan tax arrangement (signed November 26, 2015) provides that income a resident of one side derives from real estate located on the other side, including rental income, may be taxed where the real estate is located. The wording means Japan has the right to tax, not that tax can be levied “only in Japan”.

After filing in Japan, whether you must also report where you live, and whether the Japanese tax can be credited, depends on the rules of your place of residence. This article does not cover that. Confirm with a local tax adviser, and rely on current official local rules.

Claims to Treat With Caution

• “20.42% was withheld, so I do not need to file.” Withholding is not the final tax amount, and a final return is still required in principle.
• “The tenant did not withhold, so nothing is owed.” Withholding does not apply when the tenant is an individual living in the home. Filing and paying must be handled by the owner through the tax representative.
• “The withholding rate changes from 2027.” What changes is the name of the tax. The combined rate is still 20.42%.
• “Every monthly mortgage payment is deductible.” What counts as an expense is the interest on the loan used to acquire the rental property, not the principal. The National Tax Agency does not list management fees or a management company’s commission item by item; confirm with a tax accountant.
• “The whole purchase price can be depreciated.” Land is not depreciable. Only the building portion can be.
• “Non-residents never pay resident tax.” The income-based portion is generally not charged, but moving out or in during the year, and the per-capita portion, need separate checking.
• “The tax treaty says tax is due only in Japan.” The text says Japan “may” tax. How your country of residence treats the income depends on its own rules.

How to Decide What to Do Next

Before renting out, settle these four questions:

1. Is the tenant a company, an individual renting for business, or an individual renting as their home? This decides whether 20.42% is withheld when rent is paid.
2. Who collects the rent, and who is responsible for withholding and remitting? When a management company collects it, confirm with the management company and a tax accountant.
3. Who will serve as the tax representative for national tax and for fixed asset tax, and have they been notified to the tax office and the municipality?
4. Who prepares the annual final return? Who keeps the income and expense records and the allocation of the price between building and land?

Only when each of these has an owner will the yearly filing and payment not fall through. If you are still weighing whether to buy a property to rent out, and want the full picture of rental yield, vacancy, costs and short-term rental rules first, go back to the main article, “Before Looking at Japan Rental Yields, Understand Tenant Sources, Vacancy Rates, Management Costs and City Differences.”

FAQ: Japan Rental Income Tax

The tenant lives in the home and no tax is withheld. Must the owner still file in Japan?

In principle, yes. An individual tenant who lives in the home does not withhold tax when paying rent, but a non-resident’s Japanese rent is still real estate income. In principle it must be reported on a final return filed between February 16 and March 15 of the following year through the tax representative, and the tax must be paid.

Do renewal fees and deposits received on a Japanese rental count as rental income?

Renewal fees must be included in total revenue. The non-refundable part of a deposit (敷金) must also be included, and electricity, water and cleaning charges collected as common-area fees are included as well. Income is total revenue minus necessary expenses.

Will the withholding rate on Japanese rent change from 2027?

No. For income arising on or after January 1, 2027, the withheld tax is renamed income tax, special defense income tax and special reconstruction income tax, but the surtax rates still add up to 2.1%, the withholding rate remains 20.42%, and the calculation is unchanged.

Glossary

• Non-resident (非居住者, hikyojusha): an individual with no address in Japan and no residence there for a continuous year or more.
• Withholding (源泉徴収, gensen choshu): the paying party deducts tax from a payment and remits it on the recipient’s behalf.
• Final return (確定申告, kakutei shinkoku): the yearly procedure of reporting the previous year’s income and settling the tax.
• Real estate income (不動産所得, fudosan shotoku): total revenue from renting out real estate minus necessary expenses.
• Necessary expenses (必要経費, hitsuyo keihi): costs directly needed to earn the rent and clearly distinguishable from household spending.
• Statutory useful life (法定耐用年数, hotei taiyo nensu): the number of years used to calculate a building’s depreciation, set by Ministry of Finance ordinance.
• Blue return special deduction (青色申告特別控除): an extra deduction from income for owners who choose the blue return and meet bookkeeping and other requirements.
• Tax representative (納税管理人, nozei kanrinin): a person who handles filing and tax payment for a taxpayer not living in Japan; national tax and local tax are handled separately.
• Specified tax representative (特定納税管理人, tokutei nozei kanrinin): a person the tax office can designate, when no tax representative has been notified, to handle matters such as receiving and forwarding documents.
• Income-based portion (所得割, shotokuwari): the part of individual resident tax calculated on the previous year’s income.
• Miscellaneous income (雑所得, zatsu shotoku): one of the income tax categories; the National Tax Agency classifies income from home-sharing in one’s own home in principle under it.

About the Information

• The information was checked on September 30, 2026, against Japanese laws and documents published by the National Tax Agency, the Ministry of Internal Affairs and Communications, the Ministry of Finance and the Japan-Taiwan Exchange Association. The Japan-Hong Kong agreement follows the English text published by the Ministry of Finance.
• The following conclusions are drawn from official documents; no official text states them in a single sentence:
• “An overseas owner with no address in Japan on January 1 is generally not charged the income-based portion of resident tax on rent.” This rests on the Ministry of Internal Affairs and Communications’ explanation that individual resident tax applies to people with an address in a municipality on January 1. The original text of the relevant Local Tax Act provisions and the per-capita portion rules were not checked.
• “A non-resident’s Japanese rental income must in principle be reported on a final return.” This comes from the National Tax Agency’s explanation for people working abroad. The rule it relies on, comprehensive taxation of Japan-source income, applies to all non-residents.
• “An individual who rents for business purposes must withhold.” This is inferred from the exception for individuals renting a home for themselves.
• “The national tax representative and the fixed asset tax representative can generally be the same person.” This is inferred from the two sets of rules.
• “Whether you must also report where you live, and whether credit is available.” The Japanese official documents consulted (National Tax Agency No. 2880 and No. 1926, Article 6 of the Japan-Hong Kong agreement and the Japan-Taiwan arrangement) only explain that Japan may tax. The tax law of the country of residence was not checked.
• The following were not covered by the sources consulted: who withholds when a management company collects the rent; actual tax rates, tax amounts and income deduction amounts; whether management fees and management commissions can be expensed; the useful life of used buildings; the blue return application deadline and whether non-residents face special requirements; and the income category for home-sharing in an investment apartment the owner does not live in (the National Tax Agency explanation is the 2018 version and assumes a home the owner lives in).
• For the 2027 blue return special deduction changes, this article relies only on the National Tax Agency’s April 2026 leaflet for the cap for owners below business scale. How the JPY 550,000 deduction is treated from 2027 is not clearly stated in the leaflet, and further guidance may follow. The name of the withheld tax on rent changes from 2027, and the combined rate is unchanged according to the National Tax Agency.

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.2875 居住者と非居住者の区分
• 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
• e-Gov法令検索－所得税法
• e-Gov法令検索－所得税法施行令
• 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）
• 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
• 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）
• 国税庁－タックスアンサー No.2100 減価償却のあらまし
• e-Gov法令検索－減価償却資産の耐用年数等に関する省令
• 国税庁－タックスアンサー No.1373 事業としての不動産貸付けとそれ以外の不動産貸付けとの区分
• 国税庁－タックスアンサー No.2072 青色申告特別控除
• 国税庁－令和９年分から青色申告特別控除はどう変わる？
• e-Gov法令検索－国税通則法
• 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
• 国税庁－特定納税管理人制度の概要
• e-Gov法令検索－地方税法
• 総務省－地方税制度：個人住民税
• 国税庁－タックスアンサー No.6201 非課税となる取引
• 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
• e-Gov法令検索－消費税法
• 国税庁－住宅宿泊事業法に規定する住宅宿泊事業により生じる所得の課税関係等について（情報）
• 財務省－所得に対する租税に関する二重課税の回避及び脱税の防止のための日本国政府と中華人民共和国香港特別行政区政府との間の協定（英文）
• 日本台湾交流協会－所得に対する租税に関する二重課税の回避及び脱税の防止のための公益財団法人交流協会と亜東関係協会との間の取決め

Important Notice

This article is a general information summary. It is not individual tax, legal or accounting advice, and it does not calculate anyone’s tax payable. The information was checked on September 30, 2026. Tax rules and procedures may change, so rely on the current notices of the Japanese National Tax Agency, local governments and the tax authority where you live, and consult a qualified tax accountant (税理士) or other professional where needed.