Transaction Costs

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Total transactions costs for purchasing an apartment in Tokyo vary from around 4 to 10% depending on the property. This article provides a breakdown of these costs.

Contents

Purchase Fees

Broker Fee

The standard broker is 3.24% of the transaction price plus JPY 64,800. Both the buyer and the seller pay this amount. Normally the buyer and seller have each their own broker. One broker is allowed to represent both parties, in which case he receives the broker fee twice. It is not common for brokers to give a discount on their fees.

Stamp Duty

On the sales contract each party is obliged to put a stamp. The amount is dependent on the transaction price and normally varies from 10,000 up to 80,000 yen. The stamps can be bought at any post office. Look here for the details of the amount due.

Judicial Scrivener Fee

In Japan the title transfer is arranged by a judicial scrivener. Included in his invoice will be the registration tax. The total costs can vary wildly depending on the type of property, the assessed value and if a mortgage needs to be registered as well. Also much like lawyers, some scrivener's are much more expensive than others. As a rough estimate assume that the total cost for this item is about 60,000 yen plus 1.5% of the purchase price. And in case of a financed purchase add another 0.4% of the mortgage amount. Here are some links (1 and 2) to the registration tax the scrivener will include in his invoice.

Other Closing Costs

Other income and expenses that show up on the final closing cost calculation are:

Acquisition Tax

Technically this is not a closing cost as it is due a few months after buying the property. Normally around around 0.5 to 1.0% of the purchase price, it can peak as high as 2%. Commercial properties are taxed at a higher rate then residential ones. For more details on how to calculate this tax look at the acquisition tax calculation.

Annual Possession Tax

The annual possession tax has to be paid by the owner of the property as of January 1. When you buy a property halfway during the year, it is customary to reimburse the seller for part of the year's tax.

Monthly Maintenance

The monthly maintenance is normally paid at the beginning of the month. If you buy the property halfway during the month it is customary to reimburse the seller part of the maintenance fee. For transactions done close to the end of the month it is also normal to pay the next month's maintenance to the seller as it can take a couple of days to notify the building management of the change in ownership.

Rent and Rental Deposit

In case the apartment is renter occupied the seller will transfer the deposit to the buyer. And like with the monthly maintenance fee, the seller will pay the part of the month's rent starting at the purchase date.

Additional Costs

Furthermore you might want to budget for the following costs:

Mortgage Origination Fees

Mortgage origination fees vary wildly from bank to bank. Many Japanese banks also require that the buyer pays a 2% mortgage insurance fee on the loan amount. In return the interest rate is lowered by 0.2% for 10 years. In general this fee turns out to be optional and it might be partially refunded if the property is sold within 10 years.

Remittance Fees

Transferring funds to Japan is expensive. If you transfer foreign currency to a bank in Japan they will convert it to yen at a unfavorable rate causing losses of about 1 to 3% of the transferred amount (Today's rates). For a 20 million yen transfer this comes down to 200,000 to 600,000 yen! As this amount is so large it is strongly recommended to compare exchange rates at different banks and consider transferring the funds using a foreign exchange money broker such as HiFX or CurrenciesDirect. We have negotiated a special rate with Currencies Direct. Just mention affiliate code A010815 to get the better rate.

When transferring yen the remittance fee our bank (MUFJ) charges is as follows:

Transfer amount Remittance Fee
1 - 5,000,000 4,000
5,000,001 and over 1,500 + 0.05% of transfer amount

This means for example transferring 20 million yen will cost 14,000 yen. I am looking around to find a bank that charges more reasonable fees. I will accept BitCoin if the buyer accepts the Bitcoin exchange rate risk.

If the seller requests the funds to be send by transfer there is a 540 yen bank transfer fee. For a check (cheque) the normal fee is 864 yen.

Fire Insurance

Fire insurance is relatively cheap. Human Corporation Ltd, an agent for ACE Insurance can arrange fire insurance for 2,000 to 4,000 yen per year. Their phone number is 042-420-9796 (Japanese Only). When getting a mortgage some banks require that the buyer take out fire insurance over the full length of the mortgage term in advance.

Moving Costs

To get a quote from an English speaking mover call Mike Kealy at XPS Tokyo.

Seller's Costs

Broker Fee

The seller also pays a broker fee. It is the same amount as the buyer at 3.24% of the transaction price plus JPY 64,800.

Stamp Duty

The seller has to pay the same stamp duty as the buyer.

Scrivener Fee

In case a seller has a mortgage registered on the property, the scrivener will need to clear the title. There is a small charge for this, normally around 20,000 yen.

Bank Fees

Some banks have a penalty for prepayment. Also it is possible that a bank will refund some of the mortgage insurance that was paid when the property was bought.


Examples

A small investment apartment in the North of Tokyo

Purchase price: JPY 3.85 million

Transaction Date: April 19, 2010

Total closing costs: 252,035 (6.5%)

Paid by buyer: 362,435 (9.4%)

  • Broker Fee: 182,700
  • Scrivener Fee: 82,065
  • Stamp Duty: 2,000
  • Annual Possession Tax: 16,762 (257 / 365 x 23,806)
  • Maintenance Fee: 19,908 (12 days in April + May = 42/30 x 14,220)
  • Acquisition Tax: 59,000 (Land 24,900 + Building 34,100)

Received from seller: 110,400 (2.9%)

  • Deposit 46,000
  • Rent: 64,400 (12 days in April + May = 42/30 x 46,000)

A small investment apartment in the Center of Tokyo

Purchase price: JPY 9 million

Transaction Date: February 9, 2011

Total closing costs: 413,664 (4.60%)

Paid by buyer: 628,950 (6.99%)

  • Broker Fee: 346,500
  • Scrivener Fee: 222,750
  • Stamp Duty: 10,000
  • Annual Possession Tax: 40,679 (326 / 365 x 45,545)
  • Maintenance Fee: 9,021 (20/28 x 12,630)
  • Acquisition Tax: 206,100 (Land 163,100 + Building 43,000)

Received from seller: 215,286 (2.39%)

  • Deposit 156,000
  • Rent: 59,286 (20/28 x 83,000)

A small house in the center

Purchase price: JPY 50.5 million

Transaction Date: May 10, 2010

Total closing costs: 3,253,058 (6.4%)

  • Broker Fee: 1,488,375
  • Scrivener Fee: 722,050
  • Stamp Duty: 45,000
  • Annual Possession Tax: 92,403 (145 / 365 x 153,305)
  • Acquisition Tax: 569,600 (Land 393,100 + Building 176,500)
  • Bank Fees: 335,630

A large investment apartment in the center

Purchase price: JPY 73 million

Transaction Date: September 3, 2010

Total closing costs: 2,937,434 (4.0%)

Paid by buyer: 5,100,767 (7.0%)

  • Broker Fee: 2,329,503
  • Scrivener Fee: 1,156,930
  • Stamp Duty: 45,000
  • Annual Possession Tax: 114,837 (120 / 365 x 336,573)
  • Maintenance Fee: 96,967 (28 days in September = 28/30 x 103,893)
  • Acquisition Tax: 981,900 (Land 532,900 + Building 449,000)
  • Bank Fees: 375,630

Received from seller: 2,163,333 (3.0%)

  • Deposit 1,650,000
  • Rent: 513,333 (28 days in September = 28 / 30 x 550,000)

A top end apartment used as primary residence

Purchase price: JPY 120 million

Transaction Date: November 28, 2008

Total closing costs: 4,545,201 (3.79%)

  • Broker Fee: 3,843,000
  • Scrivener Fee: 601,507
  • Stamp Duty: 80,000
  • Annual Possession Tax: 11,854 (34 / 366 x 127,600)
  • Maintenance Fee: 8,840 (3 days in Novtember = 3/30 x 88,400)
  • Acquisition Tax: 1,029,800 (Land 464,700 + Building 565,100)
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