The yen hitting all time lows, foreign tourism increasing, it is becoming slightly easier for foreigners to move here, the new digital nomad visa and the change in regulations to become a permanent resident having become slightly more lenient. Many foreigners a looking to purchase a property in Japan. In the past decade foreigners have been scooping up the relative cheap properties in places like Sapporo and Tokyo.
Yes, it is possible, to say it simply and shortly.
However, lets take a look at some of the highlights. Contact us for further details or a consultation.
Non-Residents can purchase land and properties just as a Japanese National would be able. There are no restrictions based on residence status, nationality, or visa type. Taxes paid would be typically the same as a Japanese National. The government of Japan has implemented a regulation regarding the purchase of land near strategic assets (such as military bases, etc.). See Land-Use Regulation Act No. 84 of 2021
Things that a Non-resident should be aware of when purchasing property in Japan
- Real estate transaction process
- The process might be different from your home country
- Types of paperwork or registration process may be different
- Cost for purchasing in Japan
- Their are fees, registration costs, taxes, etc. on top of the listing price
- The costs are all based on the property value, land value and assessed value of fixed assets
- Real Estate Purchase Flow and Timeline
- Understanding the timeline for application, payments, terms and agreements and final payments
- Finding your ideal property
- What type of purchase is this? Investment property, primary residence or second home?
- Property location, city knowledge, and other factors are important so having an English speaking advisor is helpful with the decision making process
- Post purchase
- Submitting income tax report for a primary residence property for the same year/following year(s)
- Investment property
- Finding tenants
- Self maintenance or finding a company to manage the maintenance
- Managing the taxes and filing the paperwork
What to prepare in advance when purchasing as a resident/non-resident
For residents or status of residence;
- Certificate of residence ・住民票 (Jyuminhyou) or 居住証明書 (Kyojuu shoumei-sho)
- Residence Card/ Special Permanent Resident Certificate
- Identification documents (driver’s license, passport, etc.)
- Hanko (Seal・Required for housing loan)
- Hanko Registration Certificate (required when using a housing loan)
- 印鑑登録証 (Inkan touroku-shou)
For Non-Resident;
- Affidavit (For proof of address)
- An affidavit: a document signed by a notary; stating the document is a fact
- Required: a certified proof of address
- Must be certified by a Notary in your home country or by the consular section of your embassy in Japan
- Identification documents (driver’s license, passport, etc.)
Housing loans for non-residents
Getting a mortgage or housing loan from a bank as a non-resident can be tricky in any country. Banks cannot deduct directly from the home countries bank account. The loanee transfers mortgage payments from their home country. Therefore these transfers can be held by banks, transferring companies etc. The transfer also incurs fees, and exchange rate fluctuations. So Banks take a high risk for non residents. However every individual applicant is unique, it is under the banks discretion when approving a housing loan.
Housing Loans for residents
Mortgages for residents is a little easier than for non residents. Banks look at income, credit history and residency status. Having a permanent resident status, as well as having a Seishain employment (正社員・Full time employee) status makes things easier. Also having a good relationship with your preferred bank can help the approval process.
Making the payment for the property
After deciding on your property, submitting your application, the buyer would pay a deposit for the property. Between this date and the final contract date, there are several meeting, regarding mortgages, document signings, explanations of the contracts etc. Finally on the closing date the payment of the balance of the purchase is transferred to the seller.
Notification as per Foreign Exchange and Foreign Trade Control Act
A property acquired by a foreigner living abroad is categorized as a “capital transaction” (per Japan’s Foreign Exchange and Foreign Trade Control Act). So, within 20 days of acquisition the buyer (Non-resident only) must submit a notification of purchase to the Minister of Finance. The real estate company can submit this notification on the behalf of the buyer.
- The exception; a buyer does not need to submit this notification if:
- they intend to live in the residence
- they will operate a non-profit business in Japan at that property
- the property is for a business office
- the purchase of the property is from another non-resident
Taxes
After the initial purchase, the buyer must pay Fixed Asset Tax and City Planning Tax every year. If the property is a rental property, the rental income will incur income tax, thus the buyer must file their tax returns every year. Therefore, we recommend hiring a tax agent to manage the taxes on the buyers behalf.
Additional fees such as building management/maintenance fees, reserve fund for repair, etc. may occur depending on the property.
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