https://www.akasakarealestate.com/wiki/api.php?action=feedcontributions&user=Erik&feedformat=atomJapanRealEstateWiki - User contributions [en]2024-03-29T01:38:13ZUser contributionsMediaWiki 1.34.0https://www.akasakarealestate.com/wiki/index.php?title=Links&diff=71Links2024-03-15T06:58:23Z<p>Erik: /* Akasaka Real Estate in the Press */</p>
<hr />
<div>= Akasaka Real Estate in the Press =<br />
<br />
{| border="0" cellpadding="0" cellspacing="0" <br />
<br />
<br />
<br />
|-<br />
|February 28 2023 <br />
||<br />
|width="10px"|<br />
|| <br />
[https://weekend.gazeta.pl/weekend/7,177340,29507792,dla-ludzi-rownie-mocno-liczyly-sie-dostepne-miejsca-parkingowe.html?_r=0 Gazeta.pl]<br />
|-<br />
|-<br />
|October 14 2015 <br />
||<br />
|width="10px"|<br />
|| <br />
[http://mobile.nytimes.com/2015/10/15/realestate/house-hunting-in-in-japan.html?_r=0 New York Times: House hunting in ... Japan]<br />
|-<br />
|November 23 2013 <br />
||<br />
|width="10px"|<br />
|| <br />
[http://beaconreports.net/reaching-yield-tokyos-buy-let-market/# Beacon Reports: Reaching for yield in Tokyo’s buy-to-let market]<br />
|-<br />
|June 18 2013 <br />
||<br />
|width="10px"|<br />
|| <br />
[http://www.scmp.com/comment/blogs/article/1263711/tokyo-property-market-set-olympic-bounce South China Morning Post: Tokyo property market set for Olympic bounce]<br />
|-<br />
|December 26 2012 <br />
||<br />
|width="10px"|<br />
|| <br />
[http://www.nytimes.com/2012/12/27/greathomesanddestinations/real-estate-in-japan.html?_r=0 New York Times: House Hunting in ... Japan]<br />
|-<br />
|November 28 2011 <br />
||<br />
|width="10px"|<br />
|| <br />
[http://www.realestate.co.jp/2011/11/28/webinar-upload-how-to-spot-a-good-investment-in-tokyo-real-estate-with-erik-oskamp/ realestate.co.jp: Live Webinar: How to Spot a Good Investment in Tokyo Real Estate with Erik Oskamp]<br />
|-<br />
|November 14 2011<br />
||<br />
|width="10px"|<br />
|| <br />
[http://akasakarealestate.com/articles/FD%20JAPAN%20VASTGOED%20OSKAMP%2014-11-2011.pdf Het Financieele Dagblad: Vastgoedmarkt Japan klautert uit dal na domper door aardbeving (in Dutch)]<br />
|-<br />
|February 25 2011<br />
||<br />
|width="10px"|<br />
|| <br />
[http://metropolis.co.jp/specials/883/883_top.htm Metropolis: Real Estate Special]<br />
|-<br />
|February 25 2011 <br />
||<br />
|width="10px"|<br />
|| <br />
[http://www.realestate.co.jp/2011/02/28/practical-guide-to-the-tokyo-real-estate-market-webinar-upload/ realestate.co.jp: Live Webinar: A Practical Investor’s Guide to the Tokyo Real Estate Market]<br />
|-<br />
|February 7 2011 <br />
||<br />
|width="10px"|<br />
|| <br />
[http://www.japantoday.com/category/commentary/view/how-to-make-money-on-property-in-tokyo JapanToday: How to make money on property in Tokyo]<br />
|-<br />
|January 20 2011 <br />
||<br />
|width="10px"|<br />
|| <br />
[http://www.realestate.co.jp/2011/01/20/reasons-to-invest-in-residential-property-in-tokyo-part-1/ realestate.co.jp: Reasons to invest in residential property in Tokyo]<br />
|-<br />
|October 28 2010 <br />
||<br />
|width="10px"|<br />
|| <br />
[http://www.ftchinese.com/story/001035198?page=2 Financial Times China: 该去东京投资房产了]<br />
|-<br />
|September 22 2010<br />
||<br />
|width="10px"|<br />
|| <br />
[http://www.globalpropertyguide.com/news-What-you-need-to-know-about-Tokyo-residential-property-investment-447 Global Property Guide: What you need to know about Tokyo residential property investment]<br />
|-<br />
|September 17 2010 <br />
||<br />
|width="10px"|<br />
|| <br />
[http://www.ft.com/cms/s/2/249881ba-c11e-11df-afe0-00144feab49a.html Financial Times: Tokyo turns to tomorrow]<br />
|-<br />
|March 20 2009 <br />
||<br />
|width="10px"|<br />
|| <br />
[http://archive.metropolis.co.jp/specials/782/782_top.htm Metropolis: Real Estate Special]<br />
|-<br />
|October 3 2008 <br />
||<br />
|width="10px"|<br />
|| <br />
[http://metropolis.co.jp/specials/758/758_top.htm Metropolis: Real Estate Special]<br />
|}<br />
<br />
= Other Real Estate Articles =<br />
[http://www.kensetsu.metro.tokyo.jp/suigai_taisaku/index/menu03.htm Tokyo Flood Hazard maps] (In japanese)<br />
<br />
[http://doboku.metro.tokyo.jp/start/03-jyouhou/ekijyouka/lhmap1.aspx Tokyo Liquefaction Map]<br />
<br />
[http://www.akasakarealestate.com/articles/PMKan092010.pdf Nikkei Real Estate Market Report: "Prime Minister Kan: A Little-Known Expert on Land Policy"]<br />
<br />
[http://www.joneslanglasalle.com/pages/greti_home.aspx Jones Lang LaSalle: "Real Estate Transparency"]<br />
<br />
[http://www.joneslanglasalle.com/Pages/GRETI_cameo_japanskorea.aspx Jones Lang LaSalle: "Japan and South Korea: Real estate transparency lags economic development"]<br />
<br />
Aug 31 2013 [http://www.economist.com/news/finance-and-economics/21584361-america-surges-much-europe-sinks-mixed-messages?zid=295&ah=0bca374e65f2354d553956ea65f756e0 Economist "Global house prices"]<br />
<br />
Jul 7 2011 [http://www.economist.com/node/18925999 Economist "Global house prices"]<br />
<br />
Mar 3 2011 [http://www.economist.com/node/18285595 Economist "Global house prices"]<br />
<br />
Oct 21 2010 [http://www.economist.com/node/17311841?story_id=17311841 Economist "Global house prices"]<br />
<br />
Dec 30 2009 [http://www.economist.com/node/15179388?story_id=15179388 Economist: "Ratio rentals"]<br />
<br />
[http://www.globalpropertyguide.com/Asia/Japan Global Property Guide: "Japan"]<br />
<br />
[http://www.lij.jp/index.phtml?page=lij_english/monthly_data_of_real_estate_economy/list The Land Institute of Japan: "Monthly Data of Real Estate Economy"]<br />
<br />
[http://www.breitbart.com/article.php?id=D9IK0THO0&show_article=1 Breithart: "Property purchases with foreign capital may be regulated"]<br />
<br />
[http://injapan.gaijinpot.com/2010/09/30/tokyo-investment-properties-what-to-look-for GaijinPot: "Tokyo Investment Properties; What To Look For"]<br />
<br />
Oct 18 2010 [http://www.japantoday.com/category/politics/view/kan-to-review-rules-on-land-acquisitions-by-foreigners Japan Today: Kan to review rules on land acquisitions by foreigners]<br />
<br />
[http://landprice.m47.jp/ Land Price Survey]<br />
<br />
[http://tochi.mlit.go.jp/english/index.html Ministry of Land, Infrastructure, Transport and Tourism: "Land and Real Property in Japan"]<br />
<br />
[http://www.rosenka.nta.go.jp/ Rosenka] The official land valuation published by the National Tax Administration Agency (Japanese)<br />
<br />
[http://www.the-earth.tv/TheEarth/map?iconId=block_diff_market&lng=139.688788&lat=35.650828&mapTypeNo=3&zoomLevel=13 The Earth]: "Price, Yield, <br />
[http://www.the-earth.tv/TheEarth/map?iconId=populations&lng=139.755964&lat=35.671051&mapTypeNo=3&zoomLevel=16 Population],<br />
[http://www.the-earth.tv/TheEarth/map?iconId=disaster&lng=139.745447&lat=35.65861&mapTypeNo=2&zoomLevel=5 Fault Line] and [http://www.the-earth.tv/TheEarth/map?iconId=useZone&lng=139.701365&lat=35.658517&mapTypeNo=1&zoomLevel=16 Zoning maps]" (Japanese)<br />
<br />
[http://translate.google.com/translate?hl=en&sl=ja&tl=en&u=http%3A%2F%2Fj-jis.com%2Fdanso%2F JIS: Fault line details]<br />
<br />
[http://www.jishin.go.jp/main/chousa/09_yosokuchizu/b1_kanto.pdf JIS: Probabilistic seismic hazard maps for the Tokyo area] (Japanese)<br />
<br />
[http://www.shiawasehome-eigoban.com/saisinjyouhou.1.html Shiawase Home: Beautiful old houses for sale in Niigata]<br />
<br />
[http://www.interlinknagoya.com Interlink: A foreign owned real estate company in Nagoya]<br />
<br />
[http://www.ex-pat-apartments.com/index.html Expat Apartments: Real Estate agent in Osaka specialized in renting to foreigners]<br />
<br />
[http://www.ft.com/cms/s/0/e5615554-592a-11df-adc3-00144feab49a.html Financial Times: "Reasons to fall for Japanese love hotel fundraiser"]<br />
<br />
Nov 30 2010 [http://japantoday.com/category/executive-impact/view/real-estate-in-japan-a-good-time-to-buy-or-not Japan Today: "Real estate in Japan: A good time to buy or not?"]<br />
<br />
[http://www.realmarkits.com./realestate/propertyvalueovertime.html#herengracht Herengracht Location Value Index], [http://www.akasakarealestate.com/articles/herengracht.jpg chart] and accompanying article in New York Times: [http://www.nytimes.com/2006/03/05/magazine/305tulips_shorto.1.html?pagewanted=all This Very, Very Old House ]<br />
<br />
[http://www.realestate.co.jp/2010/12/07/introduction-to-buying-property-in-japan-webinar-upload/ Webinar with Chris Dillon, the author of 'Landed: The guide to buying property in Japan']<br />
<br />
[http://squeeze-box.ca/?cat=57 Andrew Woolner's blog: "House Hunting in Japan"]<br />
<br />
[http://www.bbc.co.uk/news/world-asia-pacific-12397216 BBC: "The stigma of Japan's 'suicide apartments'"]<br />
<br />
[http://www.bloomberg.com/news/2011-03-08/billionaire-sons-aspire-to-make-snowbound-niseko-asia-s-aspen.html Bloomberg: "Billionaire Sons Aspire to Make Snowbound Niseko Asia's Aspen"]<br />
<br />
[http://www.gtjapan.com/english/pdf/publications/taxpub/20100601_Taxation_of_Real_Property_Investment_in_Japan.pdf Grant Thorton: "Taxation of Real Property Investment in Japan"]<br />
<br />
[http://www.gtjapan.com/english/pdf/publications/taxpub/200810_JapanRealEstatePropertyTaxGuide.pdf Grant Thorton: "Investing in real estate in Japan"]<br />
<br />
[http://www.tse.or.jp/english/market/data/homeprice_indices/index.html TSE Home Price Indices]<br />
<br />
[http://japantax.org/?page_id=36 The Japan Tax Site: "The Japanese taxation of real estate income for individuals"]<br />
<br />
[http://www.oshimaland.co.jp/index_en.html Oshimaland: "Map of properties where violent deaths and suicides occurred"]<br />
<br />
[http://www.ipdindex.co.jp/library/rrpi.html IPD/RECRUIT Residential Index]<br />
<br />
[http://to-ekijoukayosoku.jp/start/03-jyouhou/ekijyouka/yosokuzu.aspx Liquefaction Risk Map]<br />
<br />
[http://www.toshiseibi.metro.tokyo.jp/bosai/chousa_6/home.htm Earthquake Hazard Map]<br />
<br />
= Japan Links =<br />
<br />
[http://www.lydayfinancialplanning.com/ John Lyday Financial Planning]<br />
<br />
[http://www.japan-guide.com/e/e2029_reservations.html Making online reservations at hotels and guesthouses]<br />
<br />
[http://www.rentafonejapan.com/Cost-Comparison.html Cost comparison mobile phone rental]<br />
<br />
[http://www.gtjapan.com/english/pdf/doing/2010_doing_b_j.pdf Grant Thornton: "Doing business in japan"]</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=Investment&diff=70Investment2024-02-21T06:25:03Z<p>Erik: /* Reasons to invest in residential property in Tokyo */</p>
<hr />
<div>This article is about investing in residential property in Tokyo with a focus on small units.<br />
<br />
== Reasons to invest in residential property in Tokyo ==<br />
<br />
* High Rents / Low Interest Rates<br />
<br />
* Strong Rule of Law<br />
: No restrictions on foreign ownership<br />
: Ownership rights firmly protected<br />
<br />
* Law is Pro-Landlord<br />
: Little protection for the renter at the end of the lease period<br />
: Key money, cleaning fees, renewal fees<br />
<br />
* Cheap Currency<br />
: The Bank of Japan has been keeping interest rates artificially low, therefore depressing the value of the yen. Due to very low inflation the yen can buy more and so long-term currency comparisons should be corrected for inflation. Have a look [[The Yen Foreign Exchange Rate|here]] for an inflation corrected chart of the yen.<br />
: The US, UK and Europe are printing excessive amounts of money which increases the long-term risk of inflation that would lead to devaluation of their currencies.<br />
: Also Japan has a current account surplus, low individual debt levels and the government debt is entirely domestically financed<br />
<br />
* Demographics<br />
:Even though the population of Japan will decline, with so many people moving to Tokyo, the population in the capital is still increasing. The biggest change though is the decreasing family size and aging population. More and more people are living alone, with seniors the fastest growing group. This segment is projected to grow for another 20 years. However most new apartments that are built are larger properties suitable for families with children. This means that we expect a continuous strong rental demand for very small units.<br />
<br />
* Good Timing<br />
: Due to artificially low interest rates, prices are moving up quickly. In Tokyo, the return of mass tourism is also fueling demand. If the Bank of Japan keeps interest rates low, a property bubble will develop. With zero interest rates, prices could double from here. More likely, the BOJ will eventually have to raise interest rates. In that case the yen would appreciate markedly. For foreign investors this is a win-win.<br />
<br />
[[image:centraltokyoprices.gif]]<br />
<br />
== What to Buy ==<br />
<br />
=== Prefer old apartments ===<br />
<br />
The advantages of older apartments are:<br />
* Higher rental yield<br />
* Lower depreciation<br />
* No earthquake risk as all the value is in the land<br />
<br />
Depreciation is brutal. After 30-35 years a building is worthless. There is very little for sale between 1984 and 1995. <br />
<br />
[[image:pricedepreciationakasaka.gif]]<br />
<br />
Rents for older apartments are also lower.<br />
<br />
[[image:rentdepreciationakasaka.gif]]<br />
<br />
But rents drop only about 30%, while prices drop 60%. So rental yields for older places are higher<br />
<br />
The earthquake standards were upgraded in 1981, so if there is a chance that you will live there yourself avoid buildings that are much older.<br />
<br />
=== Small apartments have higher yield ===<br />
<br />
[[image: yieldminatokulayout.gif]]<br />
<br />
=== Look outside the Center ===<br />
<br />
[[image: rentalyields.gif]]<br />
<br />
Rental yields are significantly higher outside the center. But avoid going outside the 23 wards of Tokyo. Not only is the population in the countryside rapidly declining, but also local real estate agents tend to have a near-monopoly in the smaller towns. As a result there is not a lot of transparency and it is hard to find out what a good price is. Also you would have to rely on that same broker to find renters. That put you at a disadvantage if that broker or his friends own property in the town as well. In Tokyo there are many brokers and the competition will ensure a decent level of service.<br />
<br />
=== Prefer apartments with an existing renter ===<br />
<br />
A property with a renter is called ‘Owner Change’ in Japan.<br />
<br />
The advantages of buying a property with a renter are:<br />
* No need to search for a renter. You start collecting rent from the day you get the keys.<br />
* They are cheaper. For small studio apartments the price difference is very small, but for a 3LDK the difference can be as much as 25%.<br />
: Many buyers are looking for a residence for themselves and thus are not interested in a rented apartment.<br />
: Japanese banks are reluctant to finance investment apartments, which means there is significantly less money chasing rented apartments.<br />
* You receive the deposit from the seller.<br />
However, you can not see inside. Sometimes there are pictures available and sellers are generally honest about the condition.<br />
<br />
=== Ordinary apartments are easy to rent out and to sell ===<br />
<br />
Ordinary apartments are easier to rent out or sell than unique apartments. It is a common misconception that an especially beautiful, centrally located and new apartment is easy to rent out. In general such apartments are significantly more expensive and as such there are only few people that can afford such a place. It is much better to invest in ordinary apartments, such as apartments in large buildings with many similar units. As there is a big market for such units there are always people offering and looking for such units. This means it is easy to establish the market price at which such an apartment attracts a renter or a buyer quickly. Some areas might not have many very large buildings, but always prefer to invest in what is common for the area.<br />
<br />
== Pitfalls ==<br />
<br />
When buying a property watch out for the following issues:<br />
<br />
=== Land Issues ===<br />
* Poor Road Access<br />
: The larger the road the more valuable the land is. Also the length of the frontage with the road has a large impact. If the frontage is less than 2 meters normally you are not allowed to rebuild the property and the land is essentially only worth something for the neighbors. If they are not buying it, you certainly shouldn't.<br />
* Setback<br />
: Most small roads in Tokyo are being widened. If land lies on such a road it might be necessary to give up a piece of the land for this purpose. Normally this happens when applying for a new building permit, but occasionally small slices of land are used for road widening without tearing down a building. As the land is made smaller an existing building suddenly might now be larger than officially allowed according to the zoning regulation. This can lead to confusion during the purchase and mortgage application as the seller needs to proof that the building originally was built according to the zoning laws. Not everybody has the appropriate documentation.<br />
<br />
* Rezoning<br />
: Sometimes land has been rezoned, often reducing the floorspace that can be built. As a result existing buildings afterward are technically illegal and an owner will need to proof that the original building permit was legal.<br />
<br />
=== Building Issues ===<br />
* Post Construction Inspection Certificate<br />
: This certificate proofs that a building was legal according to the zoning laws when it was built. Often for older buildings the sellers do not have this document, but we can often find it at the local government office. Normally this document is needed when applying for a mortgage.<br />
* Union Fund<br />
: Also called sinking fund, this money is held by the union of owners in reserve for any future maintenance. It is important that a building is reasonably capitalized to pay for the necessary upkeep and refurbishment. The biggest expense often is the elevator so prefer buildings without an elevator or where the elevator is relatively new.<br />
* Maintenance Costs<br />
: The building maintenance costs are used for the regular monthly expenses such as cleaning and utilities for the common spaces. The monthly amount payable varies wildly among buildings. If a building owns parking spaces extra income can be had from renting these out and in such cases the maintenance fee might be lower.<br />
* Artificially Inflated Rents<br />
: Occasionally you might find an apartment with a very high rental yield. Always compare if the current rent is close to the market rent. Rents have dropped significantly over the years and so a long-term renter might be overpaying. If such a renter leaves the new owner might have to drop the rent drastically to attract a new renter. <br />
* Cemeteries, red light districts and suicides<br />
: A property next to a cemetery is much cheaper as the Japanese are not comfortable in such places. Also if a suicide has happened in the apartment most Japanese would not want to live there. There are no clear rules about informing prospective buyers or tenants about such conditions, but commonly any suicides in the last 2 years or by a previous tenant are mentioned. Often on inquiry with the doorman or maintenance people you can find out events that happened even decades ago. It can be advantageous to purchase such units and rent them out to foreigners who are normally much less worried about these things. Unfortunately such conditions are not properly advertised.<br />
<br />
=== Contract Issues ===<br />
<br />
The way business is done in Japan is different from many other countries. Even though rule of law is very strong in Japan it is unusual to go to court. This process is expensive and quite time consuming. Culturally the Japanese prefer to resolve their conflicts through direct mediation to avoid nasty confrontations. And so you should see a contract in Japan as a declaration of intention and disclosure document.There is no need to get overly suspicious about the details and instead be extra careful that you manage the expectations the other party might have. In Japan business is done based on trust. Leading someone to believe that you will do something will lead to an obligation even though it might not be in writing.<br />
<br />
=== Leaseholds ===<br />
<br />
A leasehold is a building that has been constructed on land that belongs to someone else. It is possible to buy such a structure and take over the lease of the land. In Japan often the owner of the land is a temple or shrine. Each leasehold is different and leases are commonly for periods between 20 and 50 years and are automatically renewed. The monthly charges are low and often comparable with the real estate tax on land. The renewal fees are hefty though, often up to 5 to 10% of the value of the property. Also many lease contracts have other restrictions. For example the owner of the land has to agree with any construction and could require a substantial gift before giving approval. Also a percentage of the proceeds of a sale might be required to transfer the lease to a new building owner.<br />
<br />
The biggest obstacle to purchasing a leasehold is that banks are reluctant to lend against it as there is no collateral. And as each lease contract is different and confidential it is impossible to compare prices for leaseholds. Even though leaseholds are 20 to 40% cheaper it is therefore best to stay away from these types of property. The only reason to buy a leasehold would be that you have the cash and you really would like to live for a long time in a particular neighborhood.<br />
<br />
=== Foreclosures ===<br />
<br />
The reasons I discourage anyone from buying a foreclosure in Japan are as follows:<br />
* Bankruptcy is a big shame in Japan, so the family normally helps out and foreclosures are very rare. In Japan most financial problems get solved behind closed doors.<br />
* The foreclosures that do get executed in general are caused by a combination of addiction (gambling, alcohol), mental disease (Alzheimer) and mafia involvement (Yakuza). Often the family has long ago disowned the seller.<br />
* The foreclosure process is very long (over 2 years) in which time often the yakuza has moved into the property. This means that when you buy a property from the court there is a big chance that it has an unlawful (and possibly violent) tenant. It is also possible that the original owner is still there with nowhere else to go.<br />
* As many foreigners do not understand the distinction between foreclosures in Japan and their own country they tend to have an interest in the limited amount of foreclosures in Japan. This results in bid prices that are higher than market value (the so-called [http://en.wikipedia.org/wiki/Winner%27s_curse winner's curse]).<br />
* Only foreclosures in the countryside can be interesting, but realize that most villagers will look at a buyer of a foreclosure as a vulture. It requires significant commitment to the local community to make a successful purchase. One guy who pulled this off is Beau Retallick. He brought bungy jumping to Japan and after a lot of research through a foreclosure bought a hotel in Minakami called [http://www.yubiso-sansou.com/ Yubiso Sansou].<br />
<br />
=== Demolition of older buildings ===<br />
<br />
There is this myth that buildings in Tokyo have a certain lifespan and after that get demolished. The reality is that it is very difficult to demolish a building as the approval of 80% of the owners is needed. This very rarely happens even though often the land value is greater than the market value of all the units combined. Instead the union of owners routinely vote to refurbish. In some rare cases a developer will come in and make a bid on all the units in the building. Normally such a bid is a choice between a replacement unit in the new building at a discount or a cash offer and will be contingent on all the owners accepting it.</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=File:Centraltokyoprices.gif&diff=69File:Centraltokyoprices.gif2024-02-21T06:19:21Z<p>Erik: Erik uploaded a new version of File:Centraltokyoprices.gif</p>
<hr />
<div>== Summary ==<br />
The latest prices can be found here: [http://www.akasakarealestate.com/main.pl?page=chart.htm&ward=Custom&ward_custom=ward0x200x3D0x200x27Chiyoda-ku0x2CChuo-ku0x2CMinato-ku0x2CShibuya-ku0x27&points=30&sort=Price&sortorder=]</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=Investment&diff=68Investment2024-02-21T06:16:39Z<p>Erik: /* Reasons to invest in residential property in Tokyo */</p>
<hr />
<div>This article is about investing in residential property in Tokyo with a focus on small units.<br />
<br />
== Reasons to invest in residential property in Tokyo ==<br />
<br />
* High Rents / Low Interest Rates<br />
<br />
* Strong Rule of Law<br />
: No restrictions on foreign ownership<br />
: Ownership rights firmly protected<br />
<br />
* Law is Pro-Landlord<br />
: Little protection for the renter at the end of the lease period<br />
: Key money, cleaning fees, renewal fees<br />
<br />
* Cheap Currency<br />
: The Bank of Japan has been keeping interest rates artificially low, therefore depressing the value of the yen. Due to very low inflation the yen can buy more and so long-term currency comparisons should be corrected for inflation. Have a look [[The Yen Foreign Exchange Rate|here]] for an inflation corrected chart of the yen.<br />
: The US, UK and Europe are printing excessive amounts of money which increases the long-term risk of inflation that would lead to devaluation of their currencies.<br />
: Also Japan has a current account surplus, low individual debt levels and the government debt is entirely domestically financed<br />
<br />
* Demographics<br />
:Even though the population of Japan will decline, with so many people moving to Tokyo, the population in the capital is still increasing. The biggest change though is the decreasing family size and aging population. More and more people are living alone, with seniors the fastest growing group. This segment is projected to grow for another 20 years. However most new apartments that are built are larger properties suitable for families with children. This means that we expect a continuous strong rental demand for very small units.<br />
<br />
* Good Timing<br />
: Prices went up in 2006 and 2007. During the financial crisis in 2008 prices declined. Prices finally stabilized in the summer of 2009 and started slowly increasing after that. The earthquake in March 2011 caused prices in the center to fall again. However as of beginning 2012 prices seem to have stabilized. Overall the market is down 80-85% since 1990.<br />
<br />
[[image:centraltokyoprices.gif]]<br />
<br />
== What to Buy ==<br />
<br />
=== Prefer old apartments ===<br />
<br />
The advantages of older apartments are:<br />
* Higher rental yield<br />
* Lower depreciation<br />
* No earthquake risk as all the value is in the land<br />
<br />
Depreciation is brutal. After 30-35 years a building is worthless. There is very little for sale between 1984 and 1995. <br />
<br />
[[image:pricedepreciationakasaka.gif]]<br />
<br />
Rents for older apartments are also lower.<br />
<br />
[[image:rentdepreciationakasaka.gif]]<br />
<br />
But rents drop only about 30%, while prices drop 60%. So rental yields for older places are higher<br />
<br />
The earthquake standards were upgraded in 1981, so if there is a chance that you will live there yourself avoid buildings that are much older.<br />
<br />
=== Small apartments have higher yield ===<br />
<br />
[[image: yieldminatokulayout.gif]]<br />
<br />
=== Look outside the Center ===<br />
<br />
[[image: rentalyields.gif]]<br />
<br />
Rental yields are significantly higher outside the center. But avoid going outside the 23 wards of Tokyo. Not only is the population in the countryside rapidly declining, but also local real estate agents tend to have a near-monopoly in the smaller towns. As a result there is not a lot of transparency and it is hard to find out what a good price is. Also you would have to rely on that same broker to find renters. That put you at a disadvantage if that broker or his friends own property in the town as well. In Tokyo there are many brokers and the competition will ensure a decent level of service.<br />
<br />
=== Prefer apartments with an existing renter ===<br />
<br />
A property with a renter is called ‘Owner Change’ in Japan.<br />
<br />
The advantages of buying a property with a renter are:<br />
* No need to search for a renter. You start collecting rent from the day you get the keys.<br />
* They are cheaper. For small studio apartments the price difference is very small, but for a 3LDK the difference can be as much as 25%.<br />
: Many buyers are looking for a residence for themselves and thus are not interested in a rented apartment.<br />
: Japanese banks are reluctant to finance investment apartments, which means there is significantly less money chasing rented apartments.<br />
* You receive the deposit from the seller.<br />
However, you can not see inside. Sometimes there are pictures available and sellers are generally honest about the condition.<br />
<br />
=== Ordinary apartments are easy to rent out and to sell ===<br />
<br />
Ordinary apartments are easier to rent out or sell than unique apartments. It is a common misconception that an especially beautiful, centrally located and new apartment is easy to rent out. In general such apartments are significantly more expensive and as such there are only few people that can afford such a place. It is much better to invest in ordinary apartments, such as apartments in large buildings with many similar units. As there is a big market for such units there are always people offering and looking for such units. This means it is easy to establish the market price at which such an apartment attracts a renter or a buyer quickly. Some areas might not have many very large buildings, but always prefer to invest in what is common for the area.<br />
<br />
== Pitfalls ==<br />
<br />
When buying a property watch out for the following issues:<br />
<br />
=== Land Issues ===<br />
* Poor Road Access<br />
: The larger the road the more valuable the land is. Also the length of the frontage with the road has a large impact. If the frontage is less than 2 meters normally you are not allowed to rebuild the property and the land is essentially only worth something for the neighbors. If they are not buying it, you certainly shouldn't.<br />
* Setback<br />
: Most small roads in Tokyo are being widened. If land lies on such a road it might be necessary to give up a piece of the land for this purpose. Normally this happens when applying for a new building permit, but occasionally small slices of land are used for road widening without tearing down a building. As the land is made smaller an existing building suddenly might now be larger than officially allowed according to the zoning regulation. This can lead to confusion during the purchase and mortgage application as the seller needs to proof that the building originally was built according to the zoning laws. Not everybody has the appropriate documentation.<br />
<br />
* Rezoning<br />
: Sometimes land has been rezoned, often reducing the floorspace that can be built. As a result existing buildings afterward are technically illegal and an owner will need to proof that the original building permit was legal.<br />
<br />
=== Building Issues ===<br />
* Post Construction Inspection Certificate<br />
: This certificate proofs that a building was legal according to the zoning laws when it was built. Often for older buildings the sellers do not have this document, but we can often find it at the local government office. Normally this document is needed when applying for a mortgage.<br />
* Union Fund<br />
: Also called sinking fund, this money is held by the union of owners in reserve for any future maintenance. It is important that a building is reasonably capitalized to pay for the necessary upkeep and refurbishment. The biggest expense often is the elevator so prefer buildings without an elevator or where the elevator is relatively new.<br />
* Maintenance Costs<br />
: The building maintenance costs are used for the regular monthly expenses such as cleaning and utilities for the common spaces. The monthly amount payable varies wildly among buildings. If a building owns parking spaces extra income can be had from renting these out and in such cases the maintenance fee might be lower.<br />
* Artificially Inflated Rents<br />
: Occasionally you might find an apartment with a very high rental yield. Always compare if the current rent is close to the market rent. Rents have dropped significantly over the years and so a long-term renter might be overpaying. If such a renter leaves the new owner might have to drop the rent drastically to attract a new renter. <br />
* Cemeteries, red light districts and suicides<br />
: A property next to a cemetery is much cheaper as the Japanese are not comfortable in such places. Also if a suicide has happened in the apartment most Japanese would not want to live there. There are no clear rules about informing prospective buyers or tenants about such conditions, but commonly any suicides in the last 2 years or by a previous tenant are mentioned. Often on inquiry with the doorman or maintenance people you can find out events that happened even decades ago. It can be advantageous to purchase such units and rent them out to foreigners who are normally much less worried about these things. Unfortunately such conditions are not properly advertised.<br />
<br />
=== Contract Issues ===<br />
<br />
The way business is done in Japan is different from many other countries. Even though rule of law is very strong in Japan it is unusual to go to court. This process is expensive and quite time consuming. Culturally the Japanese prefer to resolve their conflicts through direct mediation to avoid nasty confrontations. And so you should see a contract in Japan as a declaration of intention and disclosure document.There is no need to get overly suspicious about the details and instead be extra careful that you manage the expectations the other party might have. In Japan business is done based on trust. Leading someone to believe that you will do something will lead to an obligation even though it might not be in writing.<br />
<br />
=== Leaseholds ===<br />
<br />
A leasehold is a building that has been constructed on land that belongs to someone else. It is possible to buy such a structure and take over the lease of the land. In Japan often the owner of the land is a temple or shrine. Each leasehold is different and leases are commonly for periods between 20 and 50 years and are automatically renewed. The monthly charges are low and often comparable with the real estate tax on land. The renewal fees are hefty though, often up to 5 to 10% of the value of the property. Also many lease contracts have other restrictions. For example the owner of the land has to agree with any construction and could require a substantial gift before giving approval. Also a percentage of the proceeds of a sale might be required to transfer the lease to a new building owner.<br />
<br />
The biggest obstacle to purchasing a leasehold is that banks are reluctant to lend against it as there is no collateral. And as each lease contract is different and confidential it is impossible to compare prices for leaseholds. Even though leaseholds are 20 to 40% cheaper it is therefore best to stay away from these types of property. The only reason to buy a leasehold would be that you have the cash and you really would like to live for a long time in a particular neighborhood.<br />
<br />
=== Foreclosures ===<br />
<br />
The reasons I discourage anyone from buying a foreclosure in Japan are as follows:<br />
* Bankruptcy is a big shame in Japan, so the family normally helps out and foreclosures are very rare. In Japan most financial problems get solved behind closed doors.<br />
* The foreclosures that do get executed in general are caused by a combination of addiction (gambling, alcohol), mental disease (Alzheimer) and mafia involvement (Yakuza). Often the family has long ago disowned the seller.<br />
* The foreclosure process is very long (over 2 years) in which time often the yakuza has moved into the property. This means that when you buy a property from the court there is a big chance that it has an unlawful (and possibly violent) tenant. It is also possible that the original owner is still there with nowhere else to go.<br />
* As many foreigners do not understand the distinction between foreclosures in Japan and their own country they tend to have an interest in the limited amount of foreclosures in Japan. This results in bid prices that are higher than market value (the so-called [http://en.wikipedia.org/wiki/Winner%27s_curse winner's curse]).<br />
* Only foreclosures in the countryside can be interesting, but realize that most villagers will look at a buyer of a foreclosure as a vulture. It requires significant commitment to the local community to make a successful purchase. One guy who pulled this off is Beau Retallick. He brought bungy jumping to Japan and after a lot of research through a foreclosure bought a hotel in Minakami called [http://www.yubiso-sansou.com/ Yubiso Sansou].<br />
<br />
=== Demolition of older buildings ===<br />
<br />
There is this myth that buildings in Tokyo have a certain lifespan and after that get demolished. The reality is that it is very difficult to demolish a building as the approval of 80% of the owners is needed. This very rarely happens even though often the land value is greater than the market value of all the units combined. Instead the union of owners routinely vote to refurbish. In some rare cases a developer will come in and make a bid on all the units in the building. Normally such a bid is a choice between a replacement unit in the new building at a discount or a cash offer and will be contingent on all the owners accepting it.</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=Our_Company&diff=67Our Company2024-01-10T08:00:37Z<p>Erik: /* Erik Oskamp */</p>
<hr />
<div>Akasaka Real Estate focuses on helping foreigners buy property in Tokyo, including both primary residences and investment properties. Other services include property management, help with obtaining financing, and organizing renovations. Akasaka Real Estate’s website also features property listings translated into English, as well as detailed statistics on the local market.<br />
<br />
<br />
== Team ==<br />
<br />
Akasaka Real Estate has assembled a team of seasoned real estate professionals with a wealth of knowledge and experience to draw upon when performing real estate brokerage, investment, consulting and management.<br />
<br />
=== Erik Oskamp ===<br />
'''Founder/President'''<br />
<br />
[[image:oskamp.jpg|right|150px|x]]<br />
<br />
Erik Oskamp came to Japan in 2004 and applied for a mortgage the first day. Within 2 months of research he bought his first property in Tokyo, a 3 bedroom house in Shirokane. By 2005 he bought his first investment property. During this process Mr. Oskamp encountered a lack of transparency in the Japanese real estate market and so proceeded to built computer models to assist with the statistical analysis. By 2006 he was able to realize his first capital gains with a 60% profit on the house in Shirokane. This encouraged him to take a more serious look at real estate. When many friends and colleagues started asking for information he realized the need for a real estate agency specialized in helping foreigners dealing with the Japanese market. He started Akasaka Real Estate in September 2007. He took advantage of the financial crisis by purchasing more properties in the dark days of early 2009. By 2010 many investors started following this strategy.<br />
<br />
Before Mr. Oskamp started Akasaka Real Estate he spent over 15 years working in finance for companies such as Credit Suisse, Citibank, UBS and Barclays in New York, London and Tokyo as well as his native Amsterdam. In his last position at Barclays he was working as a quantitative analyst, modeling the yen yield curve for swap traders. For his full resume look [https://www.akasakarealestate.com/articles/ErikOskamp.doc here].<br />
<br />
Mr. Oskamp divides his time between Tokyo, Manila, Hong Kong and Bangkok. He currently owns over two dozen properties in Japan, but rents the apartment he lives in. In his rare free time you might find him at the beach with his daughters or enjoying [http://www.oskamp.com/TRAVELING.html traveling].<br />
<br />
=== Chito Kera ===<br />
'''Licensed Realtor'''<br />
<br />
Chito Kera joined Akasaka Real Estate in October 2011. He has worked as a real estate agent for over 5 years as such has extensive experience with all aspects of real estate transactions. Kera-san speaks native Japanese and business level English.<br />
<br />
=== Mio Yagi ===<br />
'''Bookkeeper'''<br />
<br />
=== Yoshiaki Nakano===<br />
'''Property Manager'''<br />
<br />
=== Kaoru Arfaoui ===<br />
'''Property Manager'''<br />
<br />
=== Saya Yabusaki ===<br />
'''Property Manager'''<br />
<br />
=== Noriko Murray ===<br />
'''Property Manager'''<br />
<br />
=== Namihiko Wakabayashi ===<br />
<br />
In accordance with Japanese law no information is made public about Mr Namihiko Wakabayashi's time with Akasaka Real Estate.</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=Investment&diff=66Investment2023-09-25T04:45:31Z<p>Erik: /* Prefer apartments with an existing renter */</p>
<hr />
<div>This article is about investing in residential property in Tokyo with a focus on small units.<br />
<br />
== Reasons to invest in residential property in Tokyo ==<br />
<br />
* High Rents / Low Interest Rates<br />
<br />
* Strong Rule of Law<br />
: No restrictions on foreign ownership<br />
: Ownership rights firmly protected<br />
<br />
* Law is Pro-Landlord<br />
: Little protection for the renter at the end of the lease period<br />
: Key money, cleaning fees, renewal fees<br />
<br />
* Strong Currency<br />
: A common misconception is that the yen is strong and possibly over-valued. Due to persistent deflation the yen can buy more and so long-term currency comparisons should be corrected for inflation. Have a look [[The Yen Foreign Exchange Rate|here]] for an inflation corrected chart of the yen.<br />
: The US, UK and Europe are printing excessive amounts of money which increases the long-term risk of inflation that would lead to devaluation of their currencies.<br />
: Also Japan has a current account surplus, low individual debt levels and the government debt is entirely domestically financed<br />
<br />
* Demographics<br />
:Even though the population of Japan will decline, with so many people moving to Tokyo, the population in the capital is still increasing. The biggest change though is the decreasing family size and aging population. More and more people are living alone, with seniors the fastest growing group. This segment is projected to grow for another 20 years. However most new apartments that are built are larger properties suitable for families with children. This means that we expect a continuous strong rental demand for very small units.<br />
<br />
* Good Timing<br />
: Prices went up in 2006 and 2007. During the financial crisis in 2008 prices declined. Prices finally stabilized in the summer of 2009 and started slowly increasing after that. The earthquake in March 2011 caused prices in the center to fall again. However as of beginning 2012 prices seem to have stabilized. Overall the market is down 80-85% since 1990.<br />
<br />
[[image:centraltokyoprices.gif]]<br />
<br />
== What to Buy ==<br />
<br />
=== Prefer old apartments ===<br />
<br />
The advantages of older apartments are:<br />
* Higher rental yield<br />
* Lower depreciation<br />
* No earthquake risk as all the value is in the land<br />
<br />
Depreciation is brutal. After 30-35 years a building is worthless. There is very little for sale between 1984 and 1995. <br />
<br />
[[image:pricedepreciationakasaka.gif]]<br />
<br />
Rents for older apartments are also lower.<br />
<br />
[[image:rentdepreciationakasaka.gif]]<br />
<br />
But rents drop only about 30%, while prices drop 60%. So rental yields for older places are higher<br />
<br />
The earthquake standards were upgraded in 1981, so if there is a chance that you will live there yourself avoid buildings that are much older.<br />
<br />
=== Small apartments have higher yield ===<br />
<br />
[[image: yieldminatokulayout.gif]]<br />
<br />
=== Look outside the Center ===<br />
<br />
[[image: rentalyields.gif]]<br />
<br />
Rental yields are significantly higher outside the center. But avoid going outside the 23 wards of Tokyo. Not only is the population in the countryside rapidly declining, but also local real estate agents tend to have a near-monopoly in the smaller towns. As a result there is not a lot of transparency and it is hard to find out what a good price is. Also you would have to rely on that same broker to find renters. That put you at a disadvantage if that broker or his friends own property in the town as well. In Tokyo there are many brokers and the competition will ensure a decent level of service.<br />
<br />
=== Prefer apartments with an existing renter ===<br />
<br />
A property with a renter is called ‘Owner Change’ in Japan.<br />
<br />
The advantages of buying a property with a renter are:<br />
* No need to search for a renter. You start collecting rent from the day you get the keys.<br />
* They are cheaper. For small studio apartments the price difference is very small, but for a 3LDK the difference can be as much as 25%.<br />
: Many buyers are looking for a residence for themselves and thus are not interested in a rented apartment.<br />
: Japanese banks are reluctant to finance investment apartments, which means there is significantly less money chasing rented apartments.<br />
* You receive the deposit from the seller.<br />
However, you can not see inside. Sometimes there are pictures available and sellers are generally honest about the condition.<br />
<br />
=== Ordinary apartments are easy to rent out and to sell ===<br />
<br />
Ordinary apartments are easier to rent out or sell than unique apartments. It is a common misconception that an especially beautiful, centrally located and new apartment is easy to rent out. In general such apartments are significantly more expensive and as such there are only few people that can afford such a place. It is much better to invest in ordinary apartments, such as apartments in large buildings with many similar units. As there is a big market for such units there are always people offering and looking for such units. This means it is easy to establish the market price at which such an apartment attracts a renter or a buyer quickly. Some areas might not have many very large buildings, but always prefer to invest in what is common for the area.<br />
<br />
== Pitfalls ==<br />
<br />
When buying a property watch out for the following issues:<br />
<br />
=== Land Issues ===<br />
* Poor Road Access<br />
: The larger the road the more valuable the land is. Also the length of the frontage with the road has a large impact. If the frontage is less than 2 meters normally you are not allowed to rebuild the property and the land is essentially only worth something for the neighbors. If they are not buying it, you certainly shouldn't.<br />
* Setback<br />
: Most small roads in Tokyo are being widened. If land lies on such a road it might be necessary to give up a piece of the land for this purpose. Normally this happens when applying for a new building permit, but occasionally small slices of land are used for road widening without tearing down a building. As the land is made smaller an existing building suddenly might now be larger than officially allowed according to the zoning regulation. This can lead to confusion during the purchase and mortgage application as the seller needs to proof that the building originally was built according to the zoning laws. Not everybody has the appropriate documentation.<br />
<br />
* Rezoning<br />
: Sometimes land has been rezoned, often reducing the floorspace that can be built. As a result existing buildings afterward are technically illegal and an owner will need to proof that the original building permit was legal.<br />
<br />
=== Building Issues ===<br />
* Post Construction Inspection Certificate<br />
: This certificate proofs that a building was legal according to the zoning laws when it was built. Often for older buildings the sellers do not have this document, but we can often find it at the local government office. Normally this document is needed when applying for a mortgage.<br />
* Union Fund<br />
: Also called sinking fund, this money is held by the union of owners in reserve for any future maintenance. It is important that a building is reasonably capitalized to pay for the necessary upkeep and refurbishment. The biggest expense often is the elevator so prefer buildings without an elevator or where the elevator is relatively new.<br />
* Maintenance Costs<br />
: The building maintenance costs are used for the regular monthly expenses such as cleaning and utilities for the common spaces. The monthly amount payable varies wildly among buildings. If a building owns parking spaces extra income can be had from renting these out and in such cases the maintenance fee might be lower.<br />
* Artificially Inflated Rents<br />
: Occasionally you might find an apartment with a very high rental yield. Always compare if the current rent is close to the market rent. Rents have dropped significantly over the years and so a long-term renter might be overpaying. If such a renter leaves the new owner might have to drop the rent drastically to attract a new renter. <br />
* Cemeteries, red light districts and suicides<br />
: A property next to a cemetery is much cheaper as the Japanese are not comfortable in such places. Also if a suicide has happened in the apartment most Japanese would not want to live there. There are no clear rules about informing prospective buyers or tenants about such conditions, but commonly any suicides in the last 2 years or by a previous tenant are mentioned. Often on inquiry with the doorman or maintenance people you can find out events that happened even decades ago. It can be advantageous to purchase such units and rent them out to foreigners who are normally much less worried about these things. Unfortunately such conditions are not properly advertised.<br />
<br />
=== Contract Issues ===<br />
<br />
The way business is done in Japan is different from many other countries. Even though rule of law is very strong in Japan it is unusual to go to court. This process is expensive and quite time consuming. Culturally the Japanese prefer to resolve their conflicts through direct mediation to avoid nasty confrontations. And so you should see a contract in Japan as a declaration of intention and disclosure document.There is no need to get overly suspicious about the details and instead be extra careful that you manage the expectations the other party might have. In Japan business is done based on trust. Leading someone to believe that you will do something will lead to an obligation even though it might not be in writing.<br />
<br />
=== Leaseholds ===<br />
<br />
A leasehold is a building that has been constructed on land that belongs to someone else. It is possible to buy such a structure and take over the lease of the land. In Japan often the owner of the land is a temple or shrine. Each leasehold is different and leases are commonly for periods between 20 and 50 years and are automatically renewed. The monthly charges are low and often comparable with the real estate tax on land. The renewal fees are hefty though, often up to 5 to 10% of the value of the property. Also many lease contracts have other restrictions. For example the owner of the land has to agree with any construction and could require a substantial gift before giving approval. Also a percentage of the proceeds of a sale might be required to transfer the lease to a new building owner.<br />
<br />
The biggest obstacle to purchasing a leasehold is that banks are reluctant to lend against it as there is no collateral. And as each lease contract is different and confidential it is impossible to compare prices for leaseholds. Even though leaseholds are 20 to 40% cheaper it is therefore best to stay away from these types of property. The only reason to buy a leasehold would be that you have the cash and you really would like to live for a long time in a particular neighborhood.<br />
<br />
=== Foreclosures ===<br />
<br />
The reasons I discourage anyone from buying a foreclosure in Japan are as follows:<br />
* Bankruptcy is a big shame in Japan, so the family normally helps out and foreclosures are very rare. In Japan most financial problems get solved behind closed doors.<br />
* The foreclosures that do get executed in general are caused by a combination of addiction (gambling, alcohol), mental disease (Alzheimer) and mafia involvement (Yakuza). Often the family has long ago disowned the seller.<br />
* The foreclosure process is very long (over 2 years) in which time often the yakuza has moved into the property. This means that when you buy a property from the court there is a big chance that it has an unlawful (and possibly violent) tenant. It is also possible that the original owner is still there with nowhere else to go.<br />
* As many foreigners do not understand the distinction between foreclosures in Japan and their own country they tend to have an interest in the limited amount of foreclosures in Japan. This results in bid prices that are higher than market value (the so-called [http://en.wikipedia.org/wiki/Winner%27s_curse winner's curse]).<br />
* Only foreclosures in the countryside can be interesting, but realize that most villagers will look at a buyer of a foreclosure as a vulture. It requires significant commitment to the local community to make a successful purchase. One guy who pulled this off is Beau Retallick. He brought bungy jumping to Japan and after a lot of research through a foreclosure bought a hotel in Minakami called [http://www.yubiso-sansou.com/ Yubiso Sansou].<br />
<br />
=== Demolition of older buildings ===<br />
<br />
There is this myth that buildings in Tokyo have a certain lifespan and after that get demolished. The reality is that it is very difficult to demolish a building as the approval of 80% of the owners is needed. This very rarely happens even though often the land value is greater than the market value of all the units combined. Instead the union of owners routinely vote to refurbish. In some rare cases a developer will come in and make a bid on all the units in the building. Normally such a bid is a choice between a replacement unit in the new building at a discount or a cash offer and will be contingent on all the owners accepting it.</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=Investment&diff=65Investment2023-09-25T04:45:10Z<p>Erik: /* Prefer apartments with an existing renter */</p>
<hr />
<div>This article is about investing in residential property in Tokyo with a focus on small units.<br />
<br />
== Reasons to invest in residential property in Tokyo ==<br />
<br />
* High Rents / Low Interest Rates<br />
<br />
* Strong Rule of Law<br />
: No restrictions on foreign ownership<br />
: Ownership rights firmly protected<br />
<br />
* Law is Pro-Landlord<br />
: Little protection for the renter at the end of the lease period<br />
: Key money, cleaning fees, renewal fees<br />
<br />
* Strong Currency<br />
: A common misconception is that the yen is strong and possibly over-valued. Due to persistent deflation the yen can buy more and so long-term currency comparisons should be corrected for inflation. Have a look [[The Yen Foreign Exchange Rate|here]] for an inflation corrected chart of the yen.<br />
: The US, UK and Europe are printing excessive amounts of money which increases the long-term risk of inflation that would lead to devaluation of their currencies.<br />
: Also Japan has a current account surplus, low individual debt levels and the government debt is entirely domestically financed<br />
<br />
* Demographics<br />
:Even though the population of Japan will decline, with so many people moving to Tokyo, the population in the capital is still increasing. The biggest change though is the decreasing family size and aging population. More and more people are living alone, with seniors the fastest growing group. This segment is projected to grow for another 20 years. However most new apartments that are built are larger properties suitable for families with children. This means that we expect a continuous strong rental demand for very small units.<br />
<br />
* Good Timing<br />
: Prices went up in 2006 and 2007. During the financial crisis in 2008 prices declined. Prices finally stabilized in the summer of 2009 and started slowly increasing after that. The earthquake in March 2011 caused prices in the center to fall again. However as of beginning 2012 prices seem to have stabilized. Overall the market is down 80-85% since 1990.<br />
<br />
[[image:centraltokyoprices.gif]]<br />
<br />
== What to Buy ==<br />
<br />
=== Prefer old apartments ===<br />
<br />
The advantages of older apartments are:<br />
* Higher rental yield<br />
* Lower depreciation<br />
* No earthquake risk as all the value is in the land<br />
<br />
Depreciation is brutal. After 30-35 years a building is worthless. There is very little for sale between 1984 and 1995. <br />
<br />
[[image:pricedepreciationakasaka.gif]]<br />
<br />
Rents for older apartments are also lower.<br />
<br />
[[image:rentdepreciationakasaka.gif]]<br />
<br />
But rents drop only about 30%, while prices drop 60%. So rental yields for older places are higher<br />
<br />
The earthquake standards were upgraded in 1981, so if there is a chance that you will live there yourself avoid buildings that are much older.<br />
<br />
=== Small apartments have higher yield ===<br />
<br />
[[image: yieldminatokulayout.gif]]<br />
<br />
=== Look outside the Center ===<br />
<br />
[[image: rentalyields.gif]]<br />
<br />
Rental yields are significantly higher outside the center. But avoid going outside the 23 wards of Tokyo. Not only is the population in the countryside rapidly declining, but also local real estate agents tend to have a near-monopoly in the smaller towns. As a result there is not a lot of transparency and it is hard to find out what a good price is. Also you would have to rely on that same broker to find renters. That put you at a disadvantage if that broker or his friends own property in the town as well. In Tokyo there are many brokers and the competition will ensure a decent level of service.<br />
<br />
=== Prefer apartments with an existing renter ===<br />
<br />
A property with a renter is called ‘Owner Change’ in Japan.<br />
<br />
The advantages of buying a property with a renter are:<br />
* No need to search for a renter. You start collecting rent from the day you get the keys.<br />
* They are cheaper. For small studio apartments the price difference is very small, but for a 3LDK the difference can be as much as 25%.<br />
: Many buyers are looking for a residence for themselves and thus are not interested in a rented apartment.<br />
: Japanese banks are reluctant to finance investment apartments, which means there is significantly less money chasing rented apartments.<br />
* You receive the deposit from the seller.<br />
However, you can not see inside.<br />
: But sometimes there are pictures available and sellers are generally honest about the condition.<br />
<br />
=== Ordinary apartments are easy to rent out and to sell ===<br />
<br />
Ordinary apartments are easier to rent out or sell than unique apartments. It is a common misconception that an especially beautiful, centrally located and new apartment is easy to rent out. In general such apartments are significantly more expensive and as such there are only few people that can afford such a place. It is much better to invest in ordinary apartments, such as apartments in large buildings with many similar units. As there is a big market for such units there are always people offering and looking for such units. This means it is easy to establish the market price at which such an apartment attracts a renter or a buyer quickly. Some areas might not have many very large buildings, but always prefer to invest in what is common for the area.<br />
<br />
== Pitfalls ==<br />
<br />
When buying a property watch out for the following issues:<br />
<br />
=== Land Issues ===<br />
* Poor Road Access<br />
: The larger the road the more valuable the land is. Also the length of the frontage with the road has a large impact. If the frontage is less than 2 meters normally you are not allowed to rebuild the property and the land is essentially only worth something for the neighbors. If they are not buying it, you certainly shouldn't.<br />
* Setback<br />
: Most small roads in Tokyo are being widened. If land lies on such a road it might be necessary to give up a piece of the land for this purpose. Normally this happens when applying for a new building permit, but occasionally small slices of land are used for road widening without tearing down a building. As the land is made smaller an existing building suddenly might now be larger than officially allowed according to the zoning regulation. This can lead to confusion during the purchase and mortgage application as the seller needs to proof that the building originally was built according to the zoning laws. Not everybody has the appropriate documentation.<br />
<br />
* Rezoning<br />
: Sometimes land has been rezoned, often reducing the floorspace that can be built. As a result existing buildings afterward are technically illegal and an owner will need to proof that the original building permit was legal.<br />
<br />
=== Building Issues ===<br />
* Post Construction Inspection Certificate<br />
: This certificate proofs that a building was legal according to the zoning laws when it was built. Often for older buildings the sellers do not have this document, but we can often find it at the local government office. Normally this document is needed when applying for a mortgage.<br />
* Union Fund<br />
: Also called sinking fund, this money is held by the union of owners in reserve for any future maintenance. It is important that a building is reasonably capitalized to pay for the necessary upkeep and refurbishment. The biggest expense often is the elevator so prefer buildings without an elevator or where the elevator is relatively new.<br />
* Maintenance Costs<br />
: The building maintenance costs are used for the regular monthly expenses such as cleaning and utilities for the common spaces. The monthly amount payable varies wildly among buildings. If a building owns parking spaces extra income can be had from renting these out and in such cases the maintenance fee might be lower.<br />
* Artificially Inflated Rents<br />
: Occasionally you might find an apartment with a very high rental yield. Always compare if the current rent is close to the market rent. Rents have dropped significantly over the years and so a long-term renter might be overpaying. If such a renter leaves the new owner might have to drop the rent drastically to attract a new renter. <br />
* Cemeteries, red light districts and suicides<br />
: A property next to a cemetery is much cheaper as the Japanese are not comfortable in such places. Also if a suicide has happened in the apartment most Japanese would not want to live there. There are no clear rules about informing prospective buyers or tenants about such conditions, but commonly any suicides in the last 2 years or by a previous tenant are mentioned. Often on inquiry with the doorman or maintenance people you can find out events that happened even decades ago. It can be advantageous to purchase such units and rent them out to foreigners who are normally much less worried about these things. Unfortunately such conditions are not properly advertised.<br />
<br />
=== Contract Issues ===<br />
<br />
The way business is done in Japan is different from many other countries. Even though rule of law is very strong in Japan it is unusual to go to court. This process is expensive and quite time consuming. Culturally the Japanese prefer to resolve their conflicts through direct mediation to avoid nasty confrontations. And so you should see a contract in Japan as a declaration of intention and disclosure document.There is no need to get overly suspicious about the details and instead be extra careful that you manage the expectations the other party might have. In Japan business is done based on trust. Leading someone to believe that you will do something will lead to an obligation even though it might not be in writing.<br />
<br />
=== Leaseholds ===<br />
<br />
A leasehold is a building that has been constructed on land that belongs to someone else. It is possible to buy such a structure and take over the lease of the land. In Japan often the owner of the land is a temple or shrine. Each leasehold is different and leases are commonly for periods between 20 and 50 years and are automatically renewed. The monthly charges are low and often comparable with the real estate tax on land. The renewal fees are hefty though, often up to 5 to 10% of the value of the property. Also many lease contracts have other restrictions. For example the owner of the land has to agree with any construction and could require a substantial gift before giving approval. Also a percentage of the proceeds of a sale might be required to transfer the lease to a new building owner.<br />
<br />
The biggest obstacle to purchasing a leasehold is that banks are reluctant to lend against it as there is no collateral. And as each lease contract is different and confidential it is impossible to compare prices for leaseholds. Even though leaseholds are 20 to 40% cheaper it is therefore best to stay away from these types of property. The only reason to buy a leasehold would be that you have the cash and you really would like to live for a long time in a particular neighborhood.<br />
<br />
=== Foreclosures ===<br />
<br />
The reasons I discourage anyone from buying a foreclosure in Japan are as follows:<br />
* Bankruptcy is a big shame in Japan, so the family normally helps out and foreclosures are very rare. In Japan most financial problems get solved behind closed doors.<br />
* The foreclosures that do get executed in general are caused by a combination of addiction (gambling, alcohol), mental disease (Alzheimer) and mafia involvement (Yakuza). Often the family has long ago disowned the seller.<br />
* The foreclosure process is very long (over 2 years) in which time often the yakuza has moved into the property. This means that when you buy a property from the court there is a big chance that it has an unlawful (and possibly violent) tenant. It is also possible that the original owner is still there with nowhere else to go.<br />
* As many foreigners do not understand the distinction between foreclosures in Japan and their own country they tend to have an interest in the limited amount of foreclosures in Japan. This results in bid prices that are higher than market value (the so-called [http://en.wikipedia.org/wiki/Winner%27s_curse winner's curse]).<br />
* Only foreclosures in the countryside can be interesting, but realize that most villagers will look at a buyer of a foreclosure as a vulture. It requires significant commitment to the local community to make a successful purchase. One guy who pulled this off is Beau Retallick. He brought bungy jumping to Japan and after a lot of research through a foreclosure bought a hotel in Minakami called [http://www.yubiso-sansou.com/ Yubiso Sansou].<br />
<br />
=== Demolition of older buildings ===<br />
<br />
There is this myth that buildings in Tokyo have a certain lifespan and after that get demolished. The reality is that it is very difficult to demolish a building as the approval of 80% of the owners is needed. This very rarely happens even though often the land value is greater than the market value of all the units combined. Instead the union of owners routinely vote to refurbish. In some rare cases a developer will come in and make a bid on all the units in the building. Normally such a bid is a choice between a replacement unit in the new building at a discount or a cash offer and will be contingent on all the owners accepting it.</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=Transaction_Costs&diff=64Transaction Costs2023-05-31T06:11:30Z<p>Erik: /* A small investment apartment in Ebisu */</p>
<hr />
<div>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.<br />
<br />
= Purchase Fees =<br />
<br />
=== Broker Fee ===<br />
<br />
The standard broker is 3.30% of the transaction price plus JPY 66,000. 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.<br />
<br />
=== Stamp Duty ===<br />
<br />
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 [http://www.akasakarealestate.com/wiki/index.php/Taxes#Stamp_Duty here] for the details of the amount due.<br />
<br />
=== Judicial Scrivener Fee ===<br />
<br />
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 ([http://www.moj.go.jp/content/000011324.pdf 1] and [http://www.nta.go.jp/taxanswer/inshi/7191.htm 2]) to the registration tax the scrivener will include in his invoice.<br />
<br />
= Other Closing Costs =<br />
<br />
Other income and expenses that show up on the final closing cost calculation are:<br />
<br />
=== Acquisition Tax ===<br />
<br />
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.<br />
For more details on how to calculate this tax look at the [http://www.akasakarealestate.com/wiki/index.php/Taxes#Acquisition_Tax acquisition tax calculation].<br />
<br />
=== Annual Possession Tax ===<br />
<br />
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.<br />
<br />
=== Monthly Maintenance ===<br />
<br />
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.<br />
<br />
=== Rent and Rental Deposit ===<br />
<br />
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.<br />
<br />
= Additional Costs =<br />
<br />
Furthermore you might want to budget for the following costs:<br />
<br />
=== Mortgage Origination Fees ===<br />
<br />
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.<br />
<br />
=== Remittance Fees ===<br />
<br />
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 ([http://www.bk.mufg.jp/gdocs/kinri/list_j/kinri/kawase.html 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 [http://www.hifx.co.uk/ HiFX] or [http://www.currenciesdirect.com/ CurrenciesDirect]. We have negotiated a special rate with Currencies Direct. Just mention affiliate code A010815 to get the better rate. <br />
<br />
When transferring yen the remittance fee our bank (MUFJ) charges is as follows:<br />
<br />
{| class="wikitable"<br />
|-<br />
! Transfer amount<br />
! Remittance Fee<br />
|-<br />
|1 - 5,000,000 <br />
|4,000<br />
|-<br />
|5,000,001 and over<br />
|1,500 + 0.05% of transfer amount<br />
|}<br />
<br />
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. <br />
<br />
If the seller requests the funds to be send by transfer there is a 275 yen bank transfer fee. For a check (cheque) the normal fee is 880 yen.<br />
<br />
=== Fire Insurance ===<br />
<br />
Fire insurance is relatively cheap. [http://human-corporation.com/ 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.<br />
<br />
=== Moving Costs ===<br />
<br />
To get a quote from an English speaking mover call Mike Kealy at [http://xpstokyo.com/ XPS Tokyo].<br />
<br />
= Seller's Costs =<br />
<br />
=== Broker Fee ===<br />
<br />
The seller also pays a broker fee. It is the same amount as the buyer at 3.30% of the transaction price plus JPY 66,000.<br />
<br />
=== Stamp Duty ===<br />
<br />
The seller has to pay the same stamp duty as the buyer.<br />
<br />
=== Scrivener Fee ===<br />
<br />
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.<br />
<br />
=== Bank Fees ===<br />
<br />
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.<br />
<br />
<br />
<br />
= Examples =<br />
<br />
<br />
=== A small investment apartment in Ebisu ===<br />
<br />
Purchase price: JPY 14.5 million<br />
<br />
Transaction Date: December 23, 2022<br />
<br />
Total closing costs at closing: 513,596 (3.54%)<br />
<br />
Actual transaction fees: 854,908 (5.90%)<br />
<br />
Paid by buyer at closing: 752,693 (5.19%)<br />
* Broker Fee: 544,500<br />
* Scrivener Fee: 186,108<br />
* Stamp Duty: 10,000<br />
* Annual Possession Tax: 730 (9 / 365 x 29,619)<br />
* Maintenance Fee: 11,355 (9 days in December + January)<br />
<br />
Paid about 3 months after closing (0.79%)<br />
* Acquisition Tax: 114,300 (Land 90,200 + building 24,100)<br />
<br />
Received from seller at closing: 239,097 (1.65%)<br />
* Deposit 140,000<br />
* Rent: 99,097 (9 days in December + January)<br />
<br />
=== A small investment apartment in Setagaya===<br />
<br />
Purchase price: JPY 5.85million<br />
<br />
Transaction Date: September 9, 2022<br />
<br />
Total closing costs at closing: 330,957 (5.66%)<br />
<br />
Actual transaction fees: 486,550 (8.32%)<br />
<br />
Paid by buyer at closing: 453,957 (7.76%)<br />
* Broker Fee: 259,050<br />
* Scrivener Fee: 150,200<br />
* Stamp Duty: 5,000<br />
* Annual Possession Tax: 7,208 (114 / 365 x 23,077)<br />
* Maintenance Fee: 32,499 (22 days in September + October + November)<br />
<br />
Paid about 3 months after closing (1.24%)<br />
* Acquisition Tax: 72,300 (Land 46,400 + building 25,900)<br />
<br />
Received from seller at closing: 123,000 (2.10%)<br />
* Deposit 45,000<br />
* Rent: 78,000 (22 days in September + October)<br />
<br />
=== A small house in the center ===<br />
<br />
Purchase price: JPY 50.5 million<br />
<br />
Transaction Date: May 10, 2010<br />
<br />
Total closing costs: 3,253,058 (6.4%)<br />
* Broker Fee: 1,488,375<br />
* Scrivener Fee: 722,050<br />
* Stamp Duty: 45,000<br />
* Annual Possession Tax: 92,403 (145 / 365 x 153,305)<br />
* Acquisition Tax: 569,600 (Land 393,100 + Building 176,500)<br />
* Bank Fees: 335,630<br />
<br />
=== A large investment apartment in the center ===<br />
<br />
Purchase price: JPY 73 million<br />
<br />
Transaction Date: September 3, 2010<br />
<br />
Total closing costs: 2,937,434 (4.0%)<br />
<br />
Paid by buyer: 5,100,767 (7.0%)<br />
* Broker Fee: 2,329,503<br />
* Scrivener Fee: 1,156,930<br />
* Stamp Duty: 45,000<br />
* Annual Possession Tax: 114,837 (120 / 365 x 336,573)<br />
* Maintenance Fee: 96,967 (28 days in September = 28/30 x 103,893)<br />
* Acquisition Tax: 981,900 (Land 532,900 + Building 449,000)<br />
* Bank Fees: 375,630<br />
<br />
Received from seller: 2,163,333 (3.0%)<br />
* Deposit 1,650,000<br />
* Rent: 513,333 (28 days in September = 28 / 30 x 550,000)</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=Transaction_Costs&diff=63Transaction Costs2023-05-31T06:11:10Z<p>Erik: /* A small investment apartment in Setagaya */</p>
<hr />
<div>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.<br />
<br />
= Purchase Fees =<br />
<br />
=== Broker Fee ===<br />
<br />
The standard broker is 3.30% of the transaction price plus JPY 66,000. 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.<br />
<br />
=== Stamp Duty ===<br />
<br />
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 [http://www.akasakarealestate.com/wiki/index.php/Taxes#Stamp_Duty here] for the details of the amount due.<br />
<br />
=== Judicial Scrivener Fee ===<br />
<br />
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 ([http://www.moj.go.jp/content/000011324.pdf 1] and [http://www.nta.go.jp/taxanswer/inshi/7191.htm 2]) to the registration tax the scrivener will include in his invoice.<br />
<br />
= Other Closing Costs =<br />
<br />
Other income and expenses that show up on the final closing cost calculation are:<br />
<br />
=== Acquisition Tax ===<br />
<br />
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.<br />
For more details on how to calculate this tax look at the [http://www.akasakarealestate.com/wiki/index.php/Taxes#Acquisition_Tax acquisition tax calculation].<br />
<br />
=== Annual Possession Tax ===<br />
<br />
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.<br />
<br />
=== Monthly Maintenance ===<br />
<br />
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.<br />
<br />
=== Rent and Rental Deposit ===<br />
<br />
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.<br />
<br />
= Additional Costs =<br />
<br />
Furthermore you might want to budget for the following costs:<br />
<br />
=== Mortgage Origination Fees ===<br />
<br />
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.<br />
<br />
=== Remittance Fees ===<br />
<br />
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 ([http://www.bk.mufg.jp/gdocs/kinri/list_j/kinri/kawase.html 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 [http://www.hifx.co.uk/ HiFX] or [http://www.currenciesdirect.com/ CurrenciesDirect]. We have negotiated a special rate with Currencies Direct. Just mention affiliate code A010815 to get the better rate. <br />
<br />
When transferring yen the remittance fee our bank (MUFJ) charges is as follows:<br />
<br />
{| class="wikitable"<br />
|-<br />
! Transfer amount<br />
! Remittance Fee<br />
|-<br />
|1 - 5,000,000 <br />
|4,000<br />
|-<br />
|5,000,001 and over<br />
|1,500 + 0.05% of transfer amount<br />
|}<br />
<br />
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. <br />
<br />
If the seller requests the funds to be send by transfer there is a 275 yen bank transfer fee. For a check (cheque) the normal fee is 880 yen.<br />
<br />
=== Fire Insurance ===<br />
<br />
Fire insurance is relatively cheap. [http://human-corporation.com/ 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.<br />
<br />
=== Moving Costs ===<br />
<br />
To get a quote from an English speaking mover call Mike Kealy at [http://xpstokyo.com/ XPS Tokyo].<br />
<br />
= Seller's Costs =<br />
<br />
=== Broker Fee ===<br />
<br />
The seller also pays a broker fee. It is the same amount as the buyer at 3.30% of the transaction price plus JPY 66,000.<br />
<br />
=== Stamp Duty ===<br />
<br />
The seller has to pay the same stamp duty as the buyer.<br />
<br />
=== Scrivener Fee ===<br />
<br />
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.<br />
<br />
=== Bank Fees ===<br />
<br />
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.<br />
<br />
<br />
<br />
= Examples =<br />
<br />
<br />
=== A small investment apartment in Ebisu ===<br />
<br />
Purchase price: JPY 14.5 million<br />
<br />
Transaction Date: December 23, 2022<br />
<br />
Total closing costs at closing: 513,596 (3.54%)<br />
Actual transaction fees: 854,908 (5.90%)<br />
<br />
Paid by buyer at closing: 752,693 (5.19%)<br />
* Broker Fee: 544,500<br />
* Scrivener Fee: 186,108<br />
* Stamp Duty: 10,000<br />
* Annual Possession Tax: 730 (9 / 365 x 29,619)<br />
* Maintenance Fee: 11,355 (9 days in December + January)<br />
<br />
Paid about 3 months after closing (0.79%)<br />
* Acquisition Tax: 114,300 (Land 90,200 + building 24,100)<br />
<br />
Received from seller at closing: 239,097 (1.65%)<br />
* Deposit 140,000<br />
* Rent: 99,097 (9 days in December + January)<br />
<br />
=== A small investment apartment in Setagaya===<br />
<br />
Purchase price: JPY 5.85million<br />
<br />
Transaction Date: September 9, 2022<br />
<br />
Total closing costs at closing: 330,957 (5.66%)<br />
<br />
Actual transaction fees: 486,550 (8.32%)<br />
<br />
Paid by buyer at closing: 453,957 (7.76%)<br />
* Broker Fee: 259,050<br />
* Scrivener Fee: 150,200<br />
* Stamp Duty: 5,000<br />
* Annual Possession Tax: 7,208 (114 / 365 x 23,077)<br />
* Maintenance Fee: 32,499 (22 days in September + October + November)<br />
<br />
Paid about 3 months after closing (1.24%)<br />
* Acquisition Tax: 72,300 (Land 46,400 + building 25,900)<br />
<br />
Received from seller at closing: 123,000 (2.10%)<br />
* Deposit 45,000<br />
* Rent: 78,000 (22 days in September + October)<br />
<br />
=== A small house in the center ===<br />
<br />
Purchase price: JPY 50.5 million<br />
<br />
Transaction Date: May 10, 2010<br />
<br />
Total closing costs: 3,253,058 (6.4%)<br />
* Broker Fee: 1,488,375<br />
* Scrivener Fee: 722,050<br />
* Stamp Duty: 45,000<br />
* Annual Possession Tax: 92,403 (145 / 365 x 153,305)<br />
* Acquisition Tax: 569,600 (Land 393,100 + Building 176,500)<br />
* Bank Fees: 335,630<br />
<br />
=== A large investment apartment in the center ===<br />
<br />
Purchase price: JPY 73 million<br />
<br />
Transaction Date: September 3, 2010<br />
<br />
Total closing costs: 2,937,434 (4.0%)<br />
<br />
Paid by buyer: 5,100,767 (7.0%)<br />
* Broker Fee: 2,329,503<br />
* Scrivener Fee: 1,156,930<br />
* Stamp Duty: 45,000<br />
* Annual Possession Tax: 114,837 (120 / 365 x 336,573)<br />
* Maintenance Fee: 96,967 (28 days in September = 28/30 x 103,893)<br />
* Acquisition Tax: 981,900 (Land 532,900 + Building 449,000)<br />
* Bank Fees: 375,630<br />
<br />
Received from seller: 2,163,333 (3.0%)<br />
* Deposit 1,650,000<br />
* Rent: 513,333 (28 days in September = 28 / 30 x 550,000)</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=Transaction_Costs&diff=62Transaction Costs2023-05-31T06:10:33Z<p>Erik: /* Examples */</p>
<hr />
<div>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.<br />
<br />
= Purchase Fees =<br />
<br />
=== Broker Fee ===<br />
<br />
The standard broker is 3.30% of the transaction price plus JPY 66,000. 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.<br />
<br />
=== Stamp Duty ===<br />
<br />
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 [http://www.akasakarealestate.com/wiki/index.php/Taxes#Stamp_Duty here] for the details of the amount due.<br />
<br />
=== Judicial Scrivener Fee ===<br />
<br />
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 ([http://www.moj.go.jp/content/000011324.pdf 1] and [http://www.nta.go.jp/taxanswer/inshi/7191.htm 2]) to the registration tax the scrivener will include in his invoice.<br />
<br />
= Other Closing Costs =<br />
<br />
Other income and expenses that show up on the final closing cost calculation are:<br />
<br />
=== Acquisition Tax ===<br />
<br />
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.<br />
For more details on how to calculate this tax look at the [http://www.akasakarealestate.com/wiki/index.php/Taxes#Acquisition_Tax acquisition tax calculation].<br />
<br />
=== Annual Possession Tax ===<br />
<br />
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.<br />
<br />
=== Monthly Maintenance ===<br />
<br />
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.<br />
<br />
=== Rent and Rental Deposit ===<br />
<br />
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.<br />
<br />
= Additional Costs =<br />
<br />
Furthermore you might want to budget for the following costs:<br />
<br />
=== Mortgage Origination Fees ===<br />
<br />
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.<br />
<br />
=== Remittance Fees ===<br />
<br />
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 ([http://www.bk.mufg.jp/gdocs/kinri/list_j/kinri/kawase.html 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 [http://www.hifx.co.uk/ HiFX] or [http://www.currenciesdirect.com/ CurrenciesDirect]. We have negotiated a special rate with Currencies Direct. Just mention affiliate code A010815 to get the better rate. <br />
<br />
When transferring yen the remittance fee our bank (MUFJ) charges is as follows:<br />
<br />
{| class="wikitable"<br />
|-<br />
! Transfer amount<br />
! Remittance Fee<br />
|-<br />
|1 - 5,000,000 <br />
|4,000<br />
|-<br />
|5,000,001 and over<br />
|1,500 + 0.05% of transfer amount<br />
|}<br />
<br />
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. <br />
<br />
If the seller requests the funds to be send by transfer there is a 275 yen bank transfer fee. For a check (cheque) the normal fee is 880 yen.<br />
<br />
=== Fire Insurance ===<br />
<br />
Fire insurance is relatively cheap. [http://human-corporation.com/ 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.<br />
<br />
=== Moving Costs ===<br />
<br />
To get a quote from an English speaking mover call Mike Kealy at [http://xpstokyo.com/ XPS Tokyo].<br />
<br />
= Seller's Costs =<br />
<br />
=== Broker Fee ===<br />
<br />
The seller also pays a broker fee. It is the same amount as the buyer at 3.30% of the transaction price plus JPY 66,000.<br />
<br />
=== Stamp Duty ===<br />
<br />
The seller has to pay the same stamp duty as the buyer.<br />
<br />
=== Scrivener Fee ===<br />
<br />
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.<br />
<br />
=== Bank Fees ===<br />
<br />
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.<br />
<br />
<br />
<br />
= Examples =<br />
<br />
<br />
=== A small investment apartment in Ebisu ===<br />
<br />
Purchase price: JPY 14.5 million<br />
<br />
Transaction Date: December 23, 2022<br />
<br />
Total closing costs at closing: 513,596 (3.54%)<br />
Actual transaction fees: 854,908 (5.90%)<br />
<br />
Paid by buyer at closing: 752,693 (5.19%)<br />
* Broker Fee: 544,500<br />
* Scrivener Fee: 186,108<br />
* Stamp Duty: 10,000<br />
* Annual Possession Tax: 730 (9 / 365 x 29,619)<br />
* Maintenance Fee: 11,355 (9 days in December + January)<br />
<br />
Paid about 3 months after closing (0.79%)<br />
* Acquisition Tax: 114,300 (Land 90,200 + building 24,100)<br />
<br />
Received from seller at closing: 239,097 (1.65%)<br />
* Deposit 140,000<br />
* Rent: 99,097 (9 days in December + January)<br />
<br />
=== A small investment apartment in Setagaya===<br />
<br />
Purchase price: JPY 5.85million<br />
<br />
Transaction Date: September 9, 2022<br />
<br />
Total closing costs at closing: 330,957 (5.66%)<br />
Actual transaction fees: 486,550 (8.32%)<br />
<br />
Paid by buyer at closing: 453,957 (7.76%)<br />
* Broker Fee: 259,050<br />
* Scrivener Fee: 150,200<br />
* Stamp Duty: 5,000<br />
* Annual Possession Tax: 7,208 (114 / 365 x 23,077)<br />
* Maintenance Fee: 32,499 (22 days in September + October + November)<br />
<br />
Paid about 3 months after closing (1.24%)<br />
* Acquisition Tax: 72,300 (Land 46,400 + building 25,900)<br />
<br />
Received from seller at closing: 123,000 (2.10%)<br />
* Deposit 45,000<br />
* Rent: 78,000 (22 days in September + October)<br />
<br />
=== A small house in the center ===<br />
<br />
Purchase price: JPY 50.5 million<br />
<br />
Transaction Date: May 10, 2010<br />
<br />
Total closing costs: 3,253,058 (6.4%)<br />
* Broker Fee: 1,488,375<br />
* Scrivener Fee: 722,050<br />
* Stamp Duty: 45,000<br />
* Annual Possession Tax: 92,403 (145 / 365 x 153,305)<br />
* Acquisition Tax: 569,600 (Land 393,100 + Building 176,500)<br />
* Bank Fees: 335,630<br />
<br />
=== A large investment apartment in the center ===<br />
<br />
Purchase price: JPY 73 million<br />
<br />
Transaction Date: September 3, 2010<br />
<br />
Total closing costs: 2,937,434 (4.0%)<br />
<br />
Paid by buyer: 5,100,767 (7.0%)<br />
* Broker Fee: 2,329,503<br />
* Scrivener Fee: 1,156,930<br />
* Stamp Duty: 45,000<br />
* Annual Possession Tax: 114,837 (120 / 365 x 336,573)<br />
* Maintenance Fee: 96,967 (28 days in September = 28/30 x 103,893)<br />
* Acquisition Tax: 981,900 (Land 532,900 + Building 449,000)<br />
* Bank Fees: 375,630<br />
<br />
Received from seller: 2,163,333 (3.0%)<br />
* Deposit 1,650,000<br />
* Rent: 513,333 (28 days in September = 28 / 30 x 550,000)</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=Transaction_Costs&diff=61Transaction Costs2023-05-31T06:01:39Z<p>Erik: /* Examples */</p>
<hr />
<div>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.<br />
<br />
= Purchase Fees =<br />
<br />
=== Broker Fee ===<br />
<br />
The standard broker is 3.30% of the transaction price plus JPY 66,000. 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.<br />
<br />
=== Stamp Duty ===<br />
<br />
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 [http://www.akasakarealestate.com/wiki/index.php/Taxes#Stamp_Duty here] for the details of the amount due.<br />
<br />
=== Judicial Scrivener Fee ===<br />
<br />
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 ([http://www.moj.go.jp/content/000011324.pdf 1] and [http://www.nta.go.jp/taxanswer/inshi/7191.htm 2]) to the registration tax the scrivener will include in his invoice.<br />
<br />
= Other Closing Costs =<br />
<br />
Other income and expenses that show up on the final closing cost calculation are:<br />
<br />
=== Acquisition Tax ===<br />
<br />
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.<br />
For more details on how to calculate this tax look at the [http://www.akasakarealestate.com/wiki/index.php/Taxes#Acquisition_Tax acquisition tax calculation].<br />
<br />
=== Annual Possession Tax ===<br />
<br />
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.<br />
<br />
=== Monthly Maintenance ===<br />
<br />
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.<br />
<br />
=== Rent and Rental Deposit ===<br />
<br />
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.<br />
<br />
= Additional Costs =<br />
<br />
Furthermore you might want to budget for the following costs:<br />
<br />
=== Mortgage Origination Fees ===<br />
<br />
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.<br />
<br />
=== Remittance Fees ===<br />
<br />
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 ([http://www.bk.mufg.jp/gdocs/kinri/list_j/kinri/kawase.html 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 [http://www.hifx.co.uk/ HiFX] or [http://www.currenciesdirect.com/ CurrenciesDirect]. We have negotiated a special rate with Currencies Direct. Just mention affiliate code A010815 to get the better rate. <br />
<br />
When transferring yen the remittance fee our bank (MUFJ) charges is as follows:<br />
<br />
{| class="wikitable"<br />
|-<br />
! Transfer amount<br />
! Remittance Fee<br />
|-<br />
|1 - 5,000,000 <br />
|4,000<br />
|-<br />
|5,000,001 and over<br />
|1,500 + 0.05% of transfer amount<br />
|}<br />
<br />
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. <br />
<br />
If the seller requests the funds to be send by transfer there is a 275 yen bank transfer fee. For a check (cheque) the normal fee is 880 yen.<br />
<br />
=== Fire Insurance ===<br />
<br />
Fire insurance is relatively cheap. [http://human-corporation.com/ 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.<br />
<br />
=== Moving Costs ===<br />
<br />
To get a quote from an English speaking mover call Mike Kealy at [http://xpstokyo.com/ XPS Tokyo].<br />
<br />
= Seller's Costs =<br />
<br />
=== Broker Fee ===<br />
<br />
The seller also pays a broker fee. It is the same amount as the buyer at 3.30% of the transaction price plus JPY 66,000.<br />
<br />
=== Stamp Duty ===<br />
<br />
The seller has to pay the same stamp duty as the buyer.<br />
<br />
=== Scrivener Fee ===<br />
<br />
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.<br />
<br />
=== Bank Fees ===<br />
<br />
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.<br />
<br />
<br />
<br />
= Examples =<br />
<br />
<br />
=== A small investment apartment in Ebisu ===<br />
<br />
Purchase price: JPY 14.5 million<br />
<br />
Transaction Date: December 23, 2022<br />
<br />
Total closing costs at closing: 513,596(3.54%)<br />
Actual transaction fees: 854,908 (5.90%)<br />
<br />
Paid by buyer at closing: 752,693 (5.19%)<br />
* Broker Fee: 544,500<br />
* Scrivener Fee: 186,108<br />
* Stamp Duty: 10,000<br />
* Annual Possession Tax: 730 (9 / 365 x 29,619)<br />
* Maintenance Fee: 11,355 (9 days in December + January)<br />
<br />
Paid about 3 months after closing (0.79%)<br />
* Acquisition Tax: 114,300 (Land 90,200 + building 24,100)<br />
<br />
Received from seller at closing: 239,097 (1.65%)<br />
* Deposit 140,000<br />
* Rent: 99,097 (9 days in December + January)<br />
<br />
=== A small investment apartment in the Center of Tokyo ===<br />
<br />
Purchase price: JPY 9 million<br />
<br />
Transaction Date: February 9, 2011<br />
<br />
Total closing costs: 413,664 (4.60%)<br />
<br />
Paid by buyer: 628,950 (6.99%)<br />
* Broker Fee: 346,500<br />
* Scrivener Fee: 222,750<br />
* Stamp Duty: 10,000<br />
* Annual Possession Tax: 40,679 (326 / 365 x 45,545)<br />
* Maintenance Fee: 9,021 (20/28 x 12,630)<br />
* Acquisition Tax: 206,100 (Land 163,100 + Building 43,000)<br />
<br />
Received from seller: 215,286 (2.39%)<br />
* Deposit 156,000<br />
* Rent: 59,286 (20/28 x 83,000)<br />
<br />
=== A small house in the center ===<br />
<br />
Purchase price: JPY 50.5 million<br />
<br />
Transaction Date: May 10, 2010<br />
<br />
Total closing costs: 3,253,058 (6.4%)<br />
* Broker Fee: 1,488,375<br />
* Scrivener Fee: 722,050<br />
* Stamp Duty: 45,000<br />
* Annual Possession Tax: 92,403 (145 / 365 x 153,305)<br />
* Acquisition Tax: 569,600 (Land 393,100 + Building 176,500)<br />
* Bank Fees: 335,630<br />
<br />
=== A large investment apartment in the center ===<br />
<br />
Purchase price: JPY 73 million<br />
<br />
Transaction Date: September 3, 2010<br />
<br />
Total closing costs: 2,937,434 (4.0%)<br />
<br />
Paid by buyer: 5,100,767 (7.0%)<br />
* Broker Fee: 2,329,503<br />
* Scrivener Fee: 1,156,930<br />
* Stamp Duty: 45,000<br />
* Annual Possession Tax: 114,837 (120 / 365 x 336,573)<br />
* Maintenance Fee: 96,967 (28 days in September = 28/30 x 103,893)<br />
* Acquisition Tax: 981,900 (Land 532,900 + Building 449,000)<br />
* Bank Fees: 375,630<br />
<br />
Received from seller: 2,163,333 (3.0%)<br />
* Deposit 1,650,000<br />
* Rent: 513,333 (28 days in September = 28 / 30 x 550,000)<br />
<br />
=== A top end apartment used as primary residence ===<br />
<br />
Purchase price: JPY 120 million<br />
<br />
Transaction Date: November 28, 2008<br />
<br />
Total closing costs: 4,545,201 (3.79%)<br />
* Broker Fee: 3,843,000<br />
* Scrivener Fee: 601,507<br />
* Stamp Duty: 80,000<br />
* Annual Possession Tax: 11,854 (34 / 366 x 127,600)<br />
* Maintenance Fee: 8,840 (3 days in Novtember = 3/30 x 88,400)<br />
* Acquisition Tax: 1,029,800 (Land 464,700 + Building 565,100)</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=Taxes&diff=60Taxes2023-05-10T04:58:10Z<p>Erik: /* Withholding for Income Tax */</p>
<hr />
<div>For properties we manage we handle all the tax filings. At the end of the year we will provide the owner with the details and instruction how to file the relevant income taxes. For people living outside Japan we file a non-resident income tax return.<br />
<br />
== Possession Tax ==<br />
<br />
Paid once a year. The invoice normally arrives on June 1st and needs to be paid by the end of June. It is possible to pay in 4 quarterly installments.<br />
<br />
The exact number is computed using a complex formula that takes 4 different assessments (2 for the building, 2 for the land) and then multiplies some assessments by 1.4%, others by 0.3%. There is often a 20% discount on the tax for land and possible other discounts depending on the zoning, and possibly the alignment of stars. The assessed values differ wildly from the real market value. In Tokyo alone we have seen variations between 20% to 120%, making the annual possession tax a rather random number, on average about 0.3% to 0.5% of the market value each year.<br />
<br />
== Acquisition Tax ==<br />
This tax is due a few months after buying the property. Normally around 0.5 to 1.0% of the purchase price, it can peak as high as 2%.<br />
It is based on the assessed value and the calculation for residential property is as follows:<br />
<br />
Acquisition Tax = Assessed Land Value x Share of the Land x 1.5% + Assessed Apartment Value x 3%<br />
<br />
Commercial properties are taxed at 4% instead of 3%.<br />
<br />
The assessed land and building value are published annually and available from the property records that are obtainable from the tax office. Here are examples of these property records.<br />
<br />
{| border="0" <br />
|-<br />
| [[image:assessed land value.jpg|400px|thumb|c|left|The assessed land value and the share of the land are circled in red]] [[image:assessed building value.jpg|400px|thumb|c|right|The apartment value is circled in red ]]<br />
|}<br />
<br />
There is a discount for newly built properties. More information can be found on this [http://tochi.mlit.go.jp/english/tax/02_01_02.html page] of the Ministry of Land, Infrastructure, Transport and Tourism.<br />
<br />
== Stamp Duty ==<br />
<br />
On any real estate contract both the buyer and the seller need to put a stamp. The stamps can be bought at the post office and the value is dependent on the transaction price. Mortgage contracts need a stamp too and the tax rates for this are slightly different.<br />
<br />
{| class="wikitable"<br />
|-<br />
! Transaction Amount<br />
! Property Purchase<br />
! Mortgage<br />
|-<br />
| 10,000 or less<br />
| nil<br />
| nil<br />
|-<br />
| 10,001 - 100,000<br />
| 200<br />
| 200<br />
|-<br />
| 100,001 - 500,000<br />
| 400<br />
| 400<br />
|-<br />
| 500,001 - 1,000,000<br />
| 1,000<br />
| 1,000<br />
|-<br />
| 1,000,001 - 5,000,000<br />
| 1,000<br />
| 2,000<br />
|-<br />
| 5,000,001 - 10,000,000<br />
| 5,000<br />
| 10,000<br />
|-<br />
| 10,000,001 - 50,000,000<br />
| 10,000<br />
| 20,000<br />
|-<br />
| 50,000,001 - 100,000,000<br />
| 30,000<br />
| 60,000<br />
|-<br />
| 100,000,001 - 500,000,000<br />
| 60,000<br />
| 100,000<br />
|-<br />
| 500,000,001 - 1,000,000,000<br />
| 160,000<br />
| 200,000<br />
|-<br />
| 1,000,000,001 - 5,000,000,000<br />
| 320,000<br />
| 400,000<br />
|-<br />
| more than 5,000,000,000<br />
| 480,000<br />
| 600,000<br />
|-<br />
| if no amount is stated<br />
| 200<br />
| 200<br />
|}<br />
<br />
== Income Tax ==<br />
Rental income is part of your income and taxed as such.<br />
Maintenance, repair, management and financing costs can be deducted.<br />
[http://akasakarealestate.com/wiki/index.php/Taxes#Depreciation_Deduction_for_Income_Tax Depreciation] can be deducted too. <br />
If you are not resident in Japan the total income in Japan will be low and so you will fall in a low tax bracket. Also no local tax will have to be paid.<br />
<br />
The first 480,000 yen is the total income not taxed. After that the national tax rates are as follows:<br />
<br />
{| class="wikitable"<br />
|-<br />
! Tax Base (Yen)<br />
! Tax<br />
|-<br />
|1 - 1,950,000 <br />
|5%<br />
|-<br />
|1,950,001 - 3,300,000<br />
|10% of base exceeding 1,950,000<br />
|-<br />
|3,300,001 - 6,950,000<br />
|20% of base exceeding 3,300,000<br />
|-<br />
|6,950,001 - 9,000,000<br />
|23% of base exceeding 6,950,000<br />
|-<br />
|9,000,001 - 18,000,000<br />
|33% of base exceeding 9,000,000<br />
|-<br />
|18,000,001 and over<br />
|40% of base exceeding 18,000,000<br />
|}<br />
<br />
A 2.1% Tohoku reconstruction tax on the tax amount is added to the final bill.<br />
<br />
When filing personal income tax you are required to fill out two forms for the real estate income:<br />
<br />
{| border="0" <br />
|-<br />
| [[image:incometaxrentalincome.jpg|400px|thumb|c|left|The income tax form ]] [[image:incometaxdepreciation.jpg|400px|thumb|c|right|The depreciation calculation form ]]<br />
|-<br />
| [[image:incometaxtranslation1.jpg|400px|thumb|c|left|Translation of the income tax form (part 1) ]] [[image:incometaxtranslation2.jpg|400px|thumb|c|right|Translation of the income tax form (part 2) ]]<br />
|-<br />
| [[image:incometaxtranslation3.jpg|400px|thumb|c|left|Translation of the depreciation calculation form (part 1) ]] [[image:incometaxtranslation4.jpg|400px|thumb|c|right|Translation of the depreciation calculation form (part 2) ]]<br />
|}<br />
<br />
=== Depreciation Deduction for Income Tax ===<br />
It is possible to use depreciation to reduce the income tax burden. In Japan it is only possible to depreciate the building, not the land. When purchasing a new structure, often the breakdown is given. However when purchasing a second hand property it is not clear how much can be declared as building value. One way it to look at the possession tax valuation of the building and land and take that ratio. Another option would be to use the [http://akasakarealestate.com/wiki/index.php/Property_Valuation Rosenka] for the land valuation. When a property is sold, capital gains tax will have to be paid over the difference between the sales price and the book value. As depreciation reduces the book value, it will increase the capital gains tax when the property will be sold.<br />
<br />
To calculate the depreciation you can depreciate the building in an amount of years, depending on what type of structure it is. This is called the 'useful life' in Japan.<br />
<br />
{| class="wikitable"<br />
|-<br />
! Building Type<br />
! Useful life<br />
|-<br />
|Steel frame reinforced concrete buildings or reinforced concrete buildings<br />
|47 years<br />
|-<br />
|Brick, stone or block construction<br />
|38 years<br />
|-<br />
|Metal construction (thickness of internal frame exceeds 4 mm)<br />
|34 years<br />
|-<br />
|Metal construction (thickness of internal frame exceeds 3 mm)<br />
|27 years<br />
|-<br />
|Metal construction (thickness of internal frame is 3 mm or below)<br />
|19 years<br />
|-<br />
|Wood or wood composite construction<br />
|22 years<br />
|-<br />
|Wood frame mortar construction<br />
|20 years<br />
|}<br />
<br />
<br />
For second hand properties you can deduct 80 percent of the age. So for example a concrete apartment built in 1980 and bought in 2011 can be depreciated in 47 - (31 x 80%) = 47 - 24.8 = 22 years. The depreciation amount is 1/22 = 4.5% of the building value a year. When calculating the amount of years and the percentage depreciation the results are truncated down. It is not possible to depreciate a building more than its useful life, so a 40 year old wood frame structure must be depreciated in 20% of 20 = 4 years.<br />
<br />
To reduce the income tax burden sometimes several strategies are suggested to maximize the depreciation. However there are also downsides to this approach. For example the building value on a new property is higher, so the taxable depreciation is higher as well. Unfortunately such a new property will suffer a real market depreciation as well. Another strategy is to purchase a very old wooden frame structure on cheap land, allowing to depreciate almost the full purchase price in just 4 years. However capital gains tax will need to be paid when selling the property, so this might only be interesting for temporary residents who are now paying a high income tax rate, but are expected to leave Japan and so will fall into the 15% capital gains rate when selling. Also such old wooden structures might incur high maintenance costs and are hard to manage as they are normally only found outside Tokyo. The loophole for claiming a tax deduction for property outside Japan was closed in 2021.<br />
<br />
=== Withholding for Income Tax ===<br />
<br />
For non-residents the tax office wants to make sure that the income tax is paid. To this effect the law states that 20.42% of the incoming rent should be paid as withholding tax. When the annual income tax is filed by March the following year the owner will get a refund of these withholding tax payments. <br />
<br />
Officially a withholding tax filing is the responsibility of the tenant and should be done for every rent payment. This entails filling out a tax form, making the payment and sending a copy of the payment slip to the owner. Clearly this would create an excessive amount of paperwork and so the tax office is willing to take a rather flexible approach. This means that normally there is no issue if the withholding tax is not filed in case both the renter and the owner are individuals. If the renter is a corporation however they have requested that the payments are made for larger rent payments, but they are willing to let the property manager handle it. The exact definition of 'large' has not been given, but so far we have managed to avoid this paperwork for rents below 100,000 yen a month. However, sometimes an accountant hired by the renter insists.<br />
<br />
=== How to file ===<br />
<br />
For residents just take the proof of your other income like your salary slips to the tax office along with the real estate forms. If your additional income is less than 200,000 yen no filing is necessary.<br />
<br />
== Capital Gains ==<br />
On short term holdings (less than 5 to 6 years) the tax rate on capital gains is quite high at 39% (30% national + 9% local tax). Non-residents pay only the national tax. There are ways to reduce it to 15% or less. If the dwelling is used as a primary residence the first 30 million yen of capital gains per owner is tax free. If you have owned it for over 10 years the first 60 million yen gains is taxed at 14% instead of 20%. A couple owning a house jointly gets 60 million tax free. If you own a property more than 6 years the tax rate goes down to 20% (15% national and 5% local tax). If you are not a resident in Japan that means the tax is 15%. Between 5 and 6 years it depends on the time of year. To get the lower tax rate 6 times January 1st must have passed since the purchase.<br />
<br />
The Capital Gains is calculated by taking the profit (sales price - purchase price - closing costs) and adding the depreciation that was reported for income tax. If no depreciation was reported, a mandatory minimum depreciation is added nonetheless.<br />
<br />
On top of the national tax an added 2.1% Tohoku reconstruction charge is levied. This means the effective tax is between 15.315% (non-resident, holding over 6 years) and 39.63% (resident, short term holding).<br />
<br />
=== Withholding for Capital Gains ===<br />
<br />
To ensure a non-resident seller files the capital gains tax form the buyer needs to withhold 10.21% of the sales price and pay this in withholding tax. The seller then can claim this back by filing the correct papers. For leasehold the amount is 20.42%.<br />
<br />
== Entrepreneurial Tax ==<br />
Individuals owning on their personal title 10 or more apartments or 2 or more buildings are charged an extra 5 percent of the profit when filing their personal income tax. The first 2,900,000 yen profit tax not taxed though. There is some rounding involved as well. Here is an example:<br />
<br />
* Income: 4,993,170 yen <br />
* Deduction: 2,900,000<br />
* Taxable: 2,093,000 (rounded down to the lowest thousand yen)<br />
* 5% tax: 104,600 (rounded down to the lowest 100 yen)<br />
<br />
To avoid this tax we recommend to divide ownership of many apartments over the different family members. It is also possible to put the ownership in a limited company and then pay yourself a salary as a director. For residents this salary would be taxed as income. For non-residents there is a flat tax of 20% on income distributions. A further advantage of having a company structure is the possibility to deduct travel and entertainment expenses. The initial set-up costs for a company in Japan are around 250,000 to 500,000 yen. Annual corporate tax will be 70,000 yen if all income is distributed as salary. The annual tax filing would cost around 150,000 to 300,000 depending on the complexity.<br />
<br />
== Sales Tax ==<br />
No sales tax is levied on residential rental contracts. For corporate contracts 10% sales tax is added. However if the owner is an individual and the total rent is less than 10 million yen a year, the owner can keep this money and does not have to file a sales tax form.<br />
<br />
== Direct ownership versus a holding company ==<br />
<br />
As a direct owner you have to pay income tax at progressive rates over the profit made from the investment properties. For large investors it can be a good idea to set up a local Japanese company (kabushiki kaisha) to reduce the tax burden. Setting up a company takes around 3 months and costs about 300,000 to 500,000 yen. The annual accounting costs might be similar. In return it is possible to deduct for example entertainment expenses and many more items from your profit. You would have to put yourself and possibly other people on the payroll to avoid paying the high corporate taxes. This could allow you to spread the income over several people making sure to avoid those higher tax bands. For non-resident directors there is a fixed tax rate of 20.42%. A company might also be liable for sales tax over non-residential rental income. Given the costs and tax rates, setting up a company is not attractive for non-residents, unless you are investing over 500 million yen. And even then, you could consider buying properties in the name of children or other family members to avoid higher tax rates.<br />
<br />
Putting Japanese property directly in an overseas holding company might not be an effective way to save taxes. In such circumstances the tax rate would be 20% of the rent without allowing any deductions. Also the property manager would have to file a withholding tax form and make a payment with the tax office for EVERY rent payment. If overseas ownership is required a special construction called a [http://www.venturejapan.com/tokumei-kumiai-tk.htm Tokumei Kumiai (TK)] should be set up instead. However this is only suitable for larger investments (JPY 200 million and over) given the fact that non-residents pay very low tax rates on smaller investments.</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=Taxes&diff=59Taxes2022-06-09T10:59:52Z<p>Erik: /* Direct ownership versus a holding company */</p>
<hr />
<div>For properties we manage we handle all the tax filings. At the end of the year we will provide the owner with the details and instruction how to file the relevant income taxes. For people living outside Japan we file a non-resident income tax return.<br />
<br />
== Possession Tax ==<br />
<br />
Paid once a year. The invoice normally arrives on June 1st and needs to be paid by the end of June. It is possible to pay in 4 quarterly installments.<br />
<br />
The exact number is computed using a complex formula that takes 4 different assessments (2 for the building, 2 for the land) and then multiplies some assessments by 1.4%, others by 0.3%. There is often a 20% discount on the tax for land and possible other discounts depending on the zoning, and possibly the alignment of stars. The assessed values differ wildly from the real market value. In Tokyo alone we have seen variations between 20% to 120%, making the annual possession tax a rather random number, on average about 0.3% to 0.5% of the market value each year.<br />
<br />
== Acquisition Tax ==<br />
This tax is due a few months after buying the property. Normally around 0.5 to 1.0% of the purchase price, it can peak as high as 2%.<br />
It is based on the assessed value and the calculation for residential property is as follows:<br />
<br />
Acquisition Tax = Assessed Land Value x Share of the Land x 1.5% + Assessed Apartment Value x 3%<br />
<br />
Commercial properties are taxed at 4% instead of 3%.<br />
<br />
The assessed land and building value are published annually and available from the property records that are obtainable from the tax office. Here are examples of these property records.<br />
<br />
{| border="0" <br />
|-<br />
| [[image:assessed land value.jpg|400px|thumb|c|left|The assessed land value and the share of the land are circled in red]] [[image:assessed building value.jpg|400px|thumb|c|right|The apartment value is circled in red ]]<br />
|}<br />
<br />
There is a discount for newly built properties. More information can be found on this [http://tochi.mlit.go.jp/english/tax/02_01_02.html page] of the Ministry of Land, Infrastructure, Transport and Tourism.<br />
<br />
== Stamp Duty ==<br />
<br />
On any real estate contract both the buyer and the seller need to put a stamp. The stamps can be bought at the post office and the value is dependent on the transaction price. Mortgage contracts need a stamp too and the tax rates for this are slightly different.<br />
<br />
{| class="wikitable"<br />
|-<br />
! Transaction Amount<br />
! Property Purchase<br />
! Mortgage<br />
|-<br />
| 10,000 or less<br />
| nil<br />
| nil<br />
|-<br />
| 10,001 - 100,000<br />
| 200<br />
| 200<br />
|-<br />
| 100,001 - 500,000<br />
| 400<br />
| 400<br />
|-<br />
| 500,001 - 1,000,000<br />
| 1,000<br />
| 1,000<br />
|-<br />
| 1,000,001 - 5,000,000<br />
| 1,000<br />
| 2,000<br />
|-<br />
| 5,000,001 - 10,000,000<br />
| 5,000<br />
| 10,000<br />
|-<br />
| 10,000,001 - 50,000,000<br />
| 10,000<br />
| 20,000<br />
|-<br />
| 50,000,001 - 100,000,000<br />
| 30,000<br />
| 60,000<br />
|-<br />
| 100,000,001 - 500,000,000<br />
| 60,000<br />
| 100,000<br />
|-<br />
| 500,000,001 - 1,000,000,000<br />
| 160,000<br />
| 200,000<br />
|-<br />
| 1,000,000,001 - 5,000,000,000<br />
| 320,000<br />
| 400,000<br />
|-<br />
| more than 5,000,000,000<br />
| 480,000<br />
| 600,000<br />
|-<br />
| if no amount is stated<br />
| 200<br />
| 200<br />
|}<br />
<br />
== Income Tax ==<br />
Rental income is part of your income and taxed as such.<br />
Maintenance, repair, management and financing costs can be deducted.<br />
[http://akasakarealestate.com/wiki/index.php/Taxes#Depreciation_Deduction_for_Income_Tax Depreciation] can be deducted too. <br />
If you are not resident in Japan the total income in Japan will be low and so you will fall in a low tax bracket. Also no local tax will have to be paid.<br />
<br />
The first 480,000 yen is the total income not taxed. After that the national tax rates are as follows:<br />
<br />
{| class="wikitable"<br />
|-<br />
! Tax Base (Yen)<br />
! Tax<br />
|-<br />
|1 - 1,950,000 <br />
|5%<br />
|-<br />
|1,950,001 - 3,300,000<br />
|10% of base exceeding 1,950,000<br />
|-<br />
|3,300,001 - 6,950,000<br />
|20% of base exceeding 3,300,000<br />
|-<br />
|6,950,001 - 9,000,000<br />
|23% of base exceeding 6,950,000<br />
|-<br />
|9,000,001 - 18,000,000<br />
|33% of base exceeding 9,000,000<br />
|-<br />
|18,000,001 and over<br />
|40% of base exceeding 18,000,000<br />
|}<br />
<br />
A 2.1% Tohoku reconstruction tax on the tax amount is added to the final bill.<br />
<br />
When filing personal income tax you are required to fill out two forms for the real estate income:<br />
<br />
{| border="0" <br />
|-<br />
| [[image:incometaxrentalincome.jpg|400px|thumb|c|left|The income tax form ]] [[image:incometaxdepreciation.jpg|400px|thumb|c|right|The depreciation calculation form ]]<br />
|-<br />
| [[image:incometaxtranslation1.jpg|400px|thumb|c|left|Translation of the income tax form (part 1) ]] [[image:incometaxtranslation2.jpg|400px|thumb|c|right|Translation of the income tax form (part 2) ]]<br />
|-<br />
| [[image:incometaxtranslation3.jpg|400px|thumb|c|left|Translation of the depreciation calculation form (part 1) ]] [[image:incometaxtranslation4.jpg|400px|thumb|c|right|Translation of the depreciation calculation form (part 2) ]]<br />
|}<br />
<br />
=== Depreciation Deduction for Income Tax ===<br />
It is possible to use depreciation to reduce the income tax burden. In Japan it is only possible to depreciate the building, not the land. When purchasing a new structure, often the breakdown is given. However when purchasing a second hand property it is not clear how much can be declared as building value. One way it to look at the possession tax valuation of the building and land and take that ratio. Another option would be to use the [http://akasakarealestate.com/wiki/index.php/Property_Valuation Rosenka] for the land valuation. When a property is sold, capital gains tax will have to be paid over the difference between the sales price and the book value. As depreciation reduces the book value, it will increase the capital gains tax when the property will be sold.<br />
<br />
To calculate the depreciation you can depreciate the building in an amount of years, depending on what type of structure it is. This is called the 'useful life' in Japan.<br />
<br />
{| class="wikitable"<br />
|-<br />
! Building Type<br />
! Useful life<br />
|-<br />
|Steel frame reinforced concrete buildings or reinforced concrete buildings<br />
|47 years<br />
|-<br />
|Brick, stone or block construction<br />
|38 years<br />
|-<br />
|Metal construction (thickness of internal frame exceeds 4 mm)<br />
|34 years<br />
|-<br />
|Metal construction (thickness of internal frame exceeds 3 mm)<br />
|27 years<br />
|-<br />
|Metal construction (thickness of internal frame is 3 mm or below)<br />
|19 years<br />
|-<br />
|Wood or wood composite construction<br />
|22 years<br />
|-<br />
|Wood frame mortar construction<br />
|20 years<br />
|}<br />
<br />
<br />
For second hand properties you can deduct 80 percent of the age. So for example a concrete apartment built in 1980 and bought in 2011 can be depreciated in 47 - (31 x 80%) = 47 - 24.8 = 22 years. The depreciation amount is 1/22 = 4.5% of the building value a year. When calculating the amount of years and the percentage depreciation the results are truncated down. It is not possible to depreciate a building more than its useful life, so a 40 year old wood frame structure must be depreciated in 20% of 20 = 4 years.<br />
<br />
To reduce the income tax burden sometimes several strategies are suggested to maximize the depreciation. However there are also downsides to this approach. For example the building value on a new property is higher, so the taxable depreciation is higher as well. Unfortunately such a new property will suffer a real market depreciation as well. Another strategy is to purchase a very old wooden frame structure on cheap land, allowing to depreciate almost the full purchase price in just 4 years. However capital gains tax will need to be paid when selling the property, so this might only be interesting for temporary residents who are now paying a high income tax rate, but are expected to leave Japan and so will fall into the 15% capital gains rate when selling. Also such old wooden structures might incur high maintenance costs and are hard to manage as they are normally only found outside Tokyo. The loophole for claiming a tax deduction for property outside Japan was closed in 2021.<br />
<br />
=== Withholding for Income Tax ===<br />
<br />
For non-residents the tax office wants to make sure that the income tax is paid. To this effect the law states that 20.42% of the incoming rent should be paid as withholding tax. When the annual income tax is filed by March the following year the owner will get a refund of these withholding tax payments. <br />
<br />
Officially a withholding tax filing is the responsibility of the tenant and should be done for every rent payment. This entails filling out a tax form, making the payment and sending a copy of the payment slip to the owner. Clearly this would create an excessive amount of paperwork and so the tax office is willing to take a rather flexible approach. This means that normally there is no issue if the withholding tax is not filed in case both the renter and the owner are individuals. If the renter is a corporation however they have requested that the payments are made for larger rent payments, but they are willing to let the property manager handle it. The exact definition of 'large' has not been given, but so far we have managed to avoid this paperwork for rents below 200,000 yen a month.<br />
<br />
=== How to file ===<br />
<br />
For residents just take the proof of your other income like your salary slips to the tax office along with the real estate forms. If your additional income is less than 200,000 yen no filing is necessary.<br />
<br />
== Capital Gains ==<br />
On short term holdings (less than 5 to 6 years) the tax rate on capital gains is quite high at 39% (30% national + 9% local tax). Non-residents pay only the national tax. There are ways to reduce it to 15% or less. If the dwelling is used as a primary residence the first 30 million yen of capital gains per owner is tax free. If you have owned it for over 10 years the first 60 million yen gains is taxed at 14% instead of 20%. A couple owning a house jointly gets 60 million tax free. If you own a property more than 6 years the tax rate goes down to 20% (15% national and 5% local tax). If you are not a resident in Japan that means the tax is 15%. Between 5 and 6 years it depends on the time of year. To get the lower tax rate 6 times January 1st must have passed since the purchase.<br />
<br />
The Capital Gains is calculated by taking the profit (sales price - purchase price - closing costs) and adding the depreciation that was reported for income tax. If no depreciation was reported, a mandatory minimum depreciation is added nonetheless.<br />
<br />
On top of the national tax an added 2.1% Tohoku reconstruction charge is levied. This means the effective tax is between 15.315% (non-resident, holding over 6 years) and 39.63% (resident, short term holding).<br />
<br />
=== Withholding for Capital Gains ===<br />
<br />
To ensure a non-resident seller files the capital gains tax form the buyer needs to withhold 10.21% of the sales price and pay this in withholding tax. The seller then can claim this back by filing the correct papers. For leasehold the amount is 20.42%.<br />
<br />
== Entrepreneurial Tax ==<br />
Individuals owning on their personal title 10 or more apartments or 2 or more buildings are charged an extra 5 percent of the profit when filing their personal income tax. The first 2,900,000 yen profit tax not taxed though. There is some rounding involved as well. Here is an example:<br />
<br />
* Income: 4,993,170 yen <br />
* Deduction: 2,900,000<br />
* Taxable: 2,093,000 (rounded down to the lowest thousand yen)<br />
* 5% tax: 104,600 (rounded down to the lowest 100 yen)<br />
<br />
To avoid this tax we recommend to divide ownership of many apartments over the different family members. It is also possible to put the ownership in a limited company and then pay yourself a salary as a director. For residents this salary would be taxed as income. For non-residents there is a flat tax of 20% on income distributions. A further advantage of having a company structure is the possibility to deduct travel and entertainment expenses. The initial set-up costs for a company in Japan are around 250,000 to 500,000 yen. Annual corporate tax will be 70,000 yen if all income is distributed as salary. The annual tax filing would cost around 150,000 to 300,000 depending on the complexity.<br />
<br />
== Sales Tax ==<br />
No sales tax is levied on residential rental contracts. For corporate contracts 10% sales tax is added. However if the owner is an individual and the total rent is less than 10 million yen a year, the owner can keep this money and does not have to file a sales tax form.<br />
<br />
== Direct ownership versus a holding company ==<br />
<br />
As a direct owner you have to pay income tax at progressive rates over the profit made from the investment properties. For large investors it can be a good idea to set up a local Japanese company (kabushiki kaisha) to reduce the tax burden. Setting up a company takes around 3 months and costs about 300,000 to 500,000 yen. The annual accounting costs might be similar. In return it is possible to deduct for example entertainment expenses and many more items from your profit. You would have to put yourself and possibly other people on the payroll to avoid paying the high corporate taxes. This could allow you to spread the income over several people making sure to avoid those higher tax bands. For non-resident directors there is a fixed tax rate of 20.42%. A company might also be liable for sales tax over non-residential rental income. Given the costs and tax rates, setting up a company is not attractive for non-residents, unless you are investing over 500 million yen. And even then, you could consider buying properties in the name of children or other family members to avoid higher tax rates.<br />
<br />
Putting Japanese property directly in an overseas holding company might not be an effective way to save taxes. In such circumstances the tax rate would be 20% of the rent without allowing any deductions. Also the property manager would have to file a withholding tax form and make a payment with the tax office for EVERY rent payment. If overseas ownership is required a special construction called a [http://www.venturejapan.com/tokumei-kumiai-tk.htm Tokumei Kumiai (TK)] should be set up instead. However this is only suitable for larger investments (JPY 200 million and over) given the fact that non-residents pay very low tax rates on smaller investments.</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=Property_Management_Agreement&diff=58Property Management Agreement2022-06-06T04:46:32Z<p>Erik: /* Fund Transfers */</p>
<hr />
<div>== Responsibilities of Manager ==<br />
<br />
The Owner appoints the Manager as his lawful agent and attorney-in-fact with full authority to do any and all lawful things necessary for the fulfillment of this Agreement, including the following: <br />
<br />
==== Collect rent ====<br />
The Manager collects the rent on behalf of the Owner. If the renter does not pay the rent the Manager will use all legal means to pursue the renter. The Manager will report a delinquent renter quickly to the guarantor or guarantor company. The Manager will contact the renter and any contact person related to the renter to make clear the rent must be paid. If that does not resolve the issue the Manager will visit the renter personally. In Japan it is not allowed to threaten the renter, change the locks or in other ways intimidate a delinquent renter. Doing so could result in legal complications so the Manager will avoid any such action if possible. Instead in the extreme situation that a renter has a delay of over 3 months the Manager will negotiate with the renter about him leaving voluntary to avoid costly litigation. If such negotiations fail the Manager will sue the renter on behalf of the Owner. The costs of this would be for the Owner. In Japan this can take an extra 6 months and about 1 million yen in legal fees.<br />
<br />
==== Repairs and Maintenance ====<br />
The Manager will handle all repairs and maintenance issues related to the property. The Manager will always strive to keep such costs to a minimum. For this the Manager will either hire outside contractors or have their own staff fix any issues at cost. Also the manager will assess if the repair is truly needed and if the renter is liable. Under normal circumstances an estimate of the costs will be presented to the Owner for approval. However for small issues (for example fixing a doorbell) and in emergency situations (for example a water leak) the Manager may need to go ahead with the repairs without the Owner's approval. However in such cases the Owner will be notified at the soonest possible opportunity.<br />
<br />
To keep costs low some work can be done in-house. When outside contractors are used the Manager will always try to get the best price. No gifts will be accepted from contractors if that could lead in any way to a conflict of interest.<br />
<br />
When managing buildings the owner will not be charged for inspections of the common spaces. However for any cleaning of common spaces the owner will be charged the actual cleaning fees. The manager will use part-time cleaners instead of cleaning companies to reduce the cost of this when possible.<br />
<br />
==== Find Renters ====<br />
<br />
In case of vacancy the Manager will advertise the property widely and make sure any prospective renters get quick and easy access to view the property. The Manager will advise the Owner about the appropriate market rent and deposit. However the Owner has final say in this.<br />
<br />
==== Rental Contract Cancellations ====<br />
After a renter cancels the lease the Manager will inspect the property and refund the renter the deposit minus any damages and cleaning fees that can legally be claimed. As the deposit is held by the Owner, if the balance is low it might be necessary that the Owner makes a money transfer to the Manager to be able to make the refund. The Manager will get the apartment advertised, cleaned up and ready for the next tenant. The manager will strive to get this done within 3 weeks. However as with so many things in Japan things can take more time so it is not guaranteed that it will be done so quickly.<br />
<br />
==== Rental Contract Renewals ====<br />
In Japan most rental contracts are for 2 years with an option for renewal. It is very hard legally to force a renter to leave, especially if the rent is being paid on time. As a result the Manager will always offer a renter a renewal. At that time the rent can be negotiated. If the market rent is above the actual rent the Manager will try to negotiate a rent increase.<br />
<br />
If the Owner is planning to use the apartment as a primary residence and if the renter cooperates it might be possible to ask the renter to leave. This needs to be done at least 6 months before the rental contract expires. If the renter does not cooperate and pays the rent timely the Manager will not pursue any means of forcefully removing such a renter.<br />
<br />
==== Pay Bills ====<br />
The Manager will pay all bills related to the property using the rental income. This included building and association fees, utilities (when payable by the Owner), insurances fees, acquisition and annual possession tax, utilities, etc..<br />
<br />
For some buildings, it is not possible to set up automatic payments of the monthly building fees. To avoid excessive transfer fees and to save the amount of time the Manager spends at the bank in such cases payments are made once a year, usually at the beginning.<br />
<br />
==== Fund Transfers ====<br />
<br />
The Manager will transfer all profits to the Owner. This can be done by bank transfer or cash. The transfers will be made anytime the Owner makes a request. The costs of such transfers will be charged to the Owner.<br />
<br />
Japan domestic bank transfers are 160 yen per transfer. International transfers however cost 3,500 yen (see [http://akasakarealestate.com/wiki/index.php/Transaction_Costs#Remittance_Fees Remittance Fees]) on the Japanese side and possibly another 2,500 fee on the overseas side. Also in Japan such transfers get the attention from the authorities. We regularly get requests to provide documentation for compliance with the anti-money-laundering (AML) law. This can be over a 100 pages for a single transfer and sometimes must include copies of the property titles, sales contracts, rental contracts and full transaction records for all properties managed.<br />
<br />
To minimize the bureaucratic burden the Manager keeps the right to charge the Owner for the time it takes to make the transfer in case the Owner requests more than two international transfers a year, for more than 4 domestic transfers per year or for international transfers below 1 million yen. However the Manager will never charge the Owner for transfers over 2 million yen.<br />
<br />
==== Reporting ====<br />
The reporting will be done through the website of the Manager. At any time a recent transaction report, profit and loss statement, balance sheet and rent roll will be available online. If the Owner chooses so he can receive automatic email alerts notifying him of new transactions like incoming rent, missed rent payments and rental contract renewals/cancellations.<br />
<br />
The Manager will keep all the records at his office. The Owner or his representative can inspect these records anytime by making an appointment and coming over to the office of the Manager. After purchase the original property title will be sent to the Owner by the judicial scrivener handling the transaction unless the Owner specifies otherwise. The Owner can also at any time request copies of important documents such as sales and rental contracts.<br />
<br />
==== Income Tax Filing ====<br />
<br />
At the latest by the end of February of each year the Manager will prepare the tax forms related to the property income required for filing personal income taxes. These forms will include a calculation for the taxable depreciation of the property. At that time the Owner or his accountant can then use these forms for the income tax filing. This is easy, even for someone who doesn't speak Japanese as it will require only one number to be copied onto the main income tax form. On top of that there is also a profit and loss statement available online. If the Owner is a non-resident the Manager will also file the non-resident income tax on behalf of the Owner as long as the rental income from properties managed by the Manager is the only income. The Manager will also apply for any tax refunds if the owner is eligible and handle any audits of the real estate income by the tax office.<br />
<br />
== Liability of Manager ==<br />
<br />
Owner hereby agrees to hold Manager harmless from any and all claims, charges, debts, demands and lawsuits, including attorney's fees related to his management of the herein-described property, and from any liability for injury on or about the property which may be suffered by any employee, tenant or guest upon the property.<br />
<br />
== Compensation of Manager ==<br />
<br />
The Manager will charge the Owner 5.50% (5% plus sales tax) of the collected rent.<br />
<br />
For finding a new renter the Manager will receive one month rent from the Owner. However often this is paid for by the renter in the form of one month key money. In case it takes a long time to find the renter the Manager will offer a part or all of this finder's fee to local agents as extra incentive to find renter and reduce the length of the vacancy. If the Manager finds a renter himself he can charge one month commission to the renter as well. However the Manager will always allow other real estate agents to find renters and will not discriminate against such agents.<br />
<br />
If the Manager can collect a renewal fee from the renter he will keep this fee. However if an existing rental contract does not specify a renewal fee the Manager will not change the contract offered to the renter and the Manager will provide the rental renewal contract free of charge. The renewal fee will never exceed more than one month per two year renewal period.<br />
<br />
In case of a new rental application occasionally a renter will require a guarantor company. The guarantor company offers a discount to real estate agents paying the guarantor fees. These discounts are not offered to individual renters. The Manager can keep this difference. <br />
<br />
The Manager will charge 16,500 yen (15,000 + 10% sales tax) for preparing the documentation for a non-resident income tax filing. If the tax filing is done by the Owner himself the document preparation is free of charge.<br />
<br />
The Manager will not pay out any interest over the balance the Owner holds with the Manager. Any interest received from the bank therefore is income for the Manager. However currently the interest rates are so low that the 2012 interest income was just 1,039 yen.<br />
<br />
Besides the compensation mentioned above the manager will not accept any gifts in any form from contractors, renters or anyone else if it could lead to a potential conflict of interest with the Owner.<br />
<br />
If the Manager changes the fee structure he will give the Owner at least 3 months notice of this.<br />
<br />
== Termination ==<br />
<br />
The agreement can be terminated in writing by either party by providing written notice which will take effect within 1 month upon receipt of the termination notice. This Agreement may also be terminated by mutual agreement of the parties at any time. There is no notice period and no penalty will be charged. The Owner will notify the renters, the building association and the tax office of the change in management. The Manager will hand over the property documentation immediately. Upon termination the Owner and Manager will settle accounts at the soonest opportunity. <br />
<br />
In case the Manager is not capable of executing his duties (for example due to accident or bankruptcy) the Manager will bring all Owners into contact with each other so that they can look for another property manager collectively. The Owner gives permission to provide his email address to other Owners for this case only.</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=File:Jpy_usd_inflation_corrected.jpg&diff=57File:Jpy usd inflation corrected.jpg2022-04-27T07:54:27Z<p>Erik: Erik uploaded a new version of File:Jpy usd inflation corrected.jpg</p>
<hr />
<div></div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=Taxes&diff=56Taxes2021-07-28T09:47:03Z<p>Erik: /* Sales Tax */</p>
<hr />
<div>For properties we manage we handle all the tax filings. At the end of the year we will provide the owner with the details and instruction how to file the relevant income taxes. For people living outside Japan we file a non-resident income tax return.<br />
<br />
== Possession Tax ==<br />
<br />
Paid once a year. The invoice normally arrives on June 1st and needs to be paid by the end of June. It is possible to pay in 4 quarterly installments.<br />
<br />
The exact number is computed using a complex formula that takes 4 different assessments (2 for the building, 2 for the land) and then multiplies some assessments by 1.4%, others by 0.3%. There is often a 20% discount on the tax for land and possible other discounts depending on the zoning, and possibly the alignment of stars. The assessed values differ wildly from the real market value. In Tokyo alone we have seen variations between 20% to 120%, making the annual possession tax a rather random number, on average about 0.3% to 0.5% of the market value each year.<br />
<br />
== Acquisition Tax ==<br />
This tax is due a few months after buying the property. Normally around 0.5 to 1.0% of the purchase price, it can peak as high as 2%.<br />
It is based on the assessed value and the calculation for residential property is as follows:<br />
<br />
Acquisition Tax = Assessed Land Value x Share of the Land x 1.5% + Assessed Apartment Value x 3%<br />
<br />
Commercial properties are taxed at 4% instead of 3%.<br />
<br />
The assessed land and building value are published annually and available from the property records that are obtainable from the tax office. Here are examples of these property records.<br />
<br />
{| border="0" <br />
|-<br />
| [[image:assessed land value.jpg|400px|thumb|c|left|The assessed land value and the share of the land are circled in red]] [[image:assessed building value.jpg|400px|thumb|c|right|The apartment value is circled in red ]]<br />
|}<br />
<br />
There is a discount for newly built properties. More information can be found on this [http://tochi.mlit.go.jp/english/tax/02_01_02.html page] of the Ministry of Land, Infrastructure, Transport and Tourism.<br />
<br />
== Stamp Duty ==<br />
<br />
On any real estate contract both the buyer and the seller need to put a stamp. The stamps can be bought at the post office and the value is dependent on the transaction price. Mortgage contracts need a stamp too and the tax rates for this are slightly different.<br />
<br />
{| class="wikitable"<br />
|-<br />
! Transaction Amount<br />
! Property Purchase<br />
! Mortgage<br />
|-<br />
| 10,000 or less<br />
| nil<br />
| nil<br />
|-<br />
| 10,001 - 100,000<br />
| 200<br />
| 200<br />
|-<br />
| 100,001 - 500,000<br />
| 400<br />
| 400<br />
|-<br />
| 500,001 - 1,000,000<br />
| 1,000<br />
| 1,000<br />
|-<br />
| 1,000,001 - 5,000,000<br />
| 1,000<br />
| 2,000<br />
|-<br />
| 5,000,001 - 10,000,000<br />
| 5,000<br />
| 10,000<br />
|-<br />
| 10,000,001 - 50,000,000<br />
| 10,000<br />
| 20,000<br />
|-<br />
| 50,000,001 - 100,000,000<br />
| 30,000<br />
| 60,000<br />
|-<br />
| 100,000,001 - 500,000,000<br />
| 60,000<br />
| 100,000<br />
|-<br />
| 500,000,001 - 1,000,000,000<br />
| 160,000<br />
| 200,000<br />
|-<br />
| 1,000,000,001 - 5,000,000,000<br />
| 320,000<br />
| 400,000<br />
|-<br />
| more than 5,000,000,000<br />
| 480,000<br />
| 600,000<br />
|-<br />
| if no amount is stated<br />
| 200<br />
| 200<br />
|}<br />
<br />
== Income Tax ==<br />
Rental income is part of your income and taxed as such.<br />
Maintenance, repair, management and financing costs can be deducted.<br />
[http://akasakarealestate.com/wiki/index.php/Taxes#Depreciation_Deduction_for_Income_Tax Depreciation] can be deducted too. <br />
If you are not resident in Japan the total income in Japan will be low and so you will fall in a low tax bracket. Also no local tax will have to be paid.<br />
<br />
The first 480,000 yen is the total income not taxed. After that the national tax rates are as follows:<br />
<br />
{| class="wikitable"<br />
|-<br />
! Tax Base (Yen)<br />
! Tax<br />
|-<br />
|1 - 1,950,000 <br />
|5%<br />
|-<br />
|1,950,001 - 3,300,000<br />
|10% of base exceeding 1,950,000<br />
|-<br />
|3,300,001 - 6,950,000<br />
|20% of base exceeding 3,300,000<br />
|-<br />
|6,950,001 - 9,000,000<br />
|23% of base exceeding 6,950,000<br />
|-<br />
|9,000,001 - 18,000,000<br />
|33% of base exceeding 9,000,000<br />
|-<br />
|18,000,001 and over<br />
|40% of base exceeding 18,000,000<br />
|}<br />
<br />
A 2.1% Tohoku reconstruction tax on the tax amount is added to the final bill.<br />
<br />
When filing personal income tax you are required to fill out two forms for the real estate income:<br />
<br />
{| border="0" <br />
|-<br />
| [[image:incometaxrentalincome.jpg|400px|thumb|c|left|The income tax form ]] [[image:incometaxdepreciation.jpg|400px|thumb|c|right|The depreciation calculation form ]]<br />
|-<br />
| [[image:incometaxtranslation1.jpg|400px|thumb|c|left|Translation of the income tax form (part 1) ]] [[image:incometaxtranslation2.jpg|400px|thumb|c|right|Translation of the income tax form (part 2) ]]<br />
|-<br />
| [[image:incometaxtranslation3.jpg|400px|thumb|c|left|Translation of the depreciation calculation form (part 1) ]] [[image:incometaxtranslation4.jpg|400px|thumb|c|right|Translation of the depreciation calculation form (part 2) ]]<br />
|}<br />
<br />
=== Depreciation Deduction for Income Tax ===<br />
It is possible to use depreciation to reduce the income tax burden. In Japan it is only possible to depreciate the building, not the land. When purchasing a new structure, often the breakdown is given. However when purchasing a second hand property it is not clear how much can be declared as building value. One way it to look at the possession tax valuation of the building and land and take that ratio. Another option would be to use the [http://akasakarealestate.com/wiki/index.php/Property_Valuation Rosenka] for the land valuation. When a property is sold, capital gains tax will have to be paid over the difference between the sales price and the book value. As depreciation reduces the book value, it will increase the capital gains tax when the property will be sold.<br />
<br />
To calculate the depreciation you can depreciate the building in an amount of years, depending on what type of structure it is. This is called the 'useful life' in Japan.<br />
<br />
{| class="wikitable"<br />
|-<br />
! Building Type<br />
! Useful life<br />
|-<br />
|Steel frame reinforced concrete buildings or reinforced concrete buildings<br />
|47 years<br />
|-<br />
|Brick, stone or block construction<br />
|38 years<br />
|-<br />
|Metal construction (thickness of internal frame exceeds 4 mm)<br />
|34 years<br />
|-<br />
|Metal construction (thickness of internal frame exceeds 3 mm)<br />
|27 years<br />
|-<br />
|Metal construction (thickness of internal frame is 3 mm or below)<br />
|19 years<br />
|-<br />
|Wood or wood composite construction<br />
|22 years<br />
|-<br />
|Wood frame mortar construction<br />
|20 years<br />
|}<br />
<br />
<br />
For second hand properties you can deduct 80 percent of the age. So for example a concrete apartment built in 1980 and bought in 2011 can be depreciated in 47 - (31 x 80%) = 47 - 24.8 = 22 years. The depreciation amount is 1/22 = 4.5% of the building value a year. When calculating the amount of years and the percentage depreciation the results are truncated down. It is not possible to depreciate a building more than its useful life, so a 40 year old wood frame structure must be depreciated in 20% of 20 = 4 years.<br />
<br />
To reduce the income tax burden sometimes several strategies are suggested to maximize the depreciation. However there are also downsides to this approach. For example the building value on a new property is higher, so the taxable depreciation is higher as well. Unfortunately such a new property will suffer a real market depreciation as well. Another strategy is to purchase a very old wooden frame structure on cheap land, allowing to depreciate almost the full purchase price in just 4 years. However capital gains tax will need to be paid when selling the property, so this might only be interesting for temporary residents who are now paying a high income tax rate, but are expected to leave Japan and so will fall into the 15% capital gains rate when selling. Also such old wooden structures might incur high maintenance costs and are hard to manage as they are normally only found outside Tokyo. The loophole for claiming a tax deduction for property outside Japan was closed in 2021.<br />
<br />
=== Withholding for Income Tax ===<br />
<br />
For non-residents the tax office wants to make sure that the income tax is paid. To this effect the law states that 20.42% of the incoming rent should be paid as withholding tax. When the annual income tax is filed by March the following year the owner will get a refund of these withholding tax payments. <br />
<br />
Officially a withholding tax filing is the responsibility of the tenant and should be done for every rent payment. This entails filling out a tax form, making the payment and sending a copy of the payment slip to the owner. Clearly this would create an excessive amount of paperwork and so the tax office is willing to take a rather flexible approach. This means that normally there is no issue if the withholding tax is not filed in case both the renter and the owner are individuals. If the renter is a corporation however they have requested that the payments are made for larger rent payments, but they are willing to let the property manager handle it. The exact definition of 'large' has not been given, but so far we have managed to avoid this paperwork for rents below 200,000 yen a month.<br />
<br />
=== How to file ===<br />
<br />
For residents just take the proof of your other income like your salary slips to the tax office along with the real estate forms. If your additional income is less than 200,000 yen no filing is necessary.<br />
<br />
== Capital Gains ==<br />
On short term holdings (less than 5 to 6 years) the tax rate on capital gains is quite high at 39% (30% national + 9% local tax). Non-residents pay only the national tax. There are ways to reduce it to 15% or less. If the dwelling is used as a primary residence the first 30 million yen of capital gains per owner is tax free. If you have owned it for over 10 years the first 60 million yen gains is taxed at 14% instead of 20%. A couple owning a house jointly gets 60 million tax free. If you own a property more than 6 years the tax rate goes down to 20% (15% national and 5% local tax). If you are not a resident in Japan that means the tax is 15%. Between 5 and 6 years it depends on the time of year. To get the lower tax rate 6 times January 1st must have passed since the purchase.<br />
<br />
The Capital Gains is calculated by taking the profit (sales price - purchase price - closing costs) and adding the depreciation that was reported for income tax. If no depreciation was reported, a mandatory minimum depreciation is added nonetheless.<br />
<br />
On top of the national tax an added 2.1% Tohoku reconstruction charge is levied. This means the effective tax is between 15.315% (non-resident, holding over 6 years) and 39.63% (resident, short term holding).<br />
<br />
=== Withholding for Capital Gains ===<br />
<br />
To ensure a non-resident seller files the capital gains tax form the buyer needs to withhold 10.21% of the sales price and pay this in withholding tax. The seller then can claim this back by filing the correct papers. For leasehold the amount is 20.42%.<br />
<br />
== Entrepreneurial Tax ==<br />
Individuals owning on their personal title 10 or more apartments or 2 or more buildings are charged an extra 5 percent of the profit when filing their personal income tax. The first 2,900,000 yen profit tax not taxed though. There is some rounding involved as well. Here is an example:<br />
<br />
* Income: 4,993,170 yen <br />
* Deduction: 2,900,000<br />
* Taxable: 2,093,000 (rounded down to the lowest thousand yen)<br />
* 5% tax: 104,600 (rounded down to the lowest 100 yen)<br />
<br />
To avoid this tax we recommend to divide ownership of many apartments over the different family members. It is also possible to put the ownership in a limited company and then pay yourself a salary as a director. For residents this salary would be taxed as income. For non-residents there is a flat tax of 20% on income distributions. A further advantage of having a company structure is the possibility to deduct travel and entertainment expenses. The initial set-up costs for a company in Japan are around 250,000 to 500,000 yen. Annual corporate tax will be 70,000 yen if all income is distributed as salary. The annual tax filing would cost around 150,000 to 300,000 depending on the complexity.<br />
<br />
== Sales Tax ==<br />
No sales tax is levied on residential rental contracts. For corporate contracts 10% sales tax is added. However if the owner is an individual and the total rent is less than 10 million yen a year, the owner can keep this money and does not have to file a sales tax form.<br />
<br />
== Direct ownership versus a holding company ==<br />
<br />
As a direct owner you have to pay income tax at progressive rates over the profit made from the investment properties. For large investors it can be a good idea to set up a local Japanese company (kabushiki kaisha) to reduce the tax burden. Setting up a company takes around 3 months and costs about 300,000 to 500,000 yen. The annual accounting costs might be similar. In return it is possible to deduct for example entertainment expenses and many more items from your profit. You would have to put yourself and possibly other people on the payroll to avoid paying the high corporate taxes. This could allow you to spread the income over several people making sure to avoid those higher tax bands. For non-resident directors there is a fixed tax rate of 20%. For more details we can recommend to talk to Greg McDonald at [http://www.solidjapan.com SolidJapan].<br />
<br />
Putting Japanese property directly in an overseas holding company might not be an effective way to save taxes. In such circumstances the tax rate would be 20% of the rent without allowing any deductions. Also the property manager would have to file a withholding tax form and make a payment with the tax office for EVERY rent payment. If overseas ownership is required a special construction called a [http://www.venturejapan.com/tokumei-kumiai-tk.htm Tokumei Kumiai (TK)] should be set up instead. However this is only suitable for larger investments (JPY 200 million and over) given the fact that non-residents pay very low tax rates on smaller investments.</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=Taxes&diff=55Taxes2021-07-28T09:45:42Z<p>Erik: /* Withholding for Income Tax */</p>
<hr />
<div>For properties we manage we handle all the tax filings. At the end of the year we will provide the owner with the details and instruction how to file the relevant income taxes. For people living outside Japan we file a non-resident income tax return.<br />
<br />
== Possession Tax ==<br />
<br />
Paid once a year. The invoice normally arrives on June 1st and needs to be paid by the end of June. It is possible to pay in 4 quarterly installments.<br />
<br />
The exact number is computed using a complex formula that takes 4 different assessments (2 for the building, 2 for the land) and then multiplies some assessments by 1.4%, others by 0.3%. There is often a 20% discount on the tax for land and possible other discounts depending on the zoning, and possibly the alignment of stars. The assessed values differ wildly from the real market value. In Tokyo alone we have seen variations between 20% to 120%, making the annual possession tax a rather random number, on average about 0.3% to 0.5% of the market value each year.<br />
<br />
== Acquisition Tax ==<br />
This tax is due a few months after buying the property. Normally around 0.5 to 1.0% of the purchase price, it can peak as high as 2%.<br />
It is based on the assessed value and the calculation for residential property is as follows:<br />
<br />
Acquisition Tax = Assessed Land Value x Share of the Land x 1.5% + Assessed Apartment Value x 3%<br />
<br />
Commercial properties are taxed at 4% instead of 3%.<br />
<br />
The assessed land and building value are published annually and available from the property records that are obtainable from the tax office. Here are examples of these property records.<br />
<br />
{| border="0" <br />
|-<br />
| [[image:assessed land value.jpg|400px|thumb|c|left|The assessed land value and the share of the land are circled in red]] [[image:assessed building value.jpg|400px|thumb|c|right|The apartment value is circled in red ]]<br />
|}<br />
<br />
There is a discount for newly built properties. More information can be found on this [http://tochi.mlit.go.jp/english/tax/02_01_02.html page] of the Ministry of Land, Infrastructure, Transport and Tourism.<br />
<br />
== Stamp Duty ==<br />
<br />
On any real estate contract both the buyer and the seller need to put a stamp. The stamps can be bought at the post office and the value is dependent on the transaction price. Mortgage contracts need a stamp too and the tax rates for this are slightly different.<br />
<br />
{| class="wikitable"<br />
|-<br />
! Transaction Amount<br />
! Property Purchase<br />
! Mortgage<br />
|-<br />
| 10,000 or less<br />
| nil<br />
| nil<br />
|-<br />
| 10,001 - 100,000<br />
| 200<br />
| 200<br />
|-<br />
| 100,001 - 500,000<br />
| 400<br />
| 400<br />
|-<br />
| 500,001 - 1,000,000<br />
| 1,000<br />
| 1,000<br />
|-<br />
| 1,000,001 - 5,000,000<br />
| 1,000<br />
| 2,000<br />
|-<br />
| 5,000,001 - 10,000,000<br />
| 5,000<br />
| 10,000<br />
|-<br />
| 10,000,001 - 50,000,000<br />
| 10,000<br />
| 20,000<br />
|-<br />
| 50,000,001 - 100,000,000<br />
| 30,000<br />
| 60,000<br />
|-<br />
| 100,000,001 - 500,000,000<br />
| 60,000<br />
| 100,000<br />
|-<br />
| 500,000,001 - 1,000,000,000<br />
| 160,000<br />
| 200,000<br />
|-<br />
| 1,000,000,001 - 5,000,000,000<br />
| 320,000<br />
| 400,000<br />
|-<br />
| more than 5,000,000,000<br />
| 480,000<br />
| 600,000<br />
|-<br />
| if no amount is stated<br />
| 200<br />
| 200<br />
|}<br />
<br />
== Income Tax ==<br />
Rental income is part of your income and taxed as such.<br />
Maintenance, repair, management and financing costs can be deducted.<br />
[http://akasakarealestate.com/wiki/index.php/Taxes#Depreciation_Deduction_for_Income_Tax Depreciation] can be deducted too. <br />
If you are not resident in Japan the total income in Japan will be low and so you will fall in a low tax bracket. Also no local tax will have to be paid.<br />
<br />
The first 480,000 yen is the total income not taxed. After that the national tax rates are as follows:<br />
<br />
{| class="wikitable"<br />
|-<br />
! Tax Base (Yen)<br />
! Tax<br />
|-<br />
|1 - 1,950,000 <br />
|5%<br />
|-<br />
|1,950,001 - 3,300,000<br />
|10% of base exceeding 1,950,000<br />
|-<br />
|3,300,001 - 6,950,000<br />
|20% of base exceeding 3,300,000<br />
|-<br />
|6,950,001 - 9,000,000<br />
|23% of base exceeding 6,950,000<br />
|-<br />
|9,000,001 - 18,000,000<br />
|33% of base exceeding 9,000,000<br />
|-<br />
|18,000,001 and over<br />
|40% of base exceeding 18,000,000<br />
|}<br />
<br />
A 2.1% Tohoku reconstruction tax on the tax amount is added to the final bill.<br />
<br />
When filing personal income tax you are required to fill out two forms for the real estate income:<br />
<br />
{| border="0" <br />
|-<br />
| [[image:incometaxrentalincome.jpg|400px|thumb|c|left|The income tax form ]] [[image:incometaxdepreciation.jpg|400px|thumb|c|right|The depreciation calculation form ]]<br />
|-<br />
| [[image:incometaxtranslation1.jpg|400px|thumb|c|left|Translation of the income tax form (part 1) ]] [[image:incometaxtranslation2.jpg|400px|thumb|c|right|Translation of the income tax form (part 2) ]]<br />
|-<br />
| [[image:incometaxtranslation3.jpg|400px|thumb|c|left|Translation of the depreciation calculation form (part 1) ]] [[image:incometaxtranslation4.jpg|400px|thumb|c|right|Translation of the depreciation calculation form (part 2) ]]<br />
|}<br />
<br />
=== Depreciation Deduction for Income Tax ===<br />
It is possible to use depreciation to reduce the income tax burden. In Japan it is only possible to depreciate the building, not the land. When purchasing a new structure, often the breakdown is given. However when purchasing a second hand property it is not clear how much can be declared as building value. One way it to look at the possession tax valuation of the building and land and take that ratio. Another option would be to use the [http://akasakarealestate.com/wiki/index.php/Property_Valuation Rosenka] for the land valuation. When a property is sold, capital gains tax will have to be paid over the difference between the sales price and the book value. As depreciation reduces the book value, it will increase the capital gains tax when the property will be sold.<br />
<br />
To calculate the depreciation you can depreciate the building in an amount of years, depending on what type of structure it is. This is called the 'useful life' in Japan.<br />
<br />
{| class="wikitable"<br />
|-<br />
! Building Type<br />
! Useful life<br />
|-<br />
|Steel frame reinforced concrete buildings or reinforced concrete buildings<br />
|47 years<br />
|-<br />
|Brick, stone or block construction<br />
|38 years<br />
|-<br />
|Metal construction (thickness of internal frame exceeds 4 mm)<br />
|34 years<br />
|-<br />
|Metal construction (thickness of internal frame exceeds 3 mm)<br />
|27 years<br />
|-<br />
|Metal construction (thickness of internal frame is 3 mm or below)<br />
|19 years<br />
|-<br />
|Wood or wood composite construction<br />
|22 years<br />
|-<br />
|Wood frame mortar construction<br />
|20 years<br />
|}<br />
<br />
<br />
For second hand properties you can deduct 80 percent of the age. So for example a concrete apartment built in 1980 and bought in 2011 can be depreciated in 47 - (31 x 80%) = 47 - 24.8 = 22 years. The depreciation amount is 1/22 = 4.5% of the building value a year. When calculating the amount of years and the percentage depreciation the results are truncated down. It is not possible to depreciate a building more than its useful life, so a 40 year old wood frame structure must be depreciated in 20% of 20 = 4 years.<br />
<br />
To reduce the income tax burden sometimes several strategies are suggested to maximize the depreciation. However there are also downsides to this approach. For example the building value on a new property is higher, so the taxable depreciation is higher as well. Unfortunately such a new property will suffer a real market depreciation as well. Another strategy is to purchase a very old wooden frame structure on cheap land, allowing to depreciate almost the full purchase price in just 4 years. However capital gains tax will need to be paid when selling the property, so this might only be interesting for temporary residents who are now paying a high income tax rate, but are expected to leave Japan and so will fall into the 15% capital gains rate when selling. Also such old wooden structures might incur high maintenance costs and are hard to manage as they are normally only found outside Tokyo. The loophole for claiming a tax deduction for property outside Japan was closed in 2021.<br />
<br />
=== Withholding for Income Tax ===<br />
<br />
For non-residents the tax office wants to make sure that the income tax is paid. To this effect the law states that 20.42% of the incoming rent should be paid as withholding tax. When the annual income tax is filed by March the following year the owner will get a refund of these withholding tax payments. <br />
<br />
Officially a withholding tax filing is the responsibility of the tenant and should be done for every rent payment. This entails filling out a tax form, making the payment and sending a copy of the payment slip to the owner. Clearly this would create an excessive amount of paperwork and so the tax office is willing to take a rather flexible approach. This means that normally there is no issue if the withholding tax is not filed in case both the renter and the owner are individuals. If the renter is a corporation however they have requested that the payments are made for larger rent payments, but they are willing to let the property manager handle it. The exact definition of 'large' has not been given, but so far we have managed to avoid this paperwork for rents below 200,000 yen a month.<br />
<br />
=== How to file ===<br />
<br />
For residents just take the proof of your other income like your salary slips to the tax office along with the real estate forms. If your additional income is less than 200,000 yen no filing is necessary.<br />
<br />
== Capital Gains ==<br />
On short term holdings (less than 5 to 6 years) the tax rate on capital gains is quite high at 39% (30% national + 9% local tax). Non-residents pay only the national tax. There are ways to reduce it to 15% or less. If the dwelling is used as a primary residence the first 30 million yen of capital gains per owner is tax free. If you have owned it for over 10 years the first 60 million yen gains is taxed at 14% instead of 20%. A couple owning a house jointly gets 60 million tax free. If you own a property more than 6 years the tax rate goes down to 20% (15% national and 5% local tax). If you are not a resident in Japan that means the tax is 15%. Between 5 and 6 years it depends on the time of year. To get the lower tax rate 6 times January 1st must have passed since the purchase.<br />
<br />
The Capital Gains is calculated by taking the profit (sales price - purchase price - closing costs) and adding the depreciation that was reported for income tax. If no depreciation was reported, a mandatory minimum depreciation is added nonetheless.<br />
<br />
On top of the national tax an added 2.1% Tohoku reconstruction charge is levied. This means the effective tax is between 15.315% (non-resident, holding over 6 years) and 39.63% (resident, short term holding).<br />
<br />
=== Withholding for Capital Gains ===<br />
<br />
To ensure a non-resident seller files the capital gains tax form the buyer needs to withhold 10.21% of the sales price and pay this in withholding tax. The seller then can claim this back by filing the correct papers. For leasehold the amount is 20.42%.<br />
<br />
== Entrepreneurial Tax ==<br />
Individuals owning on their personal title 10 or more apartments or 2 or more buildings are charged an extra 5 percent of the profit when filing their personal income tax. The first 2,900,000 yen profit tax not taxed though. There is some rounding involved as well. Here is an example:<br />
<br />
* Income: 4,993,170 yen <br />
* Deduction: 2,900,000<br />
* Taxable: 2,093,000 (rounded down to the lowest thousand yen)<br />
* 5% tax: 104,600 (rounded down to the lowest 100 yen)<br />
<br />
To avoid this tax we recommend to divide ownership of many apartments over the different family members. It is also possible to put the ownership in a limited company and then pay yourself a salary as a director. For residents this salary would be taxed as income. For non-residents there is a flat tax of 20% on income distributions. A further advantage of having a company structure is the possibility to deduct travel and entertainment expenses. The initial set-up costs for a company in Japan are around 250,000 to 500,000 yen. Annual corporate tax will be 70,000 yen if all income is distributed as salary. The annual tax filing would cost around 150,000 to 300,000 depending on the complexity.<br />
<br />
== Sales Tax ==<br />
No sales tax is levied on residential rental contracts. For corporate contracts 8% sales tax is added. However if the owner is an individual and the total rent is less than 10 million yen a year, the owner can keep this money and does not have to file a sales tax form.<br />
<br />
== Direct ownership versus a holding company ==<br />
<br />
As a direct owner you have to pay income tax at progressive rates over the profit made from the investment properties. For large investors it can be a good idea to set up a local Japanese company (kabushiki kaisha) to reduce the tax burden. Setting up a company takes around 3 months and costs about 300,000 to 500,000 yen. The annual accounting costs might be similar. In return it is possible to deduct for example entertainment expenses and many more items from your profit. You would have to put yourself and possibly other people on the payroll to avoid paying the high corporate taxes. This could allow you to spread the income over several people making sure to avoid those higher tax bands. For non-resident directors there is a fixed tax rate of 20%. For more details we can recommend to talk to Greg McDonald at [http://www.solidjapan.com SolidJapan].<br />
<br />
Putting Japanese property directly in an overseas holding company might not be an effective way to save taxes. In such circumstances the tax rate would be 20% of the rent without allowing any deductions. Also the property manager would have to file a withholding tax form and make a payment with the tax office for EVERY rent payment. If overseas ownership is required a special construction called a [http://www.venturejapan.com/tokumei-kumiai-tk.htm Tokumei Kumiai (TK)] should be set up instead. However this is only suitable for larger investments (JPY 200 million and over) given the fact that non-residents pay very low tax rates on smaller investments.</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=Taxes&diff=54Taxes2021-07-28T09:45:23Z<p>Erik: /* Depreciation Deduction for Income Tax */</p>
<hr />
<div>For properties we manage we handle all the tax filings. At the end of the year we will provide the owner with the details and instruction how to file the relevant income taxes. For people living outside Japan we file a non-resident income tax return.<br />
<br />
== Possession Tax ==<br />
<br />
Paid once a year. The invoice normally arrives on June 1st and needs to be paid by the end of June. It is possible to pay in 4 quarterly installments.<br />
<br />
The exact number is computed using a complex formula that takes 4 different assessments (2 for the building, 2 for the land) and then multiplies some assessments by 1.4%, others by 0.3%. There is often a 20% discount on the tax for land and possible other discounts depending on the zoning, and possibly the alignment of stars. The assessed values differ wildly from the real market value. In Tokyo alone we have seen variations between 20% to 120%, making the annual possession tax a rather random number, on average about 0.3% to 0.5% of the market value each year.<br />
<br />
== Acquisition Tax ==<br />
This tax is due a few months after buying the property. Normally around 0.5 to 1.0% of the purchase price, it can peak as high as 2%.<br />
It is based on the assessed value and the calculation for residential property is as follows:<br />
<br />
Acquisition Tax = Assessed Land Value x Share of the Land x 1.5% + Assessed Apartment Value x 3%<br />
<br />
Commercial properties are taxed at 4% instead of 3%.<br />
<br />
The assessed land and building value are published annually and available from the property records that are obtainable from the tax office. Here are examples of these property records.<br />
<br />
{| border="0" <br />
|-<br />
| [[image:assessed land value.jpg|400px|thumb|c|left|The assessed land value and the share of the land are circled in red]] [[image:assessed building value.jpg|400px|thumb|c|right|The apartment value is circled in red ]]<br />
|}<br />
<br />
There is a discount for newly built properties. More information can be found on this [http://tochi.mlit.go.jp/english/tax/02_01_02.html page] of the Ministry of Land, Infrastructure, Transport and Tourism.<br />
<br />
== Stamp Duty ==<br />
<br />
On any real estate contract both the buyer and the seller need to put a stamp. The stamps can be bought at the post office and the value is dependent on the transaction price. Mortgage contracts need a stamp too and the tax rates for this are slightly different.<br />
<br />
{| class="wikitable"<br />
|-<br />
! Transaction Amount<br />
! Property Purchase<br />
! Mortgage<br />
|-<br />
| 10,000 or less<br />
| nil<br />
| nil<br />
|-<br />
| 10,001 - 100,000<br />
| 200<br />
| 200<br />
|-<br />
| 100,001 - 500,000<br />
| 400<br />
| 400<br />
|-<br />
| 500,001 - 1,000,000<br />
| 1,000<br />
| 1,000<br />
|-<br />
| 1,000,001 - 5,000,000<br />
| 1,000<br />
| 2,000<br />
|-<br />
| 5,000,001 - 10,000,000<br />
| 5,000<br />
| 10,000<br />
|-<br />
| 10,000,001 - 50,000,000<br />
| 10,000<br />
| 20,000<br />
|-<br />
| 50,000,001 - 100,000,000<br />
| 30,000<br />
| 60,000<br />
|-<br />
| 100,000,001 - 500,000,000<br />
| 60,000<br />
| 100,000<br />
|-<br />
| 500,000,001 - 1,000,000,000<br />
| 160,000<br />
| 200,000<br />
|-<br />
| 1,000,000,001 - 5,000,000,000<br />
| 320,000<br />
| 400,000<br />
|-<br />
| more than 5,000,000,000<br />
| 480,000<br />
| 600,000<br />
|-<br />
| if no amount is stated<br />
| 200<br />
| 200<br />
|}<br />
<br />
== Income Tax ==<br />
Rental income is part of your income and taxed as such.<br />
Maintenance, repair, management and financing costs can be deducted.<br />
[http://akasakarealestate.com/wiki/index.php/Taxes#Depreciation_Deduction_for_Income_Tax Depreciation] can be deducted too. <br />
If you are not resident in Japan the total income in Japan will be low and so you will fall in a low tax bracket. Also no local tax will have to be paid.<br />
<br />
The first 480,000 yen is the total income not taxed. After that the national tax rates are as follows:<br />
<br />
{| class="wikitable"<br />
|-<br />
! Tax Base (Yen)<br />
! Tax<br />
|-<br />
|1 - 1,950,000 <br />
|5%<br />
|-<br />
|1,950,001 - 3,300,000<br />
|10% of base exceeding 1,950,000<br />
|-<br />
|3,300,001 - 6,950,000<br />
|20% of base exceeding 3,300,000<br />
|-<br />
|6,950,001 - 9,000,000<br />
|23% of base exceeding 6,950,000<br />
|-<br />
|9,000,001 - 18,000,000<br />
|33% of base exceeding 9,000,000<br />
|-<br />
|18,000,001 and over<br />
|40% of base exceeding 18,000,000<br />
|}<br />
<br />
A 2.1% Tohoku reconstruction tax on the tax amount is added to the final bill.<br />
<br />
When filing personal income tax you are required to fill out two forms for the real estate income:<br />
<br />
{| border="0" <br />
|-<br />
| [[image:incometaxrentalincome.jpg|400px|thumb|c|left|The income tax form ]] [[image:incometaxdepreciation.jpg|400px|thumb|c|right|The depreciation calculation form ]]<br />
|-<br />
| [[image:incometaxtranslation1.jpg|400px|thumb|c|left|Translation of the income tax form (part 1) ]] [[image:incometaxtranslation2.jpg|400px|thumb|c|right|Translation of the income tax form (part 2) ]]<br />
|-<br />
| [[image:incometaxtranslation3.jpg|400px|thumb|c|left|Translation of the depreciation calculation form (part 1) ]] [[image:incometaxtranslation4.jpg|400px|thumb|c|right|Translation of the depreciation calculation form (part 2) ]]<br />
|}<br />
<br />
=== Depreciation Deduction for Income Tax ===<br />
It is possible to use depreciation to reduce the income tax burden. In Japan it is only possible to depreciate the building, not the land. When purchasing a new structure, often the breakdown is given. However when purchasing a second hand property it is not clear how much can be declared as building value. One way it to look at the possession tax valuation of the building and land and take that ratio. Another option would be to use the [http://akasakarealestate.com/wiki/index.php/Property_Valuation Rosenka] for the land valuation. When a property is sold, capital gains tax will have to be paid over the difference between the sales price and the book value. As depreciation reduces the book value, it will increase the capital gains tax when the property will be sold.<br />
<br />
To calculate the depreciation you can depreciate the building in an amount of years, depending on what type of structure it is. This is called the 'useful life' in Japan.<br />
<br />
{| class="wikitable"<br />
|-<br />
! Building Type<br />
! Useful life<br />
|-<br />
|Steel frame reinforced concrete buildings or reinforced concrete buildings<br />
|47 years<br />
|-<br />
|Brick, stone or block construction<br />
|38 years<br />
|-<br />
|Metal construction (thickness of internal frame exceeds 4 mm)<br />
|34 years<br />
|-<br />
|Metal construction (thickness of internal frame exceeds 3 mm)<br />
|27 years<br />
|-<br />
|Metal construction (thickness of internal frame is 3 mm or below)<br />
|19 years<br />
|-<br />
|Wood or wood composite construction<br />
|22 years<br />
|-<br />
|Wood frame mortar construction<br />
|20 years<br />
|}<br />
<br />
<br />
For second hand properties you can deduct 80 percent of the age. So for example a concrete apartment built in 1980 and bought in 2011 can be depreciated in 47 - (31 x 80%) = 47 - 24.8 = 22 years. The depreciation amount is 1/22 = 4.5% of the building value a year. When calculating the amount of years and the percentage depreciation the results are truncated down. It is not possible to depreciate a building more than its useful life, so a 40 year old wood frame structure must be depreciated in 20% of 20 = 4 years.<br />
<br />
To reduce the income tax burden sometimes several strategies are suggested to maximize the depreciation. However there are also downsides to this approach. For example the building value on a new property is higher, so the taxable depreciation is higher as well. Unfortunately such a new property will suffer a real market depreciation as well. Another strategy is to purchase a very old wooden frame structure on cheap land, allowing to depreciate almost the full purchase price in just 4 years. However capital gains tax will need to be paid when selling the property, so this might only be interesting for temporary residents who are now paying a high income tax rate, but are expected to leave Japan and so will fall into the 15% capital gains rate when selling. Also such old wooden structures might incur high maintenance costs and are hard to manage as they are normally only found outside Tokyo. The loophole for claiming a tax deduction for property outside Japan was closed in 2021.<br />
<br />
=== Withholding for Income Tax ===<br />
<br />
For non-residents the tax office wants to make sure that the income tax is paid. To this effect the law states that 20% of the incoming rent should be paid as withholding tax. When the annual income tax is filed by March the following year the owner will get a refund of these withholding tax payments. <br />
<br />
Officially a withholding tax filing is the responsibility of the tenant and should be done for every rent payment. This entails filling out a tax form, making the payment and sending a copy of the payment slip to the owner. Clearly this would create an excessive amount of paperwork and so the tax office is willing to take a rather flexible approach. This means that normally there is no issue if the withholding tax is not filed in case both the renter and the owner are individuals. If the renter is a corporation however they have requested that the payments are made for larger rent payments, but they are willing to let the property manager handle it. The exact definition of 'large' has not been given, but so far we have managed to avoid this paperwork for rents below 200,000 yen a month.<br />
<br />
=== How to file ===<br />
<br />
For residents just take the proof of your other income like your salary slips to the tax office along with the real estate forms. If your additional income is less than 200,000 yen no filing is necessary.<br />
<br />
== Capital Gains ==<br />
On short term holdings (less than 5 to 6 years) the tax rate on capital gains is quite high at 39% (30% national + 9% local tax). Non-residents pay only the national tax. There are ways to reduce it to 15% or less. If the dwelling is used as a primary residence the first 30 million yen of capital gains per owner is tax free. If you have owned it for over 10 years the first 60 million yen gains is taxed at 14% instead of 20%. A couple owning a house jointly gets 60 million tax free. If you own a property more than 6 years the tax rate goes down to 20% (15% national and 5% local tax). If you are not a resident in Japan that means the tax is 15%. Between 5 and 6 years it depends on the time of year. To get the lower tax rate 6 times January 1st must have passed since the purchase.<br />
<br />
The Capital Gains is calculated by taking the profit (sales price - purchase price - closing costs) and adding the depreciation that was reported for income tax. If no depreciation was reported, a mandatory minimum depreciation is added nonetheless.<br />
<br />
On top of the national tax an added 2.1% Tohoku reconstruction charge is levied. This means the effective tax is between 15.315% (non-resident, holding over 6 years) and 39.63% (resident, short term holding).<br />
<br />
=== Withholding for Capital Gains ===<br />
<br />
To ensure a non-resident seller files the capital gains tax form the buyer needs to withhold 10.21% of the sales price and pay this in withholding tax. The seller then can claim this back by filing the correct papers. For leasehold the amount is 20.42%.<br />
<br />
== Entrepreneurial Tax ==<br />
Individuals owning on their personal title 10 or more apartments or 2 or more buildings are charged an extra 5 percent of the profit when filing their personal income tax. The first 2,900,000 yen profit tax not taxed though. There is some rounding involved as well. Here is an example:<br />
<br />
* Income: 4,993,170 yen <br />
* Deduction: 2,900,000<br />
* Taxable: 2,093,000 (rounded down to the lowest thousand yen)<br />
* 5% tax: 104,600 (rounded down to the lowest 100 yen)<br />
<br />
To avoid this tax we recommend to divide ownership of many apartments over the different family members. It is also possible to put the ownership in a limited company and then pay yourself a salary as a director. For residents this salary would be taxed as income. For non-residents there is a flat tax of 20% on income distributions. A further advantage of having a company structure is the possibility to deduct travel and entertainment expenses. The initial set-up costs for a company in Japan are around 250,000 to 500,000 yen. Annual corporate tax will be 70,000 yen if all income is distributed as salary. The annual tax filing would cost around 150,000 to 300,000 depending on the complexity.<br />
<br />
== Sales Tax ==<br />
No sales tax is levied on residential rental contracts. For corporate contracts 8% sales tax is added. However if the owner is an individual and the total rent is less than 10 million yen a year, the owner can keep this money and does not have to file a sales tax form.<br />
<br />
== Direct ownership versus a holding company ==<br />
<br />
As a direct owner you have to pay income tax at progressive rates over the profit made from the investment properties. For large investors it can be a good idea to set up a local Japanese company (kabushiki kaisha) to reduce the tax burden. Setting up a company takes around 3 months and costs about 300,000 to 500,000 yen. The annual accounting costs might be similar. In return it is possible to deduct for example entertainment expenses and many more items from your profit. You would have to put yourself and possibly other people on the payroll to avoid paying the high corporate taxes. This could allow you to spread the income over several people making sure to avoid those higher tax bands. For non-resident directors there is a fixed tax rate of 20%. For more details we can recommend to talk to Greg McDonald at [http://www.solidjapan.com SolidJapan].<br />
<br />
Putting Japanese property directly in an overseas holding company might not be an effective way to save taxes. In such circumstances the tax rate would be 20% of the rent without allowing any deductions. Also the property manager would have to file a withholding tax form and make a payment with the tax office for EVERY rent payment. If overseas ownership is required a special construction called a [http://www.venturejapan.com/tokumei-kumiai-tk.htm Tokumei Kumiai (TK)] should be set up instead. However this is only suitable for larger investments (JPY 200 million and over) given the fact that non-residents pay very low tax rates on smaller investments.</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=Taxes&diff=53Taxes2021-07-28T09:43:54Z<p>Erik: /* Income Tax */</p>
<hr />
<div>For properties we manage we handle all the tax filings. At the end of the year we will provide the owner with the details and instruction how to file the relevant income taxes. For people living outside Japan we file a non-resident income tax return.<br />
<br />
== Possession Tax ==<br />
<br />
Paid once a year. The invoice normally arrives on June 1st and needs to be paid by the end of June. It is possible to pay in 4 quarterly installments.<br />
<br />
The exact number is computed using a complex formula that takes 4 different assessments (2 for the building, 2 for the land) and then multiplies some assessments by 1.4%, others by 0.3%. There is often a 20% discount on the tax for land and possible other discounts depending on the zoning, and possibly the alignment of stars. The assessed values differ wildly from the real market value. In Tokyo alone we have seen variations between 20% to 120%, making the annual possession tax a rather random number, on average about 0.3% to 0.5% of the market value each year.<br />
<br />
== Acquisition Tax ==<br />
This tax is due a few months after buying the property. Normally around 0.5 to 1.0% of the purchase price, it can peak as high as 2%.<br />
It is based on the assessed value and the calculation for residential property is as follows:<br />
<br />
Acquisition Tax = Assessed Land Value x Share of the Land x 1.5% + Assessed Apartment Value x 3%<br />
<br />
Commercial properties are taxed at 4% instead of 3%.<br />
<br />
The assessed land and building value are published annually and available from the property records that are obtainable from the tax office. Here are examples of these property records.<br />
<br />
{| border="0" <br />
|-<br />
| [[image:assessed land value.jpg|400px|thumb|c|left|The assessed land value and the share of the land are circled in red]] [[image:assessed building value.jpg|400px|thumb|c|right|The apartment value is circled in red ]]<br />
|}<br />
<br />
There is a discount for newly built properties. More information can be found on this [http://tochi.mlit.go.jp/english/tax/02_01_02.html page] of the Ministry of Land, Infrastructure, Transport and Tourism.<br />
<br />
== Stamp Duty ==<br />
<br />
On any real estate contract both the buyer and the seller need to put a stamp. The stamps can be bought at the post office and the value is dependent on the transaction price. Mortgage contracts need a stamp too and the tax rates for this are slightly different.<br />
<br />
{| class="wikitable"<br />
|-<br />
! Transaction Amount<br />
! Property Purchase<br />
! Mortgage<br />
|-<br />
| 10,000 or less<br />
| nil<br />
| nil<br />
|-<br />
| 10,001 - 100,000<br />
| 200<br />
| 200<br />
|-<br />
| 100,001 - 500,000<br />
| 400<br />
| 400<br />
|-<br />
| 500,001 - 1,000,000<br />
| 1,000<br />
| 1,000<br />
|-<br />
| 1,000,001 - 5,000,000<br />
| 1,000<br />
| 2,000<br />
|-<br />
| 5,000,001 - 10,000,000<br />
| 5,000<br />
| 10,000<br />
|-<br />
| 10,000,001 - 50,000,000<br />
| 10,000<br />
| 20,000<br />
|-<br />
| 50,000,001 - 100,000,000<br />
| 30,000<br />
| 60,000<br />
|-<br />
| 100,000,001 - 500,000,000<br />
| 60,000<br />
| 100,000<br />
|-<br />
| 500,000,001 - 1,000,000,000<br />
| 160,000<br />
| 200,000<br />
|-<br />
| 1,000,000,001 - 5,000,000,000<br />
| 320,000<br />
| 400,000<br />
|-<br />
| more than 5,000,000,000<br />
| 480,000<br />
| 600,000<br />
|-<br />
| if no amount is stated<br />
| 200<br />
| 200<br />
|}<br />
<br />
== Income Tax ==<br />
Rental income is part of your income and taxed as such.<br />
Maintenance, repair, management and financing costs can be deducted.<br />
[http://akasakarealestate.com/wiki/index.php/Taxes#Depreciation_Deduction_for_Income_Tax Depreciation] can be deducted too. <br />
If you are not resident in Japan the total income in Japan will be low and so you will fall in a low tax bracket. Also no local tax will have to be paid.<br />
<br />
The first 480,000 yen is the total income not taxed. After that the national tax rates are as follows:<br />
<br />
{| class="wikitable"<br />
|-<br />
! Tax Base (Yen)<br />
! Tax<br />
|-<br />
|1 - 1,950,000 <br />
|5%<br />
|-<br />
|1,950,001 - 3,300,000<br />
|10% of base exceeding 1,950,000<br />
|-<br />
|3,300,001 - 6,950,000<br />
|20% of base exceeding 3,300,000<br />
|-<br />
|6,950,001 - 9,000,000<br />
|23% of base exceeding 6,950,000<br />
|-<br />
|9,000,001 - 18,000,000<br />
|33% of base exceeding 9,000,000<br />
|-<br />
|18,000,001 and over<br />
|40% of base exceeding 18,000,000<br />
|}<br />
<br />
A 2.1% Tohoku reconstruction tax on the tax amount is added to the final bill.<br />
<br />
When filing personal income tax you are required to fill out two forms for the real estate income:<br />
<br />
{| border="0" <br />
|-<br />
| [[image:incometaxrentalincome.jpg|400px|thumb|c|left|The income tax form ]] [[image:incometaxdepreciation.jpg|400px|thumb|c|right|The depreciation calculation form ]]<br />
|-<br />
| [[image:incometaxtranslation1.jpg|400px|thumb|c|left|Translation of the income tax form (part 1) ]] [[image:incometaxtranslation2.jpg|400px|thumb|c|right|Translation of the income tax form (part 2) ]]<br />
|-<br />
| [[image:incometaxtranslation3.jpg|400px|thumb|c|left|Translation of the depreciation calculation form (part 1) ]] [[image:incometaxtranslation4.jpg|400px|thumb|c|right|Translation of the depreciation calculation form (part 2) ]]<br />
|}<br />
<br />
=== Depreciation Deduction for Income Tax ===<br />
It is possible to use depreciation to reduce the income tax burden. In Japan it is only possible to depreciate the building, not the land. When purchasing a new structure, often the breakdown is given. However when purchasing a second hand property it is not clear how much can be declared as building value. One way it to look at the possession tax valuation of the building and land and take that ratio. Another option would be to use the [http://akasakarealestate.com/wiki/index.php/Property_Valuation Rosenka] for the land valuation. When a property is sold, capital gains tax will have to be paid over the difference between the sales price and the book value. As depreciation reduces the book value, it will increase the capital gains tax when the property will be sold.<br />
<br />
To calculate the depreciation you can depreciate the building in an amount of years, depending on what type of structure it is. This is called the 'useful life' in Japan.<br />
<br />
{| class="wikitable"<br />
|-<br />
! Building Type<br />
! Useful life<br />
|-<br />
|Steel frame reinforced concrete buildings or reinforced concrete buildings<br />
|47 years<br />
|-<br />
|Brick, stone or block construction<br />
|38 years<br />
|-<br />
|Metal construction (thickness of internal frame exceeds 4 mm)<br />
|34 years<br />
|-<br />
|Metal construction (thickness of internal frame exceeds 3 mm)<br />
|27 years<br />
|-<br />
|Metal construction (thickness of internal frame is 3 mm or below)<br />
|19 years<br />
|-<br />
|Wood or wood composite construction<br />
|22 years<br />
|-<br />
|Wood frame mortar construction<br />
|20 years<br />
|}<br />
<br />
<br />
For second hand properties you can deduct 80 percent of the age. So for example a concrete apartment built in 1980 and bought in 2011 can be depreciated in 47 - (31 x 80%) = 47 - 24.8 = 22 years. The depreciation amount is 1/22 = 4.5% of the building value a year. When calculating the amount of years and the percentage depreciation the results are truncated down. It is not possible to depreciate a building more than its useful life, so a 40 year old wood frame structure must be depreciated in 20% of 20 = 4 years.<br />
<br />
To reduce the income tax burden sometimes several strategies are suggested to maximize the depreciation. However there are also downsides to this approach. For example the building value on a new property is higher, so the taxable depreciation is higher as well. Unfortunately such a new property will suffer a real market depreciation as well. Another strategy is to purchase a very old wooden frame structure on cheap land, allowing to depreciate almost the full purchase price in just 4 years. However capital gains tax will need to be paid when selling the property, so this might only be interesting for temporary residents who are now paying a high income tax rate, but are expected to leave Japan and so will fall into the 15% capital gains rate when selling. Also such old wooden structures might incur high maintenance costs and are hard to manage as they are normally only found outside Tokyo.<br />
<br />
=== Withholding for Income Tax ===<br />
<br />
For non-residents the tax office wants to make sure that the income tax is paid. To this effect the law states that 20% of the incoming rent should be paid as withholding tax. When the annual income tax is filed by March the following year the owner will get a refund of these withholding tax payments. <br />
<br />
Officially a withholding tax filing is the responsibility of the tenant and should be done for every rent payment. This entails filling out a tax form, making the payment and sending a copy of the payment slip to the owner. Clearly this would create an excessive amount of paperwork and so the tax office is willing to take a rather flexible approach. This means that normally there is no issue if the withholding tax is not filed in case both the renter and the owner are individuals. If the renter is a corporation however they have requested that the payments are made for larger rent payments, but they are willing to let the property manager handle it. The exact definition of 'large' has not been given, but so far we have managed to avoid this paperwork for rents below 200,000 yen a month.<br />
<br />
=== How to file ===<br />
<br />
For residents just take the proof of your other income like your salary slips to the tax office along with the real estate forms. If your additional income is less than 200,000 yen no filing is necessary.<br />
<br />
== Capital Gains ==<br />
On short term holdings (less than 5 to 6 years) the tax rate on capital gains is quite high at 39% (30% national + 9% local tax). Non-residents pay only the national tax. There are ways to reduce it to 15% or less. If the dwelling is used as a primary residence the first 30 million yen of capital gains per owner is tax free. If you have owned it for over 10 years the first 60 million yen gains is taxed at 14% instead of 20%. A couple owning a house jointly gets 60 million tax free. If you own a property more than 6 years the tax rate goes down to 20% (15% national and 5% local tax). If you are not a resident in Japan that means the tax is 15%. Between 5 and 6 years it depends on the time of year. To get the lower tax rate 6 times January 1st must have passed since the purchase.<br />
<br />
The Capital Gains is calculated by taking the profit (sales price - purchase price - closing costs) and adding the depreciation that was reported for income tax. If no depreciation was reported, a mandatory minimum depreciation is added nonetheless.<br />
<br />
On top of the national tax an added 2.1% Tohoku reconstruction charge is levied. This means the effective tax is between 15.315% (non-resident, holding over 6 years) and 39.63% (resident, short term holding).<br />
<br />
=== Withholding for Capital Gains ===<br />
<br />
To ensure a non-resident seller files the capital gains tax form the buyer needs to withhold 10.21% of the sales price and pay this in withholding tax. The seller then can claim this back by filing the correct papers. For leasehold the amount is 20.42%.<br />
<br />
== Entrepreneurial Tax ==<br />
Individuals owning on their personal title 10 or more apartments or 2 or more buildings are charged an extra 5 percent of the profit when filing their personal income tax. The first 2,900,000 yen profit tax not taxed though. There is some rounding involved as well. Here is an example:<br />
<br />
* Income: 4,993,170 yen <br />
* Deduction: 2,900,000<br />
* Taxable: 2,093,000 (rounded down to the lowest thousand yen)<br />
* 5% tax: 104,600 (rounded down to the lowest 100 yen)<br />
<br />
To avoid this tax we recommend to divide ownership of many apartments over the different family members. It is also possible to put the ownership in a limited company and then pay yourself a salary as a director. For residents this salary would be taxed as income. For non-residents there is a flat tax of 20% on income distributions. A further advantage of having a company structure is the possibility to deduct travel and entertainment expenses. The initial set-up costs for a company in Japan are around 250,000 to 500,000 yen. Annual corporate tax will be 70,000 yen if all income is distributed as salary. The annual tax filing would cost around 150,000 to 300,000 depending on the complexity.<br />
<br />
== Sales Tax ==<br />
No sales tax is levied on residential rental contracts. For corporate contracts 8% sales tax is added. However if the owner is an individual and the total rent is less than 10 million yen a year, the owner can keep this money and does not have to file a sales tax form.<br />
<br />
== Direct ownership versus a holding company ==<br />
<br />
As a direct owner you have to pay income tax at progressive rates over the profit made from the investment properties. For large investors it can be a good idea to set up a local Japanese company (kabushiki kaisha) to reduce the tax burden. Setting up a company takes around 3 months and costs about 300,000 to 500,000 yen. The annual accounting costs might be similar. In return it is possible to deduct for example entertainment expenses and many more items from your profit. You would have to put yourself and possibly other people on the payroll to avoid paying the high corporate taxes. This could allow you to spread the income over several people making sure to avoid those higher tax bands. For non-resident directors there is a fixed tax rate of 20%. For more details we can recommend to talk to Greg McDonald at [http://www.solidjapan.com SolidJapan].<br />
<br />
Putting Japanese property directly in an overseas holding company might not be an effective way to save taxes. In such circumstances the tax rate would be 20% of the rent without allowing any deductions. Also the property manager would have to file a withholding tax form and make a payment with the tax office for EVERY rent payment. If overseas ownership is required a special construction called a [http://www.venturejapan.com/tokumei-kumiai-tk.htm Tokumei Kumiai (TK)] should be set up instead. However this is only suitable for larger investments (JPY 200 million and over) given the fact that non-residents pay very low tax rates on smaller investments.</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=Taxes&diff=52Taxes2021-07-28T09:40:42Z<p>Erik: /* Possession Tax */</p>
<hr />
<div>For properties we manage we handle all the tax filings. At the end of the year we will provide the owner with the details and instruction how to file the relevant income taxes. For people living outside Japan we file a non-resident income tax return.<br />
<br />
== Possession Tax ==<br />
<br />
Paid once a year. The invoice normally arrives on June 1st and needs to be paid by the end of June. It is possible to pay in 4 quarterly installments.<br />
<br />
The exact number is computed using a complex formula that takes 4 different assessments (2 for the building, 2 for the land) and then multiplies some assessments by 1.4%, others by 0.3%. There is often a 20% discount on the tax for land and possible other discounts depending on the zoning, and possibly the alignment of stars. The assessed values differ wildly from the real market value. In Tokyo alone we have seen variations between 20% to 120%, making the annual possession tax a rather random number, on average about 0.3% to 0.5% of the market value each year.<br />
<br />
== Acquisition Tax ==<br />
This tax is due a few months after buying the property. Normally around 0.5 to 1.0% of the purchase price, it can peak as high as 2%.<br />
It is based on the assessed value and the calculation for residential property is as follows:<br />
<br />
Acquisition Tax = Assessed Land Value x Share of the Land x 1.5% + Assessed Apartment Value x 3%<br />
<br />
Commercial properties are taxed at 4% instead of 3%.<br />
<br />
The assessed land and building value are published annually and available from the property records that are obtainable from the tax office. Here are examples of these property records.<br />
<br />
{| border="0" <br />
|-<br />
| [[image:assessed land value.jpg|400px|thumb|c|left|The assessed land value and the share of the land are circled in red]] [[image:assessed building value.jpg|400px|thumb|c|right|The apartment value is circled in red ]]<br />
|}<br />
<br />
There is a discount for newly built properties. More information can be found on this [http://tochi.mlit.go.jp/english/tax/02_01_02.html page] of the Ministry of Land, Infrastructure, Transport and Tourism.<br />
<br />
== Stamp Duty ==<br />
<br />
On any real estate contract both the buyer and the seller need to put a stamp. The stamps can be bought at the post office and the value is dependent on the transaction price. Mortgage contracts need a stamp too and the tax rates for this are slightly different.<br />
<br />
{| class="wikitable"<br />
|-<br />
! Transaction Amount<br />
! Property Purchase<br />
! Mortgage<br />
|-<br />
| 10,000 or less<br />
| nil<br />
| nil<br />
|-<br />
| 10,001 - 100,000<br />
| 200<br />
| 200<br />
|-<br />
| 100,001 - 500,000<br />
| 400<br />
| 400<br />
|-<br />
| 500,001 - 1,000,000<br />
| 1,000<br />
| 1,000<br />
|-<br />
| 1,000,001 - 5,000,000<br />
| 1,000<br />
| 2,000<br />
|-<br />
| 5,000,001 - 10,000,000<br />
| 5,000<br />
| 10,000<br />
|-<br />
| 10,000,001 - 50,000,000<br />
| 10,000<br />
| 20,000<br />
|-<br />
| 50,000,001 - 100,000,000<br />
| 30,000<br />
| 60,000<br />
|-<br />
| 100,000,001 - 500,000,000<br />
| 60,000<br />
| 100,000<br />
|-<br />
| 500,000,001 - 1,000,000,000<br />
| 160,000<br />
| 200,000<br />
|-<br />
| 1,000,000,001 - 5,000,000,000<br />
| 320,000<br />
| 400,000<br />
|-<br />
| more than 5,000,000,000<br />
| 480,000<br />
| 600,000<br />
|-<br />
| if no amount is stated<br />
| 200<br />
| 200<br />
|}<br />
<br />
== Income Tax ==<br />
Rental income is part of your income and taxed as such.<br />
Maintenance, repair, management and financing costs can be deducted.<br />
[http://akasakarealestate.com/wiki/index.php/Taxes#Depreciation_Deduction_for_Income_Tax Depreciation] can be deducted too. <br />
If you are not resident in Japan the total income in Japan will be low and so you will fall in a low tax bracket. Also no local tax will have to be paid.<br />
<br />
The first 480,000 yen is the total income not taxed. After that the national tax rates are as follows:<br />
<br />
{| class="wikitable"<br />
|-<br />
! Tax Base (Yen)<br />
! Tax<br />
|-<br />
|1 - 1,950,000 <br />
|5%<br />
|-<br />
|1,950,001 - 3,300,000<br />
|10% of base exceeding 1,950,000<br />
|-<br />
|3,300,001 - 6,950,000<br />
|20% of base exceeding 3,300,000<br />
|-<br />
|6,950,001 - 9,000,000<br />
|23% of base exceeding 6,950,000<br />
|-<br />
|9,000,001 - 18,000,000<br />
|33% of base exceeding 9,000,000<br />
|-<br />
|18,000,001 and over<br />
|40% of base exceeding 18,000,000<br />
|}<br />
<br />
When filing personal income tax you are required to fill out two forms for the real estate income:<br />
<br />
{| border="0" <br />
|-<br />
| [[image:incometaxrentalincome.jpg|400px|thumb|c|left|The income tax form ]] [[image:incometaxdepreciation.jpg|400px|thumb|c|right|The depreciation calculation form ]]<br />
|-<br />
| [[image:incometaxtranslation1.jpg|400px|thumb|c|left|Translation of the income tax form (part 1) ]] [[image:incometaxtranslation2.jpg|400px|thumb|c|right|Translation of the income tax form (part 2) ]]<br />
|-<br />
| [[image:incometaxtranslation3.jpg|400px|thumb|c|left|Translation of the depreciation calculation form (part 1) ]] [[image:incometaxtranslation4.jpg|400px|thumb|c|right|Translation of the depreciation calculation form (part 2) ]]<br />
|}<br />
<br />
=== Depreciation Deduction for Income Tax ===<br />
It is possible to use depreciation to reduce the income tax burden. In Japan it is only possible to depreciate the building, not the land. When purchasing a new structure, often the breakdown is given. However when purchasing a second hand property it is not clear how much can be declared as building value. One way it to look at the possession tax valuation of the building and land and take that ratio. Another option would be to use the [http://akasakarealestate.com/wiki/index.php/Property_Valuation Rosenka] for the land valuation. When a property is sold, capital gains tax will have to be paid over the difference between the sales price and the book value. As depreciation reduces the book value, it will increase the capital gains tax when the property will be sold.<br />
<br />
To calculate the depreciation you can depreciate the building in an amount of years, depending on what type of structure it is. This is called the 'useful life' in Japan.<br />
<br />
{| class="wikitable"<br />
|-<br />
! Building Type<br />
! Useful life<br />
|-<br />
|Steel frame reinforced concrete buildings or reinforced concrete buildings<br />
|47 years<br />
|-<br />
|Brick, stone or block construction<br />
|38 years<br />
|-<br />
|Metal construction (thickness of internal frame exceeds 4 mm)<br />
|34 years<br />
|-<br />
|Metal construction (thickness of internal frame exceeds 3 mm)<br />
|27 years<br />
|-<br />
|Metal construction (thickness of internal frame is 3 mm or below)<br />
|19 years<br />
|-<br />
|Wood or wood composite construction<br />
|22 years<br />
|-<br />
|Wood frame mortar construction<br />
|20 years<br />
|}<br />
<br />
<br />
For second hand properties you can deduct 80 percent of the age. So for example a concrete apartment built in 1980 and bought in 2011 can be depreciated in 47 - (31 x 80%) = 47 - 24.8 = 22 years. The depreciation amount is 1/22 = 4.5% of the building value a year. When calculating the amount of years and the percentage depreciation the results are truncated down. It is not possible to depreciate a building more than its useful life, so a 40 year old wood frame structure must be depreciated in 20% of 20 = 4 years.<br />
<br />
To reduce the income tax burden sometimes several strategies are suggested to maximize the depreciation. However there are also downsides to this approach. For example the building value on a new property is higher, so the taxable depreciation is higher as well. Unfortunately such a new property will suffer a real market depreciation as well. Another strategy is to purchase a very old wooden frame structure on cheap land, allowing to depreciate almost the full purchase price in just 4 years. However capital gains tax will need to be paid when selling the property, so this might only be interesting for temporary residents who are now paying a high income tax rate, but are expected to leave Japan and so will fall into the 15% capital gains rate when selling. Also such old wooden structures might incur high maintenance costs and are hard to manage as they are normally only found outside Tokyo.<br />
<br />
=== Withholding for Income Tax ===<br />
<br />
For non-residents the tax office wants to make sure that the income tax is paid. To this effect the law states that 20% of the incoming rent should be paid as withholding tax. When the annual income tax is filed by March the following year the owner will get a refund of these withholding tax payments. <br />
<br />
Officially a withholding tax filing is the responsibility of the tenant and should be done for every rent payment. This entails filling out a tax form, making the payment and sending a copy of the payment slip to the owner. Clearly this would create an excessive amount of paperwork and so the tax office is willing to take a rather flexible approach. This means that normally there is no issue if the withholding tax is not filed in case both the renter and the owner are individuals. If the renter is a corporation however they have requested that the payments are made for larger rent payments, but they are willing to let the property manager handle it. The exact definition of 'large' has not been given, but so far we have managed to avoid this paperwork for rents below 200,000 yen a month.<br />
<br />
=== How to file ===<br />
<br />
For residents just take the proof of your other income like your salary slips to the tax office along with the real estate forms. If your additional income is less than 200,000 yen no filing is necessary.<br />
<br />
== Capital Gains ==<br />
On short term holdings (less than 5 to 6 years) the tax rate on capital gains is quite high at 39% (30% national + 9% local tax). Non-residents pay only the national tax. There are ways to reduce it to 15% or less. If the dwelling is used as a primary residence the first 30 million yen of capital gains per owner is tax free. If you have owned it for over 10 years the first 60 million yen gains is taxed at 14% instead of 20%. A couple owning a house jointly gets 60 million tax free. If you own a property more than 6 years the tax rate goes down to 20% (15% national and 5% local tax). If you are not a resident in Japan that means the tax is 15%. Between 5 and 6 years it depends on the time of year. To get the lower tax rate 6 times January 1st must have passed since the purchase.<br />
<br />
The Capital Gains is calculated by taking the profit (sales price - purchase price - closing costs) and adding the depreciation that was reported for income tax. If no depreciation was reported, a mandatory minimum depreciation is added nonetheless.<br />
<br />
On top of the national tax an added 2.1% Tohoku reconstruction charge is levied. This means the effective tax is between 15.315% (non-resident, holding over 6 years) and 39.63% (resident, short term holding).<br />
<br />
=== Withholding for Capital Gains ===<br />
<br />
To ensure a non-resident seller files the capital gains tax form the buyer needs to withhold 10.21% of the sales price and pay this in withholding tax. The seller then can claim this back by filing the correct papers. For leasehold the amount is 20.42%.<br />
<br />
== Entrepreneurial Tax ==<br />
Individuals owning on their personal title 10 or more apartments or 2 or more buildings are charged an extra 5 percent of the profit when filing their personal income tax. The first 2,900,000 yen profit tax not taxed though. There is some rounding involved as well. Here is an example:<br />
<br />
* Income: 4,993,170 yen <br />
* Deduction: 2,900,000<br />
* Taxable: 2,093,000 (rounded down to the lowest thousand yen)<br />
* 5% tax: 104,600 (rounded down to the lowest 100 yen)<br />
<br />
To avoid this tax we recommend to divide ownership of many apartments over the different family members. It is also possible to put the ownership in a limited company and then pay yourself a salary as a director. For residents this salary would be taxed as income. For non-residents there is a flat tax of 20% on income distributions. A further advantage of having a company structure is the possibility to deduct travel and entertainment expenses. The initial set-up costs for a company in Japan are around 250,000 to 500,000 yen. Annual corporate tax will be 70,000 yen if all income is distributed as salary. The annual tax filing would cost around 150,000 to 300,000 depending on the complexity.<br />
<br />
== Sales Tax ==<br />
No sales tax is levied on residential rental contracts. For corporate contracts 8% sales tax is added. However if the owner is an individual and the total rent is less than 10 million yen a year, the owner can keep this money and does not have to file a sales tax form.<br />
<br />
== Direct ownership versus a holding company ==<br />
<br />
As a direct owner you have to pay income tax at progressive rates over the profit made from the investment properties. For large investors it can be a good idea to set up a local Japanese company (kabushiki kaisha) to reduce the tax burden. Setting up a company takes around 3 months and costs about 300,000 to 500,000 yen. The annual accounting costs might be similar. In return it is possible to deduct for example entertainment expenses and many more items from your profit. You would have to put yourself and possibly other people on the payroll to avoid paying the high corporate taxes. This could allow you to spread the income over several people making sure to avoid those higher tax bands. For non-resident directors there is a fixed tax rate of 20%. For more details we can recommend to talk to Greg McDonald at [http://www.solidjapan.com SolidJapan].<br />
<br />
Putting Japanese property directly in an overseas holding company might not be an effective way to save taxes. In such circumstances the tax rate would be 20% of the rent without allowing any deductions. Also the property manager would have to file a withholding tax form and make a payment with the tax office for EVERY rent payment. If overseas ownership is required a special construction called a [http://www.venturejapan.com/tokumei-kumiai-tk.htm Tokumei Kumiai (TK)] should be set up instead. However this is only suitable for larger investments (JPY 200 million and over) given the fact that non-residents pay very low tax rates on smaller investments.</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=The_Yen_Foreign_Exchange_Rate&diff=51The Yen Foreign Exchange Rate2021-07-19T05:49:55Z<p>Erik: </p>
<hr />
<div>To compare the value of two currencies it is important to correct for inflation. After all a US dollar now can buy significantly less than a decade ago. <br />
The following chart shows the exchange rate corrected by inflation as reported in the CPI.<br />
<br />
[[image:jpy usd inflation corrected.jpg]]<br />
<br />
Looking at this chart the yen currently looks seriously undervalued as it is way above it's long term mean. According to the [http://en.wikipedia.org/wiki/Big_Mac_Index Big Mac Index] by the [http://www.economist.com Economist] the yen is also undervalued [http://www.economist.com/node/16646178?story_id=16646178]. However according to an [http://www.voxeu.org/index.php?q=node/624 article] by David Weinstein the methodology to calculate the CPI in Japan differs from the US and results in an overstatement of inflation by 0.8% compared to the US. This would mean that the yen is even more undervalued. The average inflation corrected rate since the yen started floating after the [http://en.wikipedia.org/wiki/Plaza_Accord Plaza Accord] is 80.97.</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=File:Jpy_usd_inflation_corrected.jpg&diff=50File:Jpy usd inflation corrected.jpg2021-07-19T05:46:28Z<p>Erik: Erik uploaded a new version of File:Jpy usd inflation corrected.jpg</p>
<hr />
<div></div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=Taxes&diff=49Taxes2021-05-27T07:28:16Z<p>Erik: /* Capital Gains */</p>
<hr />
<div>For properties we manage we handle all the tax filings. At the end of the year we will provide the owner with the details and instruction how to file the relevant income taxes. For people living outside Japan we file a non-resident income tax return.<br />
<br />
== Possession Tax ==<br />
<br />
Paid once a year. The invoice normally arrives on June 1st and needs to be paid by the end of June. It is possible to pay in 4 quarterly installments.<br />
<br />
Normally about 0.3% to 0.5% of the market value each year, (peaks as high as 1.2%)<br />
<br />
Computed as a percentage of the assessed land and building values. <br />
<br />
Assessed values can differ wildly from the real market value.<br />
<br />
More information can be found on this [http://tochi.mlit.go.jp/english/tax/02_01_01.html page] of the Ministry of Land, Infrastructure, Transport and Tourism.<br />
<br />
== Acquisition Tax ==<br />
This tax is due a few months after buying the property. Normally around 0.5 to 1.0% of the purchase price, it can peak as high as 2%.<br />
It is based on the assessed value and the calculation for residential property is as follows:<br />
<br />
Acquisition Tax = Assessed Land Value x Share of the Land x 1.5% + Assessed Apartment Value x 3%<br />
<br />
Commercial properties are taxed at 4% instead of 3%.<br />
<br />
The assessed land and building value are published annually and available from the property records that are obtainable from the tax office. Here are examples of these property records.<br />
<br />
{| border="0" <br />
|-<br />
| [[image:assessed land value.jpg|400px|thumb|c|left|The assessed land value and the share of the land are circled in red]] [[image:assessed building value.jpg|400px|thumb|c|right|The apartment value is circled in red ]]<br />
|}<br />
<br />
There is a discount for newly built properties. More information can be found on this [http://tochi.mlit.go.jp/english/tax/02_01_02.html page] of the Ministry of Land, Infrastructure, Transport and Tourism.<br />
<br />
== Stamp Duty ==<br />
<br />
On any real estate contract both the buyer and the seller need to put a stamp. The stamps can be bought at the post office and the value is dependent on the transaction price. Mortgage contracts need a stamp too and the tax rates for this are slightly different.<br />
<br />
{| class="wikitable"<br />
|-<br />
! Transaction Amount<br />
! Property Purchase<br />
! Mortgage<br />
|-<br />
| 10,000 or less<br />
| nil<br />
| nil<br />
|-<br />
| 10,001 - 100,000<br />
| 200<br />
| 200<br />
|-<br />
| 100,001 - 500,000<br />
| 400<br />
| 400<br />
|-<br />
| 500,001 - 1,000,000<br />
| 1,000<br />
| 1,000<br />
|-<br />
| 1,000,001 - 5,000,000<br />
| 1,000<br />
| 2,000<br />
|-<br />
| 5,000,001 - 10,000,000<br />
| 5,000<br />
| 10,000<br />
|-<br />
| 10,000,001 - 50,000,000<br />
| 10,000<br />
| 20,000<br />
|-<br />
| 50,000,001 - 100,000,000<br />
| 30,000<br />
| 60,000<br />
|-<br />
| 100,000,001 - 500,000,000<br />
| 60,000<br />
| 100,000<br />
|-<br />
| 500,000,001 - 1,000,000,000<br />
| 160,000<br />
| 200,000<br />
|-<br />
| 1,000,000,001 - 5,000,000,000<br />
| 320,000<br />
| 400,000<br />
|-<br />
| more than 5,000,000,000<br />
| 480,000<br />
| 600,000<br />
|-<br />
| if no amount is stated<br />
| 200<br />
| 200<br />
|}<br />
<br />
== Income Tax ==<br />
Rental income is part of your income and taxed as such.<br />
Maintenance, repair, management and financing costs can be deducted.<br />
[http://akasakarealestate.com/wiki/index.php/Taxes#Depreciation_Deduction_for_Income_Tax Depreciation] can be deducted too. <br />
If you are not resident in Japan the total income in Japan will be low and so you will fall in a low tax bracket. Also no local tax will have to be paid.<br />
<br />
The first 480,000 yen is the total income not taxed. After that the national tax rates are as follows:<br />
<br />
{| class="wikitable"<br />
|-<br />
! Tax Base (Yen)<br />
! Tax<br />
|-<br />
|1 - 1,950,000 <br />
|5%<br />
|-<br />
|1,950,001 - 3,300,000<br />
|10% of base exceeding 1,950,000<br />
|-<br />
|3,300,001 - 6,950,000<br />
|20% of base exceeding 3,300,000<br />
|-<br />
|6,950,001 - 9,000,000<br />
|23% of base exceeding 6,950,000<br />
|-<br />
|9,000,001 - 18,000,000<br />
|33% of base exceeding 9,000,000<br />
|-<br />
|18,000,001 and over<br />
|40% of base exceeding 18,000,000<br />
|}<br />
<br />
When filing personal income tax you are required to fill out two forms for the real estate income:<br />
<br />
{| border="0" <br />
|-<br />
| [[image:incometaxrentalincome.jpg|400px|thumb|c|left|The income tax form ]] [[image:incometaxdepreciation.jpg|400px|thumb|c|right|The depreciation calculation form ]]<br />
|-<br />
| [[image:incometaxtranslation1.jpg|400px|thumb|c|left|Translation of the income tax form (part 1) ]] [[image:incometaxtranslation2.jpg|400px|thumb|c|right|Translation of the income tax form (part 2) ]]<br />
|-<br />
| [[image:incometaxtranslation3.jpg|400px|thumb|c|left|Translation of the depreciation calculation form (part 1) ]] [[image:incometaxtranslation4.jpg|400px|thumb|c|right|Translation of the depreciation calculation form (part 2) ]]<br />
|}<br />
<br />
=== Depreciation Deduction for Income Tax ===<br />
It is possible to use depreciation to reduce the income tax burden. In Japan it is only possible to depreciate the building, not the land. When purchasing a new structure, often the breakdown is given. However when purchasing a second hand property it is not clear how much can be declared as building value. One way it to look at the possession tax valuation of the building and land and take that ratio. Another option would be to use the [http://akasakarealestate.com/wiki/index.php/Property_Valuation Rosenka] for the land valuation. When a property is sold, capital gains tax will have to be paid over the difference between the sales price and the book value. As depreciation reduces the book value, it will increase the capital gains tax when the property will be sold.<br />
<br />
To calculate the depreciation you can depreciate the building in an amount of years, depending on what type of structure it is. This is called the 'useful life' in Japan.<br />
<br />
{| class="wikitable"<br />
|-<br />
! Building Type<br />
! Useful life<br />
|-<br />
|Steel frame reinforced concrete buildings or reinforced concrete buildings<br />
|47 years<br />
|-<br />
|Brick, stone or block construction<br />
|38 years<br />
|-<br />
|Metal construction (thickness of internal frame exceeds 4 mm)<br />
|34 years<br />
|-<br />
|Metal construction (thickness of internal frame exceeds 3 mm)<br />
|27 years<br />
|-<br />
|Metal construction (thickness of internal frame is 3 mm or below)<br />
|19 years<br />
|-<br />
|Wood or wood composite construction<br />
|22 years<br />
|-<br />
|Wood frame mortar construction<br />
|20 years<br />
|}<br />
<br />
<br />
For second hand properties you can deduct 80 percent of the age. So for example a concrete apartment built in 1980 and bought in 2011 can be depreciated in 47 - (31 x 80%) = 47 - 24.8 = 22 years. The depreciation amount is 1/22 = 4.5% of the building value a year. When calculating the amount of years and the percentage depreciation the results are truncated down. It is not possible to depreciate a building more than its useful life, so a 40 year old wood frame structure must be depreciated in 20% of 20 = 4 years.<br />
<br />
To reduce the income tax burden sometimes several strategies are suggested to maximize the depreciation. However there are also downsides to this approach. For example the building value on a new property is higher, so the taxable depreciation is higher as well. Unfortunately such a new property will suffer a real market depreciation as well. Another strategy is to purchase a very old wooden frame structure on cheap land, allowing to depreciate almost the full purchase price in just 4 years. However capital gains tax will need to be paid when selling the property, so this might only be interesting for temporary residents who are now paying a high income tax rate, but are expected to leave Japan and so will fall into the 15% capital gains rate when selling. Also such old wooden structures might incur high maintenance costs and are hard to manage as they are normally only found outside Tokyo.<br />
<br />
=== Withholding for Income Tax ===<br />
<br />
For non-residents the tax office wants to make sure that the income tax is paid. To this effect the law states that 20% of the incoming rent should be paid as withholding tax. When the annual income tax is filed by March the following year the owner will get a refund of these withholding tax payments. <br />
<br />
Officially a withholding tax filing is the responsibility of the tenant and should be done for every rent payment. This entails filling out a tax form, making the payment and sending a copy of the payment slip to the owner. Clearly this would create an excessive amount of paperwork and so the tax office is willing to take a rather flexible approach. This means that normally there is no issue if the withholding tax is not filed in case both the renter and the owner are individuals. If the renter is a corporation however they have requested that the payments are made for larger rent payments, but they are willing to let the property manager handle it. The exact definition of 'large' has not been given, but so far we have managed to avoid this paperwork for rents below 200,000 yen a month.<br />
<br />
=== How to file ===<br />
<br />
For residents just take the proof of your other income like your salary slips to the tax office along with the real estate forms. If your additional income is less than 200,000 yen no filing is necessary.<br />
<br />
== Capital Gains ==<br />
On short term holdings (less than 5 to 6 years) the tax rate on capital gains is quite high at 39% (30% national + 9% local tax). Non-residents pay only the national tax. There are ways to reduce it to 15% or less. If the dwelling is used as a primary residence the first 30 million yen of capital gains per owner is tax free. If you have owned it for over 10 years the first 60 million yen gains is taxed at 14% instead of 20%. A couple owning a house jointly gets 60 million tax free. If you own a property more than 6 years the tax rate goes down to 20% (15% national and 5% local tax). If you are not a resident in Japan that means the tax is 15%. Between 5 and 6 years it depends on the time of year. To get the lower tax rate 6 times January 1st must have passed since the purchase.<br />
<br />
The Capital Gains is calculated by taking the profit (sales price - purchase price - closing costs) and adding the depreciation that was reported for income tax. If no depreciation was reported, a mandatory minimum depreciation is added nonetheless.<br />
<br />
On top of the national tax an added 2.1% Tohoku reconstruction charge is levied. This means the effective tax is between 15.315% (non-resident, holding over 6 years) and 39.63% (resident, short term holding).<br />
<br />
=== Withholding for Capital Gains ===<br />
<br />
To ensure a non-resident seller files the capital gains tax form the buyer needs to withhold 10.21% of the sales price and pay this in withholding tax. The seller then can claim this back by filing the correct papers. For leasehold the amount is 20.42%.<br />
<br />
== Entrepreneurial Tax ==<br />
Individuals owning on their personal title 10 or more apartments or 2 or more buildings are charged an extra 5 percent of the profit when filing their personal income tax. The first 2,900,000 yen profit tax not taxed though. There is some rounding involved as well. Here is an example:<br />
<br />
* Income: 4,993,170 yen <br />
* Deduction: 2,900,000<br />
* Taxable: 2,093,000 (rounded down to the lowest thousand yen)<br />
* 5% tax: 104,600 (rounded down to the lowest 100 yen)<br />
<br />
To avoid this tax we recommend to divide ownership of many apartments over the different family members. It is also possible to put the ownership in a limited company and then pay yourself a salary as a director. For residents this salary would be taxed as income. For non-residents there is a flat tax of 20% on income distributions. A further advantage of having a company structure is the possibility to deduct travel and entertainment expenses. The initial set-up costs for a company in Japan are around 250,000 to 500,000 yen. Annual corporate tax will be 70,000 yen if all income is distributed as salary. The annual tax filing would cost around 150,000 to 300,000 depending on the complexity.<br />
<br />
== Sales Tax ==<br />
No sales tax is levied on residential rental contracts. For corporate contracts 8% sales tax is added. However if the owner is an individual and the total rent is less than 10 million yen a year, the owner can keep this money and does not have to file a sales tax form.<br />
<br />
== Direct ownership versus a holding company ==<br />
<br />
As a direct owner you have to pay income tax at progressive rates over the profit made from the investment properties. For large investors it can be a good idea to set up a local Japanese company (kabushiki kaisha) to reduce the tax burden. Setting up a company takes around 3 months and costs about 300,000 to 500,000 yen. The annual accounting costs might be similar. In return it is possible to deduct for example entertainment expenses and many more items from your profit. You would have to put yourself and possibly other people on the payroll to avoid paying the high corporate taxes. This could allow you to spread the income over several people making sure to avoid those higher tax bands. For non-resident directors there is a fixed tax rate of 20%. For more details we can recommend to talk to Greg McDonald at [http://www.solidjapan.com SolidJapan].<br />
<br />
Putting Japanese property directly in an overseas holding company might not be an effective way to save taxes. In such circumstances the tax rate would be 20% of the rent without allowing any deductions. Also the property manager would have to file a withholding tax form and make a payment with the tax office for EVERY rent payment. If overseas ownership is required a special construction called a [http://www.venturejapan.com/tokumei-kumiai-tk.htm Tokumei Kumiai (TK)] should be set up instead. However this is only suitable for larger investments (JPY 200 million and over) given the fact that non-residents pay very low tax rates on smaller investments.</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=Taxes&diff=48Taxes2021-05-27T06:55:29Z<p>Erik: /* Capital Gains */</p>
<hr />
<div>For properties we manage we handle all the tax filings. At the end of the year we will provide the owner with the details and instruction how to file the relevant income taxes. For people living outside Japan we file a non-resident income tax return.<br />
<br />
== Possession Tax ==<br />
<br />
Paid once a year. The invoice normally arrives on June 1st and needs to be paid by the end of June. It is possible to pay in 4 quarterly installments.<br />
<br />
Normally about 0.3% to 0.5% of the market value each year, (peaks as high as 1.2%)<br />
<br />
Computed as a percentage of the assessed land and building values. <br />
<br />
Assessed values can differ wildly from the real market value.<br />
<br />
More information can be found on this [http://tochi.mlit.go.jp/english/tax/02_01_01.html page] of the Ministry of Land, Infrastructure, Transport and Tourism.<br />
<br />
== Acquisition Tax ==<br />
This tax is due a few months after buying the property. Normally around 0.5 to 1.0% of the purchase price, it can peak as high as 2%.<br />
It is based on the assessed value and the calculation for residential property is as follows:<br />
<br />
Acquisition Tax = Assessed Land Value x Share of the Land x 1.5% + Assessed Apartment Value x 3%<br />
<br />
Commercial properties are taxed at 4% instead of 3%.<br />
<br />
The assessed land and building value are published annually and available from the property records that are obtainable from the tax office. Here are examples of these property records.<br />
<br />
{| border="0" <br />
|-<br />
| [[image:assessed land value.jpg|400px|thumb|c|left|The assessed land value and the share of the land are circled in red]] [[image:assessed building value.jpg|400px|thumb|c|right|The apartment value is circled in red ]]<br />
|}<br />
<br />
There is a discount for newly built properties. More information can be found on this [http://tochi.mlit.go.jp/english/tax/02_01_02.html page] of the Ministry of Land, Infrastructure, Transport and Tourism.<br />
<br />
== Stamp Duty ==<br />
<br />
On any real estate contract both the buyer and the seller need to put a stamp. The stamps can be bought at the post office and the value is dependent on the transaction price. Mortgage contracts need a stamp too and the tax rates for this are slightly different.<br />
<br />
{| class="wikitable"<br />
|-<br />
! Transaction Amount<br />
! Property Purchase<br />
! Mortgage<br />
|-<br />
| 10,000 or less<br />
| nil<br />
| nil<br />
|-<br />
| 10,001 - 100,000<br />
| 200<br />
| 200<br />
|-<br />
| 100,001 - 500,000<br />
| 400<br />
| 400<br />
|-<br />
| 500,001 - 1,000,000<br />
| 1,000<br />
| 1,000<br />
|-<br />
| 1,000,001 - 5,000,000<br />
| 1,000<br />
| 2,000<br />
|-<br />
| 5,000,001 - 10,000,000<br />
| 5,000<br />
| 10,000<br />
|-<br />
| 10,000,001 - 50,000,000<br />
| 10,000<br />
| 20,000<br />
|-<br />
| 50,000,001 - 100,000,000<br />
| 30,000<br />
| 60,000<br />
|-<br />
| 100,000,001 - 500,000,000<br />
| 60,000<br />
| 100,000<br />
|-<br />
| 500,000,001 - 1,000,000,000<br />
| 160,000<br />
| 200,000<br />
|-<br />
| 1,000,000,001 - 5,000,000,000<br />
| 320,000<br />
| 400,000<br />
|-<br />
| more than 5,000,000,000<br />
| 480,000<br />
| 600,000<br />
|-<br />
| if no amount is stated<br />
| 200<br />
| 200<br />
|}<br />
<br />
== Income Tax ==<br />
Rental income is part of your income and taxed as such.<br />
Maintenance, repair, management and financing costs can be deducted.<br />
[http://akasakarealestate.com/wiki/index.php/Taxes#Depreciation_Deduction_for_Income_Tax Depreciation] can be deducted too. <br />
If you are not resident in Japan the total income in Japan will be low and so you will fall in a low tax bracket. Also no local tax will have to be paid.<br />
<br />
The first 480,000 yen is the total income not taxed. After that the national tax rates are as follows:<br />
<br />
{| class="wikitable"<br />
|-<br />
! Tax Base (Yen)<br />
! Tax<br />
|-<br />
|1 - 1,950,000 <br />
|5%<br />
|-<br />
|1,950,001 - 3,300,000<br />
|10% of base exceeding 1,950,000<br />
|-<br />
|3,300,001 - 6,950,000<br />
|20% of base exceeding 3,300,000<br />
|-<br />
|6,950,001 - 9,000,000<br />
|23% of base exceeding 6,950,000<br />
|-<br />
|9,000,001 - 18,000,000<br />
|33% of base exceeding 9,000,000<br />
|-<br />
|18,000,001 and over<br />
|40% of base exceeding 18,000,000<br />
|}<br />
<br />
When filing personal income tax you are required to fill out two forms for the real estate income:<br />
<br />
{| border="0" <br />
|-<br />
| [[image:incometaxrentalincome.jpg|400px|thumb|c|left|The income tax form ]] [[image:incometaxdepreciation.jpg|400px|thumb|c|right|The depreciation calculation form ]]<br />
|-<br />
| [[image:incometaxtranslation1.jpg|400px|thumb|c|left|Translation of the income tax form (part 1) ]] [[image:incometaxtranslation2.jpg|400px|thumb|c|right|Translation of the income tax form (part 2) ]]<br />
|-<br />
| [[image:incometaxtranslation3.jpg|400px|thumb|c|left|Translation of the depreciation calculation form (part 1) ]] [[image:incometaxtranslation4.jpg|400px|thumb|c|right|Translation of the depreciation calculation form (part 2) ]]<br />
|}<br />
<br />
=== Depreciation Deduction for Income Tax ===<br />
It is possible to use depreciation to reduce the income tax burden. In Japan it is only possible to depreciate the building, not the land. When purchasing a new structure, often the breakdown is given. However when purchasing a second hand property it is not clear how much can be declared as building value. One way it to look at the possession tax valuation of the building and land and take that ratio. Another option would be to use the [http://akasakarealestate.com/wiki/index.php/Property_Valuation Rosenka] for the land valuation. When a property is sold, capital gains tax will have to be paid over the difference between the sales price and the book value. As depreciation reduces the book value, it will increase the capital gains tax when the property will be sold.<br />
<br />
To calculate the depreciation you can depreciate the building in an amount of years, depending on what type of structure it is. This is called the 'useful life' in Japan.<br />
<br />
{| class="wikitable"<br />
|-<br />
! Building Type<br />
! Useful life<br />
|-<br />
|Steel frame reinforced concrete buildings or reinforced concrete buildings<br />
|47 years<br />
|-<br />
|Brick, stone or block construction<br />
|38 years<br />
|-<br />
|Metal construction (thickness of internal frame exceeds 4 mm)<br />
|34 years<br />
|-<br />
|Metal construction (thickness of internal frame exceeds 3 mm)<br />
|27 years<br />
|-<br />
|Metal construction (thickness of internal frame is 3 mm or below)<br />
|19 years<br />
|-<br />
|Wood or wood composite construction<br />
|22 years<br />
|-<br />
|Wood frame mortar construction<br />
|20 years<br />
|}<br />
<br />
<br />
For second hand properties you can deduct 80 percent of the age. So for example a concrete apartment built in 1980 and bought in 2011 can be depreciated in 47 - (31 x 80%) = 47 - 24.8 = 22 years. The depreciation amount is 1/22 = 4.5% of the building value a year. When calculating the amount of years and the percentage depreciation the results are truncated down. It is not possible to depreciate a building more than its useful life, so a 40 year old wood frame structure must be depreciated in 20% of 20 = 4 years.<br />
<br />
To reduce the income tax burden sometimes several strategies are suggested to maximize the depreciation. However there are also downsides to this approach. For example the building value on a new property is higher, so the taxable depreciation is higher as well. Unfortunately such a new property will suffer a real market depreciation as well. Another strategy is to purchase a very old wooden frame structure on cheap land, allowing to depreciate almost the full purchase price in just 4 years. However capital gains tax will need to be paid when selling the property, so this might only be interesting for temporary residents who are now paying a high income tax rate, but are expected to leave Japan and so will fall into the 15% capital gains rate when selling. Also such old wooden structures might incur high maintenance costs and are hard to manage as they are normally only found outside Tokyo.<br />
<br />
=== Withholding for Income Tax ===<br />
<br />
For non-residents the tax office wants to make sure that the income tax is paid. To this effect the law states that 20% of the incoming rent should be paid as withholding tax. When the annual income tax is filed by March the following year the owner will get a refund of these withholding tax payments. <br />
<br />
Officially a withholding tax filing is the responsibility of the tenant and should be done for every rent payment. This entails filling out a tax form, making the payment and sending a copy of the payment slip to the owner. Clearly this would create an excessive amount of paperwork and so the tax office is willing to take a rather flexible approach. This means that normally there is no issue if the withholding tax is not filed in case both the renter and the owner are individuals. If the renter is a corporation however they have requested that the payments are made for larger rent payments, but they are willing to let the property manager handle it. The exact definition of 'large' has not been given, but so far we have managed to avoid this paperwork for rents below 200,000 yen a month.<br />
<br />
=== How to file ===<br />
<br />
For residents just take the proof of your other income like your salary slips to the tax office along with the real estate forms. If your additional income is less than 200,000 yen no filing is necessary.<br />
<br />
== Capital Gains ==<br />
On short term holdings (less than 5 to 6 years) the tax rate on capital gains is quite high at 39% (30% national + 9% local tax). But there are ways to reduce it to 15% or less. If the dwelling is used as a primary residence the first 30 million yen of capital gains is tax free, and the first 60 million yen gains is taxed at 14% instead of 20%. A couple owning a house jointly gets 60 million tax free. If you own a property more than 6 years the tax rate goes down to 20% (15% national and 5% local tax). If you are not a resident in Japan that means the tax is 15%. Between 5 and 6 years it depends on the time of year. To get the lower tax rate 6 times January 1st must have passed since the purchase.<br />
<br />
The Capital Gains is calculated by taking the profit (sales price - purchase price - closing costs) and adding the depreciation that was reported for income tax. If no depreciation was reported, a mandatory minimum depreciation is added nonetheless.<br />
<br />
On top of the tax and added 2.1% Tohoku reconstruction charge is levied. This means the effective tax is between 15.315% (non-resident, holding over 6 years) and 39.819% (resident, short term holding).<br />
<br />
=== Withholding for Capital Gains ===<br />
<br />
To ensure a non-resident seller files the capital gains tax form the buyer needs to withhold 10.21% of the sales price and pay this in withholding tax. The seller then can claim this back by filing the correct papers. For leasehold the amount is 20.42%.<br />
<br />
== Entrepreneurial Tax ==<br />
Individuals owning on their personal title 10 or more apartments or 2 or more buildings are charged an extra 5 percent of the profit when filing their personal income tax. The first 2,900,000 yen profit tax not taxed though. There is some rounding involved as well. Here is an example:<br />
<br />
* Income: 4,993,170 yen <br />
* Deduction: 2,900,000<br />
* Taxable: 2,093,000 (rounded down to the lowest thousand yen)<br />
* 5% tax: 104,600 (rounded down to the lowest 100 yen)<br />
<br />
To avoid this tax we recommend to divide ownership of many apartments over the different family members. It is also possible to put the ownership in a limited company and then pay yourself a salary as a director. For residents this salary would be taxed as income. For non-residents there is a flat tax of 20% on income distributions. A further advantage of having a company structure is the possibility to deduct travel and entertainment expenses. The initial set-up costs for a company in Japan are around 250,000 to 500,000 yen. Annual corporate tax will be 70,000 yen if all income is distributed as salary. The annual tax filing would cost around 150,000 to 300,000 depending on the complexity.<br />
<br />
== Sales Tax ==<br />
No sales tax is levied on residential rental contracts. For corporate contracts 8% sales tax is added. However if the owner is an individual and the total rent is less than 10 million yen a year, the owner can keep this money and does not have to file a sales tax form.<br />
<br />
== Direct ownership versus a holding company ==<br />
<br />
As a direct owner you have to pay income tax at progressive rates over the profit made from the investment properties. For large investors it can be a good idea to set up a local Japanese company (kabushiki kaisha) to reduce the tax burden. Setting up a company takes around 3 months and costs about 300,000 to 500,000 yen. The annual accounting costs might be similar. In return it is possible to deduct for example entertainment expenses and many more items from your profit. You would have to put yourself and possibly other people on the payroll to avoid paying the high corporate taxes. This could allow you to spread the income over several people making sure to avoid those higher tax bands. For non-resident directors there is a fixed tax rate of 20%. For more details we can recommend to talk to Greg McDonald at [http://www.solidjapan.com SolidJapan].<br />
<br />
Putting Japanese property directly in an overseas holding company might not be an effective way to save taxes. In such circumstances the tax rate would be 20% of the rent without allowing any deductions. Also the property manager would have to file a withholding tax form and make a payment with the tax office for EVERY rent payment. If overseas ownership is required a special construction called a [http://www.venturejapan.com/tokumei-kumiai-tk.htm Tokumei Kumiai (TK)] should be set up instead. However this is only suitable for larger investments (JPY 200 million and over) given the fact that non-residents pay very low tax rates on smaller investments.</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=Taxes&diff=47Taxes2021-04-20T04:29:09Z<p>Erik: /* Capital Gains */</p>
<hr />
<div>For properties we manage we handle all the tax filings. At the end of the year we will provide the owner with the details and instruction how to file the relevant income taxes. For people living outside Japan we file a non-resident income tax return.<br />
<br />
== Possession Tax ==<br />
<br />
Paid once a year. The invoice normally arrives on June 1st and needs to be paid by the end of June. It is possible to pay in 4 quarterly installments.<br />
<br />
Normally about 0.3% to 0.5% of the market value each year, (peaks as high as 1.2%)<br />
<br />
Computed as a percentage of the assessed land and building values. <br />
<br />
Assessed values can differ wildly from the real market value.<br />
<br />
More information can be found on this [http://tochi.mlit.go.jp/english/tax/02_01_01.html page] of the Ministry of Land, Infrastructure, Transport and Tourism.<br />
<br />
== Acquisition Tax ==<br />
This tax is due a few months after buying the property. Normally around 0.5 to 1.0% of the purchase price, it can peak as high as 2%.<br />
It is based on the assessed value and the calculation for residential property is as follows:<br />
<br />
Acquisition Tax = Assessed Land Value x Share of the Land x 1.5% + Assessed Apartment Value x 3%<br />
<br />
Commercial properties are taxed at 4% instead of 3%.<br />
<br />
The assessed land and building value are published annually and available from the property records that are obtainable from the tax office. Here are examples of these property records.<br />
<br />
{| border="0" <br />
|-<br />
| [[image:assessed land value.jpg|400px|thumb|c|left|The assessed land value and the share of the land are circled in red]] [[image:assessed building value.jpg|400px|thumb|c|right|The apartment value is circled in red ]]<br />
|}<br />
<br />
There is a discount for newly built properties. More information can be found on this [http://tochi.mlit.go.jp/english/tax/02_01_02.html page] of the Ministry of Land, Infrastructure, Transport and Tourism.<br />
<br />
== Stamp Duty ==<br />
<br />
On any real estate contract both the buyer and the seller need to put a stamp. The stamps can be bought at the post office and the value is dependent on the transaction price. Mortgage contracts need a stamp too and the tax rates for this are slightly different.<br />
<br />
{| class="wikitable"<br />
|-<br />
! Transaction Amount<br />
! Property Purchase<br />
! Mortgage<br />
|-<br />
| 10,000 or less<br />
| nil<br />
| nil<br />
|-<br />
| 10,001 - 100,000<br />
| 200<br />
| 200<br />
|-<br />
| 100,001 - 500,000<br />
| 400<br />
| 400<br />
|-<br />
| 500,001 - 1,000,000<br />
| 1,000<br />
| 1,000<br />
|-<br />
| 1,000,001 - 5,000,000<br />
| 1,000<br />
| 2,000<br />
|-<br />
| 5,000,001 - 10,000,000<br />
| 5,000<br />
| 10,000<br />
|-<br />
| 10,000,001 - 50,000,000<br />
| 10,000<br />
| 20,000<br />
|-<br />
| 50,000,001 - 100,000,000<br />
| 30,000<br />
| 60,000<br />
|-<br />
| 100,000,001 - 500,000,000<br />
| 60,000<br />
| 100,000<br />
|-<br />
| 500,000,001 - 1,000,000,000<br />
| 160,000<br />
| 200,000<br />
|-<br />
| 1,000,000,001 - 5,000,000,000<br />
| 320,000<br />
| 400,000<br />
|-<br />
| more than 5,000,000,000<br />
| 480,000<br />
| 600,000<br />
|-<br />
| if no amount is stated<br />
| 200<br />
| 200<br />
|}<br />
<br />
== Income Tax ==<br />
Rental income is part of your income and taxed as such.<br />
Maintenance, repair, management and financing costs can be deducted.<br />
[http://akasakarealestate.com/wiki/index.php/Taxes#Depreciation_Deduction_for_Income_Tax Depreciation] can be deducted too. <br />
If you are not resident in Japan the total income in Japan will be low and so you will fall in a low tax bracket. Also no local tax will have to be paid.<br />
<br />
The first 480,000 yen is the total income not taxed. After that the national tax rates are as follows:<br />
<br />
{| class="wikitable"<br />
|-<br />
! Tax Base (Yen)<br />
! Tax<br />
|-<br />
|1 - 1,950,000 <br />
|5%<br />
|-<br />
|1,950,001 - 3,300,000<br />
|10% of base exceeding 1,950,000<br />
|-<br />
|3,300,001 - 6,950,000<br />
|20% of base exceeding 3,300,000<br />
|-<br />
|6,950,001 - 9,000,000<br />
|23% of base exceeding 6,950,000<br />
|-<br />
|9,000,001 - 18,000,000<br />
|33% of base exceeding 9,000,000<br />
|-<br />
|18,000,001 and over<br />
|40% of base exceeding 18,000,000<br />
|}<br />
<br />
When filing personal income tax you are required to fill out two forms for the real estate income:<br />
<br />
{| border="0" <br />
|-<br />
| [[image:incometaxrentalincome.jpg|400px|thumb|c|left|The income tax form ]] [[image:incometaxdepreciation.jpg|400px|thumb|c|right|The depreciation calculation form ]]<br />
|-<br />
| [[image:incometaxtranslation1.jpg|400px|thumb|c|left|Translation of the income tax form (part 1) ]] [[image:incometaxtranslation2.jpg|400px|thumb|c|right|Translation of the income tax form (part 2) ]]<br />
|-<br />
| [[image:incometaxtranslation3.jpg|400px|thumb|c|left|Translation of the depreciation calculation form (part 1) ]] [[image:incometaxtranslation4.jpg|400px|thumb|c|right|Translation of the depreciation calculation form (part 2) ]]<br />
|}<br />
<br />
=== Depreciation Deduction for Income Tax ===<br />
It is possible to use depreciation to reduce the income tax burden. In Japan it is only possible to depreciate the building, not the land. When purchasing a new structure, often the breakdown is given. However when purchasing a second hand property it is not clear how much can be declared as building value. One way it to look at the possession tax valuation of the building and land and take that ratio. Another option would be to use the [http://akasakarealestate.com/wiki/index.php/Property_Valuation Rosenka] for the land valuation. When a property is sold, capital gains tax will have to be paid over the difference between the sales price and the book value. As depreciation reduces the book value, it will increase the capital gains tax when the property will be sold.<br />
<br />
To calculate the depreciation you can depreciate the building in an amount of years, depending on what type of structure it is. This is called the 'useful life' in Japan.<br />
<br />
{| class="wikitable"<br />
|-<br />
! Building Type<br />
! Useful life<br />
|-<br />
|Steel frame reinforced concrete buildings or reinforced concrete buildings<br />
|47 years<br />
|-<br />
|Brick, stone or block construction<br />
|38 years<br />
|-<br />
|Metal construction (thickness of internal frame exceeds 4 mm)<br />
|34 years<br />
|-<br />
|Metal construction (thickness of internal frame exceeds 3 mm)<br />
|27 years<br />
|-<br />
|Metal construction (thickness of internal frame is 3 mm or below)<br />
|19 years<br />
|-<br />
|Wood or wood composite construction<br />
|22 years<br />
|-<br />
|Wood frame mortar construction<br />
|20 years<br />
|}<br />
<br />
<br />
For second hand properties you can deduct 80 percent of the age. So for example a concrete apartment built in 1980 and bought in 2011 can be depreciated in 47 - (31 x 80%) = 47 - 24.8 = 22 years. The depreciation amount is 1/22 = 4.5% of the building value a year. When calculating the amount of years and the percentage depreciation the results are truncated down. It is not possible to depreciate a building more than its useful life, so a 40 year old wood frame structure must be depreciated in 20% of 20 = 4 years.<br />
<br />
To reduce the income tax burden sometimes several strategies are suggested to maximize the depreciation. However there are also downsides to this approach. For example the building value on a new property is higher, so the taxable depreciation is higher as well. Unfortunately such a new property will suffer a real market depreciation as well. Another strategy is to purchase a very old wooden frame structure on cheap land, allowing to depreciate almost the full purchase price in just 4 years. However capital gains tax will need to be paid when selling the property, so this might only be interesting for temporary residents who are now paying a high income tax rate, but are expected to leave Japan and so will fall into the 15% capital gains rate when selling. Also such old wooden structures might incur high maintenance costs and are hard to manage as they are normally only found outside Tokyo.<br />
<br />
=== Withholding for Income Tax ===<br />
<br />
For non-residents the tax office wants to make sure that the income tax is paid. To this effect the law states that 20% of the incoming rent should be paid as withholding tax. When the annual income tax is filed by March the following year the owner will get a refund of these withholding tax payments. <br />
<br />
Officially a withholding tax filing is the responsibility of the tenant and should be done for every rent payment. This entails filling out a tax form, making the payment and sending a copy of the payment slip to the owner. Clearly this would create an excessive amount of paperwork and so the tax office is willing to take a rather flexible approach. This means that normally there is no issue if the withholding tax is not filed in case both the renter and the owner are individuals. If the renter is a corporation however they have requested that the payments are made for larger rent payments, but they are willing to let the property manager handle it. The exact definition of 'large' has not been given, but so far we have managed to avoid this paperwork for rents below 200,000 yen a month.<br />
<br />
=== How to file ===<br />
<br />
For residents just take the proof of your other income like your salary slips to the tax office along with the real estate forms. If your additional income is less than 200,000 yen no filing is necessary.<br />
<br />
== Capital Gains ==<br />
On short term holdings (less than 5 to 6 years) the tax rate on capital gains is quite high at 39% (30% national + 9% local tax). But there are ways to reduce it to 15% or less. If the dwelling is used as a primary residence the first 30 million yen of capital gains is tax free. A couple owning a house jointly gets 60 million tax free. If you own a property more than 6 years the tax rate goes down to 20% (15% national and 5% local tax). If you are not a resident in Japan that means the tax is 15%. Between 5 and 6 years it depends on the time of year. To get the lower tax rate 6 times January 1st must have passed since the purchase.<br />
<br />
The Capital Gains is calculated by taking the profit (sales price - purchase price - closing costs) and adding the depreciation that was reported for income tax. If no depreciation was reported, a mandatory minimum depreciation is added nonetheless.<br />
<br />
On top of the tax and added 2.1% Tohoku reconstruction charge is levied. This means the effective tax is between 15.315% (non-resident, holding over 6 years) and 39.819% (resident, short term holding).<br />
<br />
=== Withholding for Capital Gains ===<br />
<br />
To ensure a non-resident seller files the capital gains tax form the buyer needs to withhold 10.21% of the sales price and pay this in withholding tax. The seller then can claim this back by filing the correct papers. For leasehold the amount is 20.42%.<br />
<br />
== Entrepreneurial Tax ==<br />
Individuals owning on their personal title 10 or more apartments or 2 or more buildings are charged an extra 5 percent of the profit when filing their personal income tax. The first 2,900,000 yen profit tax not taxed though. There is some rounding involved as well. Here is an example:<br />
<br />
* Income: 4,993,170 yen <br />
* Deduction: 2,900,000<br />
* Taxable: 2,093,000 (rounded down to the lowest thousand yen)<br />
* 5% tax: 104,600 (rounded down to the lowest 100 yen)<br />
<br />
To avoid this tax we recommend to divide ownership of many apartments over the different family members. It is also possible to put the ownership in a limited company and then pay yourself a salary as a director. For residents this salary would be taxed as income. For non-residents there is a flat tax of 20% on income distributions. A further advantage of having a company structure is the possibility to deduct travel and entertainment expenses. The initial set-up costs for a company in Japan are around 250,000 to 500,000 yen. Annual corporate tax will be 70,000 yen if all income is distributed as salary. The annual tax filing would cost around 150,000 to 300,000 depending on the complexity.<br />
<br />
== Sales Tax ==<br />
No sales tax is levied on residential rental contracts. For corporate contracts 8% sales tax is added. However if the owner is an individual and the total rent is less than 10 million yen a year, the owner can keep this money and does not have to file a sales tax form.<br />
<br />
== Direct ownership versus a holding company ==<br />
<br />
As a direct owner you have to pay income tax at progressive rates over the profit made from the investment properties. For large investors it can be a good idea to set up a local Japanese company (kabushiki kaisha) to reduce the tax burden. Setting up a company takes around 3 months and costs about 300,000 to 500,000 yen. The annual accounting costs might be similar. In return it is possible to deduct for example entertainment expenses and many more items from your profit. You would have to put yourself and possibly other people on the payroll to avoid paying the high corporate taxes. This could allow you to spread the income over several people making sure to avoid those higher tax bands. For non-resident directors there is a fixed tax rate of 20%. For more details we can recommend to talk to Greg McDonald at [http://www.solidjapan.com SolidJapan].<br />
<br />
Putting Japanese property directly in an overseas holding company might not be an effective way to save taxes. In such circumstances the tax rate would be 20% of the rent without allowing any deductions. Also the property manager would have to file a withholding tax form and make a payment with the tax office for EVERY rent payment. If overseas ownership is required a special construction called a [http://www.venturejapan.com/tokumei-kumiai-tk.htm Tokumei Kumiai (TK)] should be set up instead. However this is only suitable for larger investments (JPY 200 million and over) given the fact that non-residents pay very low tax rates on smaller investments.</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=Taxes&diff=46Taxes2021-04-20T04:27:11Z<p>Erik: /* Capital Gains */</p>
<hr />
<div>For properties we manage we handle all the tax filings. At the end of the year we will provide the owner with the details and instruction how to file the relevant income taxes. For people living outside Japan we file a non-resident income tax return.<br />
<br />
== Possession Tax ==<br />
<br />
Paid once a year. The invoice normally arrives on June 1st and needs to be paid by the end of June. It is possible to pay in 4 quarterly installments.<br />
<br />
Normally about 0.3% to 0.5% of the market value each year, (peaks as high as 1.2%)<br />
<br />
Computed as a percentage of the assessed land and building values. <br />
<br />
Assessed values can differ wildly from the real market value.<br />
<br />
More information can be found on this [http://tochi.mlit.go.jp/english/tax/02_01_01.html page] of the Ministry of Land, Infrastructure, Transport and Tourism.<br />
<br />
== Acquisition Tax ==<br />
This tax is due a few months after buying the property. Normally around 0.5 to 1.0% of the purchase price, it can peak as high as 2%.<br />
It is based on the assessed value and the calculation for residential property is as follows:<br />
<br />
Acquisition Tax = Assessed Land Value x Share of the Land x 1.5% + Assessed Apartment Value x 3%<br />
<br />
Commercial properties are taxed at 4% instead of 3%.<br />
<br />
The assessed land and building value are published annually and available from the property records that are obtainable from the tax office. Here are examples of these property records.<br />
<br />
{| border="0" <br />
|-<br />
| [[image:assessed land value.jpg|400px|thumb|c|left|The assessed land value and the share of the land are circled in red]] [[image:assessed building value.jpg|400px|thumb|c|right|The apartment value is circled in red ]]<br />
|}<br />
<br />
There is a discount for newly built properties. More information can be found on this [http://tochi.mlit.go.jp/english/tax/02_01_02.html page] of the Ministry of Land, Infrastructure, Transport and Tourism.<br />
<br />
== Stamp Duty ==<br />
<br />
On any real estate contract both the buyer and the seller need to put a stamp. The stamps can be bought at the post office and the value is dependent on the transaction price. Mortgage contracts need a stamp too and the tax rates for this are slightly different.<br />
<br />
{| class="wikitable"<br />
|-<br />
! Transaction Amount<br />
! Property Purchase<br />
! Mortgage<br />
|-<br />
| 10,000 or less<br />
| nil<br />
| nil<br />
|-<br />
| 10,001 - 100,000<br />
| 200<br />
| 200<br />
|-<br />
| 100,001 - 500,000<br />
| 400<br />
| 400<br />
|-<br />
| 500,001 - 1,000,000<br />
| 1,000<br />
| 1,000<br />
|-<br />
| 1,000,001 - 5,000,000<br />
| 1,000<br />
| 2,000<br />
|-<br />
| 5,000,001 - 10,000,000<br />
| 5,000<br />
| 10,000<br />
|-<br />
| 10,000,001 - 50,000,000<br />
| 10,000<br />
| 20,000<br />
|-<br />
| 50,000,001 - 100,000,000<br />
| 30,000<br />
| 60,000<br />
|-<br />
| 100,000,001 - 500,000,000<br />
| 60,000<br />
| 100,000<br />
|-<br />
| 500,000,001 - 1,000,000,000<br />
| 160,000<br />
| 200,000<br />
|-<br />
| 1,000,000,001 - 5,000,000,000<br />
| 320,000<br />
| 400,000<br />
|-<br />
| more than 5,000,000,000<br />
| 480,000<br />
| 600,000<br />
|-<br />
| if no amount is stated<br />
| 200<br />
| 200<br />
|}<br />
<br />
== Income Tax ==<br />
Rental income is part of your income and taxed as such.<br />
Maintenance, repair, management and financing costs can be deducted.<br />
[http://akasakarealestate.com/wiki/index.php/Taxes#Depreciation_Deduction_for_Income_Tax Depreciation] can be deducted too. <br />
If you are not resident in Japan the total income in Japan will be low and so you will fall in a low tax bracket. Also no local tax will have to be paid.<br />
<br />
The first 480,000 yen is the total income not taxed. After that the national tax rates are as follows:<br />
<br />
{| class="wikitable"<br />
|-<br />
! Tax Base (Yen)<br />
! Tax<br />
|-<br />
|1 - 1,950,000 <br />
|5%<br />
|-<br />
|1,950,001 - 3,300,000<br />
|10% of base exceeding 1,950,000<br />
|-<br />
|3,300,001 - 6,950,000<br />
|20% of base exceeding 3,300,000<br />
|-<br />
|6,950,001 - 9,000,000<br />
|23% of base exceeding 6,950,000<br />
|-<br />
|9,000,001 - 18,000,000<br />
|33% of base exceeding 9,000,000<br />
|-<br />
|18,000,001 and over<br />
|40% of base exceeding 18,000,000<br />
|}<br />
<br />
When filing personal income tax you are required to fill out two forms for the real estate income:<br />
<br />
{| border="0" <br />
|-<br />
| [[image:incometaxrentalincome.jpg|400px|thumb|c|left|The income tax form ]] [[image:incometaxdepreciation.jpg|400px|thumb|c|right|The depreciation calculation form ]]<br />
|-<br />
| [[image:incometaxtranslation1.jpg|400px|thumb|c|left|Translation of the income tax form (part 1) ]] [[image:incometaxtranslation2.jpg|400px|thumb|c|right|Translation of the income tax form (part 2) ]]<br />
|-<br />
| [[image:incometaxtranslation3.jpg|400px|thumb|c|left|Translation of the depreciation calculation form (part 1) ]] [[image:incometaxtranslation4.jpg|400px|thumb|c|right|Translation of the depreciation calculation form (part 2) ]]<br />
|}<br />
<br />
=== Depreciation Deduction for Income Tax ===<br />
It is possible to use depreciation to reduce the income tax burden. In Japan it is only possible to depreciate the building, not the land. When purchasing a new structure, often the breakdown is given. However when purchasing a second hand property it is not clear how much can be declared as building value. One way it to look at the possession tax valuation of the building and land and take that ratio. Another option would be to use the [http://akasakarealestate.com/wiki/index.php/Property_Valuation Rosenka] for the land valuation. When a property is sold, capital gains tax will have to be paid over the difference between the sales price and the book value. As depreciation reduces the book value, it will increase the capital gains tax when the property will be sold.<br />
<br />
To calculate the depreciation you can depreciate the building in an amount of years, depending on what type of structure it is. This is called the 'useful life' in Japan.<br />
<br />
{| class="wikitable"<br />
|-<br />
! Building Type<br />
! Useful life<br />
|-<br />
|Steel frame reinforced concrete buildings or reinforced concrete buildings<br />
|47 years<br />
|-<br />
|Brick, stone or block construction<br />
|38 years<br />
|-<br />
|Metal construction (thickness of internal frame exceeds 4 mm)<br />
|34 years<br />
|-<br />
|Metal construction (thickness of internal frame exceeds 3 mm)<br />
|27 years<br />
|-<br />
|Metal construction (thickness of internal frame is 3 mm or below)<br />
|19 years<br />
|-<br />
|Wood or wood composite construction<br />
|22 years<br />
|-<br />
|Wood frame mortar construction<br />
|20 years<br />
|}<br />
<br />
<br />
For second hand properties you can deduct 80 percent of the age. So for example a concrete apartment built in 1980 and bought in 2011 can be depreciated in 47 - (31 x 80%) = 47 - 24.8 = 22 years. The depreciation amount is 1/22 = 4.5% of the building value a year. When calculating the amount of years and the percentage depreciation the results are truncated down. It is not possible to depreciate a building more than its useful life, so a 40 year old wood frame structure must be depreciated in 20% of 20 = 4 years.<br />
<br />
To reduce the income tax burden sometimes several strategies are suggested to maximize the depreciation. However there are also downsides to this approach. For example the building value on a new property is higher, so the taxable depreciation is higher as well. Unfortunately such a new property will suffer a real market depreciation as well. Another strategy is to purchase a very old wooden frame structure on cheap land, allowing to depreciate almost the full purchase price in just 4 years. However capital gains tax will need to be paid when selling the property, so this might only be interesting for temporary residents who are now paying a high income tax rate, but are expected to leave Japan and so will fall into the 15% capital gains rate when selling. Also such old wooden structures might incur high maintenance costs and are hard to manage as they are normally only found outside Tokyo.<br />
<br />
=== Withholding for Income Tax ===<br />
<br />
For non-residents the tax office wants to make sure that the income tax is paid. To this effect the law states that 20% of the incoming rent should be paid as withholding tax. When the annual income tax is filed by March the following year the owner will get a refund of these withholding tax payments. <br />
<br />
Officially a withholding tax filing is the responsibility of the tenant and should be done for every rent payment. This entails filling out a tax form, making the payment and sending a copy of the payment slip to the owner. Clearly this would create an excessive amount of paperwork and so the tax office is willing to take a rather flexible approach. This means that normally there is no issue if the withholding tax is not filed in case both the renter and the owner are individuals. If the renter is a corporation however they have requested that the payments are made for larger rent payments, but they are willing to let the property manager handle it. The exact definition of 'large' has not been given, but so far we have managed to avoid this paperwork for rents below 200,000 yen a month.<br />
<br />
=== How to file ===<br />
<br />
For residents just take the proof of your other income like your salary slips to the tax office along with the real estate forms. If your additional income is less than 200,000 yen no filing is necessary.<br />
<br />
== Capital Gains ==<br />
On short term holdings (less than 5 to 6 years) the tax rate on capital gains is quite high at 39% (30% national + 9% local tax). But there are ways to reduce it to 15% or less. If the dwelling is used as a primary residence the first 30 million yen of capital gains is tax free. A couple owning a house jointly gets 60 million tax free. If you own a property more than 6 years the tax rate goes down to 20% (15% national and 5% local tax). If you are not a resident in Japan that means the tax is 15%. Between 5 and 6 years it depends on the time of year. To get the lower tax rate 6 times January 1st must have passed since the purchase.<br />
<br />
The Capital Gains is calculated by taking the profit (sales price - purchase price - closing costs) and adding the depreciation that was reported for income tax. If no depreciation was reported, a mandatory minimum depreciation is added nonetheless.<br />
<br />
=== Withholding for Capital Gains ===<br />
<br />
To ensure a non-resident seller files the capital gains tax form the buyer needs to withhold 10.21% of the sales price and pay this in withholding tax. The seller then can claim this back by filing the correct papers. For leasehold the amount is 20.42%.<br />
<br />
== Entrepreneurial Tax ==<br />
Individuals owning on their personal title 10 or more apartments or 2 or more buildings are charged an extra 5 percent of the profit when filing their personal income tax. The first 2,900,000 yen profit tax not taxed though. There is some rounding involved as well. Here is an example:<br />
<br />
* Income: 4,993,170 yen <br />
* Deduction: 2,900,000<br />
* Taxable: 2,093,000 (rounded down to the lowest thousand yen)<br />
* 5% tax: 104,600 (rounded down to the lowest 100 yen)<br />
<br />
To avoid this tax we recommend to divide ownership of many apartments over the different family members. It is also possible to put the ownership in a limited company and then pay yourself a salary as a director. For residents this salary would be taxed as income. For non-residents there is a flat tax of 20% on income distributions. A further advantage of having a company structure is the possibility to deduct travel and entertainment expenses. The initial set-up costs for a company in Japan are around 250,000 to 500,000 yen. Annual corporate tax will be 70,000 yen if all income is distributed as salary. The annual tax filing would cost around 150,000 to 300,000 depending on the complexity.<br />
<br />
== Sales Tax ==<br />
No sales tax is levied on residential rental contracts. For corporate contracts 8% sales tax is added. However if the owner is an individual and the total rent is less than 10 million yen a year, the owner can keep this money and does not have to file a sales tax form.<br />
<br />
== Direct ownership versus a holding company ==<br />
<br />
As a direct owner you have to pay income tax at progressive rates over the profit made from the investment properties. For large investors it can be a good idea to set up a local Japanese company (kabushiki kaisha) to reduce the tax burden. Setting up a company takes around 3 months and costs about 300,000 to 500,000 yen. The annual accounting costs might be similar. In return it is possible to deduct for example entertainment expenses and many more items from your profit. You would have to put yourself and possibly other people on the payroll to avoid paying the high corporate taxes. This could allow you to spread the income over several people making sure to avoid those higher tax bands. For non-resident directors there is a fixed tax rate of 20%. For more details we can recommend to talk to Greg McDonald at [http://www.solidjapan.com SolidJapan].<br />
<br />
Putting Japanese property directly in an overseas holding company might not be an effective way to save taxes. In such circumstances the tax rate would be 20% of the rent without allowing any deductions. Also the property manager would have to file a withholding tax form and make a payment with the tax office for EVERY rent payment. If overseas ownership is required a special construction called a [http://www.venturejapan.com/tokumei-kumiai-tk.htm Tokumei Kumiai (TK)] should be set up instead. However this is only suitable for larger investments (JPY 200 million and over) given the fact that non-residents pay very low tax rates on smaller investments.</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=Taxes&diff=45Taxes2021-03-12T12:58:38Z<p>Erik: /* Income Tax */</p>
<hr />
<div>For properties we manage we handle all the tax filings. At the end of the year we will provide the owner with the details and instruction how to file the relevant income taxes. For people living outside Japan we file a non-resident income tax return.<br />
<br />
== Possession Tax ==<br />
<br />
Paid once a year. The invoice normally arrives on June 1st and needs to be paid by the end of June. It is possible to pay in 4 quarterly installments.<br />
<br />
Normally about 0.3% to 0.5% of the market value each year, (peaks as high as 1.2%)<br />
<br />
Computed as a percentage of the assessed land and building values. <br />
<br />
Assessed values can differ wildly from the real market value.<br />
<br />
More information can be found on this [http://tochi.mlit.go.jp/english/tax/02_01_01.html page] of the Ministry of Land, Infrastructure, Transport and Tourism.<br />
<br />
== Acquisition Tax ==<br />
This tax is due a few months after buying the property. Normally around 0.5 to 1.0% of the purchase price, it can peak as high as 2%.<br />
It is based on the assessed value and the calculation for residential property is as follows:<br />
<br />
Acquisition Tax = Assessed Land Value x Share of the Land x 1.5% + Assessed Apartment Value x 3%<br />
<br />
Commercial properties are taxed at 4% instead of 3%.<br />
<br />
The assessed land and building value are published annually and available from the property records that are obtainable from the tax office. Here are examples of these property records.<br />
<br />
{| border="0" <br />
|-<br />
| [[image:assessed land value.jpg|400px|thumb|c|left|The assessed land value and the share of the land are circled in red]] [[image:assessed building value.jpg|400px|thumb|c|right|The apartment value is circled in red ]]<br />
|}<br />
<br />
There is a discount for newly built properties. More information can be found on this [http://tochi.mlit.go.jp/english/tax/02_01_02.html page] of the Ministry of Land, Infrastructure, Transport and Tourism.<br />
<br />
== Stamp Duty ==<br />
<br />
On any real estate contract both the buyer and the seller need to put a stamp. The stamps can be bought at the post office and the value is dependent on the transaction price. Mortgage contracts need a stamp too and the tax rates for this are slightly different.<br />
<br />
{| class="wikitable"<br />
|-<br />
! Transaction Amount<br />
! Property Purchase<br />
! Mortgage<br />
|-<br />
| 10,000 or less<br />
| nil<br />
| nil<br />
|-<br />
| 10,001 - 100,000<br />
| 200<br />
| 200<br />
|-<br />
| 100,001 - 500,000<br />
| 400<br />
| 400<br />
|-<br />
| 500,001 - 1,000,000<br />
| 1,000<br />
| 1,000<br />
|-<br />
| 1,000,001 - 5,000,000<br />
| 1,000<br />
| 2,000<br />
|-<br />
| 5,000,001 - 10,000,000<br />
| 5,000<br />
| 10,000<br />
|-<br />
| 10,000,001 - 50,000,000<br />
| 10,000<br />
| 20,000<br />
|-<br />
| 50,000,001 - 100,000,000<br />
| 30,000<br />
| 60,000<br />
|-<br />
| 100,000,001 - 500,000,000<br />
| 60,000<br />
| 100,000<br />
|-<br />
| 500,000,001 - 1,000,000,000<br />
| 160,000<br />
| 200,000<br />
|-<br />
| 1,000,000,001 - 5,000,000,000<br />
| 320,000<br />
| 400,000<br />
|-<br />
| more than 5,000,000,000<br />
| 480,000<br />
| 600,000<br />
|-<br />
| if no amount is stated<br />
| 200<br />
| 200<br />
|}<br />
<br />
== Income Tax ==<br />
Rental income is part of your income and taxed as such.<br />
Maintenance, repair, management and financing costs can be deducted.<br />
[http://akasakarealestate.com/wiki/index.php/Taxes#Depreciation_Deduction_for_Income_Tax Depreciation] can be deducted too. <br />
If you are not resident in Japan the total income in Japan will be low and so you will fall in a low tax bracket. Also no local tax will have to be paid.<br />
<br />
The first 480,000 yen is the total income not taxed. After that the national tax rates are as follows:<br />
<br />
{| class="wikitable"<br />
|-<br />
! Tax Base (Yen)<br />
! Tax<br />
|-<br />
|1 - 1,950,000 <br />
|5%<br />
|-<br />
|1,950,001 - 3,300,000<br />
|10% of base exceeding 1,950,000<br />
|-<br />
|3,300,001 - 6,950,000<br />
|20% of base exceeding 3,300,000<br />
|-<br />
|6,950,001 - 9,000,000<br />
|23% of base exceeding 6,950,000<br />
|-<br />
|9,000,001 - 18,000,000<br />
|33% of base exceeding 9,000,000<br />
|-<br />
|18,000,001 and over<br />
|40% of base exceeding 18,000,000<br />
|}<br />
<br />
When filing personal income tax you are required to fill out two forms for the real estate income:<br />
<br />
{| border="0" <br />
|-<br />
| [[image:incometaxrentalincome.jpg|400px|thumb|c|left|The income tax form ]] [[image:incometaxdepreciation.jpg|400px|thumb|c|right|The depreciation calculation form ]]<br />
|-<br />
| [[image:incometaxtranslation1.jpg|400px|thumb|c|left|Translation of the income tax form (part 1) ]] [[image:incometaxtranslation2.jpg|400px|thumb|c|right|Translation of the income tax form (part 2) ]]<br />
|-<br />
| [[image:incometaxtranslation3.jpg|400px|thumb|c|left|Translation of the depreciation calculation form (part 1) ]] [[image:incometaxtranslation4.jpg|400px|thumb|c|right|Translation of the depreciation calculation form (part 2) ]]<br />
|}<br />
<br />
=== Depreciation Deduction for Income Tax ===<br />
It is possible to use depreciation to reduce the income tax burden. In Japan it is only possible to depreciate the building, not the land. When purchasing a new structure, often the breakdown is given. However when purchasing a second hand property it is not clear how much can be declared as building value. One way it to look at the possession tax valuation of the building and land and take that ratio. Another option would be to use the [http://akasakarealestate.com/wiki/index.php/Property_Valuation Rosenka] for the land valuation. When a property is sold, capital gains tax will have to be paid over the difference between the sales price and the book value. As depreciation reduces the book value, it will increase the capital gains tax when the property will be sold.<br />
<br />
To calculate the depreciation you can depreciate the building in an amount of years, depending on what type of structure it is. This is called the 'useful life' in Japan.<br />
<br />
{| class="wikitable"<br />
|-<br />
! Building Type<br />
! Useful life<br />
|-<br />
|Steel frame reinforced concrete buildings or reinforced concrete buildings<br />
|47 years<br />
|-<br />
|Brick, stone or block construction<br />
|38 years<br />
|-<br />
|Metal construction (thickness of internal frame exceeds 4 mm)<br />
|34 years<br />
|-<br />
|Metal construction (thickness of internal frame exceeds 3 mm)<br />
|27 years<br />
|-<br />
|Metal construction (thickness of internal frame is 3 mm or below)<br />
|19 years<br />
|-<br />
|Wood or wood composite construction<br />
|22 years<br />
|-<br />
|Wood frame mortar construction<br />
|20 years<br />
|}<br />
<br />
<br />
For second hand properties you can deduct 80 percent of the age. So for example a concrete apartment built in 1980 and bought in 2011 can be depreciated in 47 - (31 x 80%) = 47 - 24.8 = 22 years. The depreciation amount is 1/22 = 4.5% of the building value a year. When calculating the amount of years and the percentage depreciation the results are truncated down. It is not possible to depreciate a building more than its useful life, so a 40 year old wood frame structure must be depreciated in 20% of 20 = 4 years.<br />
<br />
To reduce the income tax burden sometimes several strategies are suggested to maximize the depreciation. However there are also downsides to this approach. For example the building value on a new property is higher, so the taxable depreciation is higher as well. Unfortunately such a new property will suffer a real market depreciation as well. Another strategy is to purchase a very old wooden frame structure on cheap land, allowing to depreciate almost the full purchase price in just 4 years. However capital gains tax will need to be paid when selling the property, so this might only be interesting for temporary residents who are now paying a high income tax rate, but are expected to leave Japan and so will fall into the 15% capital gains rate when selling. Also such old wooden structures might incur high maintenance costs and are hard to manage as they are normally only found outside Tokyo.<br />
<br />
=== Withholding for Income Tax ===<br />
<br />
For non-residents the tax office wants to make sure that the income tax is paid. To this effect the law states that 20% of the incoming rent should be paid as withholding tax. When the annual income tax is filed by March the following year the owner will get a refund of these withholding tax payments. <br />
<br />
Officially a withholding tax filing is the responsibility of the tenant and should be done for every rent payment. This entails filling out a tax form, making the payment and sending a copy of the payment slip to the owner. Clearly this would create an excessive amount of paperwork and so the tax office is willing to take a rather flexible approach. This means that normally there is no issue if the withholding tax is not filed in case both the renter and the owner are individuals. If the renter is a corporation however they have requested that the payments are made for larger rent payments, but they are willing to let the property manager handle it. The exact definition of 'large' has not been given, but so far we have managed to avoid this paperwork for rents below 200,000 yen a month.<br />
<br />
=== How to file ===<br />
<br />
For residents just take the proof of your other income like your salary slips to the tax office along with the real estate forms. If your additional income is less than 200,000 yen no filing is necessary.<br />
<br />
== Capital Gains ==<br />
On short term holdings (less than 5 years) the tax rate on capital gains is quite high at 39% (30% national + 9% local tax). But there are ways to reduce it to 15% or less. If the dwelling is used as a primary residence the first 30 million yen of capital gains is tax free. A couple owning a house jointly gets 60 million tax free. If you own a property more than 6 years the tax rate goes down to 20% (15% national and 5% local tax). If you are not a resident in Japan that means the tax is 15%. Between 5 and 6 years it depends on the time of year. To get the lower tax rate 6 times January 1st must have passed since the purchase.<br />
<br />
=== Withholding for Capital Gains ===<br />
<br />
To ensure a non-resident seller files the capital gains tax form the buyer needs to withhold 10% of the sales price and pay this in withholding tax. The seller then can claim this back by filing the correct papers. For leasehold the amount is 20%.<br />
<br />
== Entrepreneurial Tax ==<br />
Individuals owning on their personal title 10 or more apartments or 2 or more buildings are charged an extra 5 percent of the profit when filing their personal income tax. The first 2,900,000 yen profit tax not taxed though. There is some rounding involved as well. Here is an example:<br />
<br />
* Income: 4,993,170 yen <br />
* Deduction: 2,900,000<br />
* Taxable: 2,093,000 (rounded down to the lowest thousand yen)<br />
* 5% tax: 104,600 (rounded down to the lowest 100 yen)<br />
<br />
To avoid this tax we recommend to divide ownership of many apartments over the different family members. It is also possible to put the ownership in a limited company and then pay yourself a salary as a director. For residents this salary would be taxed as income. For non-residents there is a flat tax of 20% on income distributions. A further advantage of having a company structure is the possibility to deduct travel and entertainment expenses. The initial set-up costs for a company in Japan are around 250,000 to 500,000 yen. Annual corporate tax will be 70,000 yen if all income is distributed as salary. The annual tax filing would cost around 150,000 to 300,000 depending on the complexity.<br />
<br />
== Sales Tax ==<br />
No sales tax is levied on residential rental contracts. For corporate contracts 8% sales tax is added. However if the owner is an individual and the total rent is less than 10 million yen a year, the owner can keep this money and does not have to file a sales tax form.<br />
<br />
== Direct ownership versus a holding company ==<br />
<br />
As a direct owner you have to pay income tax at progressive rates over the profit made from the investment properties. For large investors it can be a good idea to set up a local Japanese company (kabushiki kaisha) to reduce the tax burden. Setting up a company takes around 3 months and costs about 300,000 to 500,000 yen. The annual accounting costs might be similar. In return it is possible to deduct for example entertainment expenses and many more items from your profit. You would have to put yourself and possibly other people on the payroll to avoid paying the high corporate taxes. This could allow you to spread the income over several people making sure to avoid those higher tax bands. For non-resident directors there is a fixed tax rate of 20%. For more details we can recommend to talk to Greg McDonald at [http://www.solidjapan.com SolidJapan].<br />
<br />
Putting Japanese property directly in an overseas holding company might not be an effective way to save taxes. In such circumstances the tax rate would be 20% of the rent without allowing any deductions. Also the property manager would have to file a withholding tax form and make a payment with the tax office for EVERY rent payment. If overseas ownership is required a special construction called a [http://www.venturejapan.com/tokumei-kumiai-tk.htm Tokumei Kumiai (TK)] should be set up instead. However this is only suitable for larger investments (JPY 200 million and over) given the fact that non-residents pay very low tax rates on smaller investments.</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=Taxes&diff=44Taxes2020-11-29T10:06:17Z<p>Erik: /* Entrepreneurial Tax */</p>
<hr />
<div>For properties we manage we handle all the tax filings. At the end of the year we will provide the owner with the details and instruction how to file the relevant income taxes. For people living outside Japan we file a non-resident income tax return.<br />
<br />
== Possession Tax ==<br />
<br />
Paid once a year. The invoice normally arrives on June 1st and needs to be paid by the end of June. It is possible to pay in 4 quarterly installments.<br />
<br />
Normally about 0.3% to 0.5% of the market value each year, (peaks as high as 1.2%)<br />
<br />
Computed as a percentage of the assessed land and building values. <br />
<br />
Assessed values can differ wildly from the real market value.<br />
<br />
More information can be found on this [http://tochi.mlit.go.jp/english/tax/02_01_01.html page] of the Ministry of Land, Infrastructure, Transport and Tourism.<br />
<br />
== Acquisition Tax ==<br />
This tax is due a few months after buying the property. Normally around 0.5 to 1.0% of the purchase price, it can peak as high as 2%.<br />
It is based on the assessed value and the calculation for residential property is as follows:<br />
<br />
Acquisition Tax = Assessed Land Value x Share of the Land x 1.5% + Assessed Apartment Value x 3%<br />
<br />
Commercial properties are taxed at 4% instead of 3%.<br />
<br />
The assessed land and building value are published annually and available from the property records that are obtainable from the tax office. Here are examples of these property records.<br />
<br />
{| border="0" <br />
|-<br />
| [[image:assessed land value.jpg|400px|thumb|c|left|The assessed land value and the share of the land are circled in red]] [[image:assessed building value.jpg|400px|thumb|c|right|The apartment value is circled in red ]]<br />
|}<br />
<br />
There is a discount for newly built properties. More information can be found on this [http://tochi.mlit.go.jp/english/tax/02_01_02.html page] of the Ministry of Land, Infrastructure, Transport and Tourism.<br />
<br />
== Stamp Duty ==<br />
<br />
On any real estate contract both the buyer and the seller need to put a stamp. The stamps can be bought at the post office and the value is dependent on the transaction price. Mortgage contracts need a stamp too and the tax rates for this are slightly different.<br />
<br />
{| class="wikitable"<br />
|-<br />
! Transaction Amount<br />
! Property Purchase<br />
! Mortgage<br />
|-<br />
| 10,000 or less<br />
| nil<br />
| nil<br />
|-<br />
| 10,001 - 100,000<br />
| 200<br />
| 200<br />
|-<br />
| 100,001 - 500,000<br />
| 400<br />
| 400<br />
|-<br />
| 500,001 - 1,000,000<br />
| 1,000<br />
| 1,000<br />
|-<br />
| 1,000,001 - 5,000,000<br />
| 1,000<br />
| 2,000<br />
|-<br />
| 5,000,001 - 10,000,000<br />
| 5,000<br />
| 10,000<br />
|-<br />
| 10,000,001 - 50,000,000<br />
| 10,000<br />
| 20,000<br />
|-<br />
| 50,000,001 - 100,000,000<br />
| 30,000<br />
| 60,000<br />
|-<br />
| 100,000,001 - 500,000,000<br />
| 60,000<br />
| 100,000<br />
|-<br />
| 500,000,001 - 1,000,000,000<br />
| 160,000<br />
| 200,000<br />
|-<br />
| 1,000,000,001 - 5,000,000,000<br />
| 320,000<br />
| 400,000<br />
|-<br />
| more than 5,000,000,000<br />
| 480,000<br />
| 600,000<br />
|-<br />
| if no amount is stated<br />
| 200<br />
| 200<br />
|}<br />
<br />
== Income Tax ==<br />
Rental income is part of your income and taxed as such.<br />
Maintenance, repair, management and financing costs can be deducted.<br />
[http://akasakarealestate.com/wiki/index.php/Taxes#Depreciation_Deduction_for_Income_Tax Depreciation] can be deducted too. <br />
If you are not resident in Japan the total income in Japan will be low and so you will fall in a low tax bracket. Also no local tax will have to be paid.<br />
<br />
The first 380,000 yen is the total income not taxed. After that the national tax rates are as follows:<br />
<br />
{| class="wikitable"<br />
|-<br />
! Tax Base (Yen)<br />
! Tax<br />
|-<br />
|1 - 1,950,000 <br />
|5%<br />
|-<br />
|1,950,001 - 3,300,000<br />
|10% of base exceeding 1,950,000<br />
|-<br />
|3,300,001 - 6,950,000<br />
|20% of base exceeding 3,300,000<br />
|-<br />
|6,950,001 - 9,000,000<br />
|23% of base exceeding 6,950,000<br />
|-<br />
|9,000,001 - 18,000,000<br />
|33% of base exceeding 9,000,000<br />
|-<br />
|18,000,001 and over<br />
|40% of base exceeding 18,000,000<br />
|}<br />
<br />
When filing personal income tax you are required to fill out two forms for the real estate income:<br />
<br />
{| border="0" <br />
|-<br />
| [[image:incometaxrentalincome.jpg|400px|thumb|c|left|The income tax form ]] [[image:incometaxdepreciation.jpg|400px|thumb|c|right|The depreciation calculation form ]]<br />
|-<br />
| [[image:incometaxtranslation1.jpg|400px|thumb|c|left|Translation of the income tax form (part 1) ]] [[image:incometaxtranslation2.jpg|400px|thumb|c|right|Translation of the income tax form (part 2) ]]<br />
|-<br />
| [[image:incometaxtranslation3.jpg|400px|thumb|c|left|Translation of the depreciation calculation form (part 1) ]] [[image:incometaxtranslation4.jpg|400px|thumb|c|right|Translation of the depreciation calculation form (part 2) ]]<br />
|}<br />
<br />
=== Depreciation Deduction for Income Tax ===<br />
It is possible to use depreciation to reduce the income tax burden. In Japan it is only possible to depreciate the building, not the land. When purchasing a new structure, often the breakdown is given. However when purchasing a second hand property it is not clear how much can be declared as building value. One way it to look at the possession tax valuation of the building and land and take that ratio. Another option would be to use the [http://akasakarealestate.com/wiki/index.php/Property_Valuation Rosenka] for the land valuation. When a property is sold, capital gains tax will have to be paid over the difference between the sales price and the book value. As depreciation reduces the book value, it will increase the capital gains tax when the property will be sold.<br />
<br />
To calculate the depreciation you can depreciate the building in an amount of years, depending on what type of structure it is. This is called the 'useful life' in Japan.<br />
<br />
{| class="wikitable"<br />
|-<br />
! Building Type<br />
! Useful life<br />
|-<br />
|Steel frame reinforced concrete buildings or reinforced concrete buildings<br />
|47 years<br />
|-<br />
|Brick, stone or block construction<br />
|38 years<br />
|-<br />
|Metal construction (thickness of internal frame exceeds 4 mm)<br />
|34 years<br />
|-<br />
|Metal construction (thickness of internal frame exceeds 3 mm)<br />
|27 years<br />
|-<br />
|Metal construction (thickness of internal frame is 3 mm or below)<br />
|19 years<br />
|-<br />
|Wood or wood composite construction<br />
|22 years<br />
|-<br />
|Wood frame mortar construction<br />
|20 years<br />
|}<br />
<br />
<br />
For second hand properties you can deduct 80 percent of the age. So for example a concrete apartment built in 1980 and bought in 2011 can be depreciated in 47 - (31 x 80%) = 47 - 24.8 = 22 years. The depreciation amount is 1/22 = 4.5% of the building value a year. When calculating the amount of years and the percentage depreciation the results are truncated down. It is not possible to depreciate a building more than its useful life, so a 40 year old wood frame structure must be depreciated in 20% of 20 = 4 years.<br />
<br />
To reduce the income tax burden sometimes several strategies are suggested to maximize the depreciation. However there are also downsides to this approach. For example the building value on a new property is higher, so the taxable depreciation is higher as well. Unfortunately such a new property will suffer a real market depreciation as well. Another strategy is to purchase a very old wooden frame structure on cheap land, allowing to depreciate almost the full purchase price in just 4 years. However capital gains tax will need to be paid when selling the property, so this might only be interesting for temporary residents who are now paying a high income tax rate, but are expected to leave Japan and so will fall into the 15% capital gains rate when selling. Also such old wooden structures might incur high maintenance costs and are hard to manage as they are normally only found outside Tokyo.<br />
<br />
=== Withholding for Income Tax ===<br />
<br />
For non-residents the tax office wants to make sure that the income tax is paid. To this effect the law states that 20% of the incoming rent should be paid as withholding tax. When the annual income tax is filed by March the following year the owner will get a refund of these withholding tax payments. <br />
<br />
Officially a withholding tax filing is the responsibility of the tenant and should be done for every rent payment. This entails filling out a tax form, making the payment and sending a copy of the payment slip to the owner. Clearly this would create an excessive amount of paperwork and so the tax office is willing to take a rather flexible approach. This means that normally there is no issue if the withholding tax is not filed in case both the renter and the owner are individuals. If the renter is a corporation however they have requested that the payments are made for larger rent payments, but they are willing to let the property manager handle it. The exact definition of 'large' has not been given, but so far we have managed to avoid this paperwork for rents below 200,000 yen a month.<br />
<br />
=== How to file ===<br />
<br />
For residents just take the proof of your other income like your salary slips to the tax office along with the real estate forms. If your additional income is less than 200,000 yen no filing is necessary.<br />
<br />
== Capital Gains ==<br />
On short term holdings (less than 5 years) the tax rate on capital gains is quite high at 39% (30% national + 9% local tax). But there are ways to reduce it to 15% or less. If the dwelling is used as a primary residence the first 30 million yen of capital gains is tax free. A couple owning a house jointly gets 60 million tax free. If you own a property more than 6 years the tax rate goes down to 20% (15% national and 5% local tax). If you are not a resident in Japan that means the tax is 15%. Between 5 and 6 years it depends on the time of year. To get the lower tax rate 6 times January 1st must have passed since the purchase.<br />
<br />
=== Withholding for Capital Gains ===<br />
<br />
To ensure a non-resident seller files the capital gains tax form the buyer needs to withhold 10% of the sales price and pay this in withholding tax. The seller then can claim this back by filing the correct papers. For leasehold the amount is 20%.<br />
<br />
== Entrepreneurial Tax ==<br />
Individuals owning on their personal title 10 or more apartments or 2 or more buildings are charged an extra 5 percent of the profit when filing their personal income tax. The first 2,900,000 yen profit tax not taxed though. There is some rounding involved as well. Here is an example:<br />
<br />
* Income: 4,993,170 yen <br />
* Deduction: 2,900,000<br />
* Taxable: 2,093,000 (rounded down to the lowest thousand yen)<br />
* 5% tax: 104,600 (rounded down to the lowest 100 yen)<br />
<br />
To avoid this tax we recommend to divide ownership of many apartments over the different family members. It is also possible to put the ownership in a limited company and then pay yourself a salary as a director. For residents this salary would be taxed as income. For non-residents there is a flat tax of 20% on income distributions. A further advantage of having a company structure is the possibility to deduct travel and entertainment expenses. The initial set-up costs for a company in Japan are around 250,000 to 500,000 yen. Annual corporate tax will be 70,000 yen if all income is distributed as salary. The annual tax filing would cost around 150,000 to 300,000 depending on the complexity.<br />
<br />
== Sales Tax ==<br />
No sales tax is levied on residential rental contracts. For corporate contracts 8% sales tax is added. However if the owner is an individual and the total rent is less than 10 million yen a year, the owner can keep this money and does not have to file a sales tax form.<br />
<br />
== Direct ownership versus a holding company ==<br />
<br />
As a direct owner you have to pay income tax at progressive rates over the profit made from the investment properties. For large investors it can be a good idea to set up a local Japanese company (kabushiki kaisha) to reduce the tax burden. Setting up a company takes around 3 months and costs about 300,000 to 500,000 yen. The annual accounting costs might be similar. In return it is possible to deduct for example entertainment expenses and many more items from your profit. You would have to put yourself and possibly other people on the payroll to avoid paying the high corporate taxes. This could allow you to spread the income over several people making sure to avoid those higher tax bands. For non-resident directors there is a fixed tax rate of 20%. For more details we can recommend to talk to Greg McDonald at [http://www.solidjapan.com SolidJapan].<br />
<br />
Putting Japanese property directly in an overseas holding company might not be an effective way to save taxes. In such circumstances the tax rate would be 20% of the rent without allowing any deductions. Also the property manager would have to file a withholding tax form and make a payment with the tax office for EVERY rent payment. If overseas ownership is required a special construction called a [http://www.venturejapan.com/tokumei-kumiai-tk.htm Tokumei Kumiai (TK)] should be set up instead. However this is only suitable for larger investments (JPY 200 million and over) given the fact that non-residents pay very low tax rates on smaller investments.</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=Taxes&diff=43Taxes2020-11-29T10:05:24Z<p>Erik: /* Entrepreneurial Tax */</p>
<hr />
<div>For properties we manage we handle all the tax filings. At the end of the year we will provide the owner with the details and instruction how to file the relevant income taxes. For people living outside Japan we file a non-resident income tax return.<br />
<br />
== Possession Tax ==<br />
<br />
Paid once a year. The invoice normally arrives on June 1st and needs to be paid by the end of June. It is possible to pay in 4 quarterly installments.<br />
<br />
Normally about 0.3% to 0.5% of the market value each year, (peaks as high as 1.2%)<br />
<br />
Computed as a percentage of the assessed land and building values. <br />
<br />
Assessed values can differ wildly from the real market value.<br />
<br />
More information can be found on this [http://tochi.mlit.go.jp/english/tax/02_01_01.html page] of the Ministry of Land, Infrastructure, Transport and Tourism.<br />
<br />
== Acquisition Tax ==<br />
This tax is due a few months after buying the property. Normally around 0.5 to 1.0% of the purchase price, it can peak as high as 2%.<br />
It is based on the assessed value and the calculation for residential property is as follows:<br />
<br />
Acquisition Tax = Assessed Land Value x Share of the Land x 1.5% + Assessed Apartment Value x 3%<br />
<br />
Commercial properties are taxed at 4% instead of 3%.<br />
<br />
The assessed land and building value are published annually and available from the property records that are obtainable from the tax office. Here are examples of these property records.<br />
<br />
{| border="0" <br />
|-<br />
| [[image:assessed land value.jpg|400px|thumb|c|left|The assessed land value and the share of the land are circled in red]] [[image:assessed building value.jpg|400px|thumb|c|right|The apartment value is circled in red ]]<br />
|}<br />
<br />
There is a discount for newly built properties. More information can be found on this [http://tochi.mlit.go.jp/english/tax/02_01_02.html page] of the Ministry of Land, Infrastructure, Transport and Tourism.<br />
<br />
== Stamp Duty ==<br />
<br />
On any real estate contract both the buyer and the seller need to put a stamp. The stamps can be bought at the post office and the value is dependent on the transaction price. Mortgage contracts need a stamp too and the tax rates for this are slightly different.<br />
<br />
{| class="wikitable"<br />
|-<br />
! Transaction Amount<br />
! Property Purchase<br />
! Mortgage<br />
|-<br />
| 10,000 or less<br />
| nil<br />
| nil<br />
|-<br />
| 10,001 - 100,000<br />
| 200<br />
| 200<br />
|-<br />
| 100,001 - 500,000<br />
| 400<br />
| 400<br />
|-<br />
| 500,001 - 1,000,000<br />
| 1,000<br />
| 1,000<br />
|-<br />
| 1,000,001 - 5,000,000<br />
| 1,000<br />
| 2,000<br />
|-<br />
| 5,000,001 - 10,000,000<br />
| 5,000<br />
| 10,000<br />
|-<br />
| 10,000,001 - 50,000,000<br />
| 10,000<br />
| 20,000<br />
|-<br />
| 50,000,001 - 100,000,000<br />
| 30,000<br />
| 60,000<br />
|-<br />
| 100,000,001 - 500,000,000<br />
| 60,000<br />
| 100,000<br />
|-<br />
| 500,000,001 - 1,000,000,000<br />
| 160,000<br />
| 200,000<br />
|-<br />
| 1,000,000,001 - 5,000,000,000<br />
| 320,000<br />
| 400,000<br />
|-<br />
| more than 5,000,000,000<br />
| 480,000<br />
| 600,000<br />
|-<br />
| if no amount is stated<br />
| 200<br />
| 200<br />
|}<br />
<br />
== Income Tax ==<br />
Rental income is part of your income and taxed as such.<br />
Maintenance, repair, management and financing costs can be deducted.<br />
[http://akasakarealestate.com/wiki/index.php/Taxes#Depreciation_Deduction_for_Income_Tax Depreciation] can be deducted too. <br />
If you are not resident in Japan the total income in Japan will be low and so you will fall in a low tax bracket. Also no local tax will have to be paid.<br />
<br />
The first 380,000 yen is the total income not taxed. After that the national tax rates are as follows:<br />
<br />
{| class="wikitable"<br />
|-<br />
! Tax Base (Yen)<br />
! Tax<br />
|-<br />
|1 - 1,950,000 <br />
|5%<br />
|-<br />
|1,950,001 - 3,300,000<br />
|10% of base exceeding 1,950,000<br />
|-<br />
|3,300,001 - 6,950,000<br />
|20% of base exceeding 3,300,000<br />
|-<br />
|6,950,001 - 9,000,000<br />
|23% of base exceeding 6,950,000<br />
|-<br />
|9,000,001 - 18,000,000<br />
|33% of base exceeding 9,000,000<br />
|-<br />
|18,000,001 and over<br />
|40% of base exceeding 18,000,000<br />
|}<br />
<br />
When filing personal income tax you are required to fill out two forms for the real estate income:<br />
<br />
{| border="0" <br />
|-<br />
| [[image:incometaxrentalincome.jpg|400px|thumb|c|left|The income tax form ]] [[image:incometaxdepreciation.jpg|400px|thumb|c|right|The depreciation calculation form ]]<br />
|-<br />
| [[image:incometaxtranslation1.jpg|400px|thumb|c|left|Translation of the income tax form (part 1) ]] [[image:incometaxtranslation2.jpg|400px|thumb|c|right|Translation of the income tax form (part 2) ]]<br />
|-<br />
| [[image:incometaxtranslation3.jpg|400px|thumb|c|left|Translation of the depreciation calculation form (part 1) ]] [[image:incometaxtranslation4.jpg|400px|thumb|c|right|Translation of the depreciation calculation form (part 2) ]]<br />
|}<br />
<br />
=== Depreciation Deduction for Income Tax ===<br />
It is possible to use depreciation to reduce the income tax burden. In Japan it is only possible to depreciate the building, not the land. When purchasing a new structure, often the breakdown is given. However when purchasing a second hand property it is not clear how much can be declared as building value. One way it to look at the possession tax valuation of the building and land and take that ratio. Another option would be to use the [http://akasakarealestate.com/wiki/index.php/Property_Valuation Rosenka] for the land valuation. When a property is sold, capital gains tax will have to be paid over the difference between the sales price and the book value. As depreciation reduces the book value, it will increase the capital gains tax when the property will be sold.<br />
<br />
To calculate the depreciation you can depreciate the building in an amount of years, depending on what type of structure it is. This is called the 'useful life' in Japan.<br />
<br />
{| class="wikitable"<br />
|-<br />
! Building Type<br />
! Useful life<br />
|-<br />
|Steel frame reinforced concrete buildings or reinforced concrete buildings<br />
|47 years<br />
|-<br />
|Brick, stone or block construction<br />
|38 years<br />
|-<br />
|Metal construction (thickness of internal frame exceeds 4 mm)<br />
|34 years<br />
|-<br />
|Metal construction (thickness of internal frame exceeds 3 mm)<br />
|27 years<br />
|-<br />
|Metal construction (thickness of internal frame is 3 mm or below)<br />
|19 years<br />
|-<br />
|Wood or wood composite construction<br />
|22 years<br />
|-<br />
|Wood frame mortar construction<br />
|20 years<br />
|}<br />
<br />
<br />
For second hand properties you can deduct 80 percent of the age. So for example a concrete apartment built in 1980 and bought in 2011 can be depreciated in 47 - (31 x 80%) = 47 - 24.8 = 22 years. The depreciation amount is 1/22 = 4.5% of the building value a year. When calculating the amount of years and the percentage depreciation the results are truncated down. It is not possible to depreciate a building more than its useful life, so a 40 year old wood frame structure must be depreciated in 20% of 20 = 4 years.<br />
<br />
To reduce the income tax burden sometimes several strategies are suggested to maximize the depreciation. However there are also downsides to this approach. For example the building value on a new property is higher, so the taxable depreciation is higher as well. Unfortunately such a new property will suffer a real market depreciation as well. Another strategy is to purchase a very old wooden frame structure on cheap land, allowing to depreciate almost the full purchase price in just 4 years. However capital gains tax will need to be paid when selling the property, so this might only be interesting for temporary residents who are now paying a high income tax rate, but are expected to leave Japan and so will fall into the 15% capital gains rate when selling. Also such old wooden structures might incur high maintenance costs and are hard to manage as they are normally only found outside Tokyo.<br />
<br />
=== Withholding for Income Tax ===<br />
<br />
For non-residents the tax office wants to make sure that the income tax is paid. To this effect the law states that 20% of the incoming rent should be paid as withholding tax. When the annual income tax is filed by March the following year the owner will get a refund of these withholding tax payments. <br />
<br />
Officially a withholding tax filing is the responsibility of the tenant and should be done for every rent payment. This entails filling out a tax form, making the payment and sending a copy of the payment slip to the owner. Clearly this would create an excessive amount of paperwork and so the tax office is willing to take a rather flexible approach. This means that normally there is no issue if the withholding tax is not filed in case both the renter and the owner are individuals. If the renter is a corporation however they have requested that the payments are made for larger rent payments, but they are willing to let the property manager handle it. The exact definition of 'large' has not been given, but so far we have managed to avoid this paperwork for rents below 200,000 yen a month.<br />
<br />
=== How to file ===<br />
<br />
For residents just take the proof of your other income like your salary slips to the tax office along with the real estate forms. If your additional income is less than 200,000 yen no filing is necessary.<br />
<br />
== Capital Gains ==<br />
On short term holdings (less than 5 years) the tax rate on capital gains is quite high at 39% (30% national + 9% local tax). But there are ways to reduce it to 15% or less. If the dwelling is used as a primary residence the first 30 million yen of capital gains is tax free. A couple owning a house jointly gets 60 million tax free. If you own a property more than 6 years the tax rate goes down to 20% (15% national and 5% local tax). If you are not a resident in Japan that means the tax is 15%. Between 5 and 6 years it depends on the time of year. To get the lower tax rate 6 times January 1st must have passed since the purchase.<br />
<br />
=== Withholding for Capital Gains ===<br />
<br />
To ensure a non-resident seller files the capital gains tax form the buyer needs to withhold 10% of the sales price and pay this in withholding tax. The seller then can claim this back by filing the correct papers. For leasehold the amount is 20%.<br />
<br />
== Entrepreneurial Tax ==<br />
Individuals owning on their personal title 10 or more apartments or 2 or more buildings are charged an extra 5 percent of the profit when filing their personal income tax. The first 2,900,000 yen profit tax not taxed though. There is some rounding involved as well. Here is an example:<br />
<br />
Income: 4,993,170 yen <br />
Deduction: 2,900,000<br />
Taxable: 2,093,000 (rounded down to the lowest thousand yen)<br />
5% tax: 104,600 (rounded down to the lowest 100 yen)<br />
<br />
To avoid this tax we recommend to divide ownership of many apartments over the different family members. It is also possible to put the ownership in a limited company and then pay yourself a salary as a director. For residents this salary would be taxed as income. For non-residents there is a flat tax of 20% on income distributions. A further advantage of having a company structure is the possibility to deduct travel and entertainment expenses. The initial set-up costs for a company in Japan are around 250,000 to 500,000 yen. Annual corporate tax will be 70,000 yen if all income is distributed as salary. The annual tax filing would cost around 150,000 to 300,000 depending on the complexity.<br />
<br />
== Sales Tax ==<br />
No sales tax is levied on residential rental contracts. For corporate contracts 8% sales tax is added. However if the owner is an individual and the total rent is less than 10 million yen a year, the owner can keep this money and does not have to file a sales tax form.<br />
<br />
== Direct ownership versus a holding company ==<br />
<br />
As a direct owner you have to pay income tax at progressive rates over the profit made from the investment properties. For large investors it can be a good idea to set up a local Japanese company (kabushiki kaisha) to reduce the tax burden. Setting up a company takes around 3 months and costs about 300,000 to 500,000 yen. The annual accounting costs might be similar. In return it is possible to deduct for example entertainment expenses and many more items from your profit. You would have to put yourself and possibly other people on the payroll to avoid paying the high corporate taxes. This could allow you to spread the income over several people making sure to avoid those higher tax bands. For non-resident directors there is a fixed tax rate of 20%. For more details we can recommend to talk to Greg McDonald at [http://www.solidjapan.com SolidJapan].<br />
<br />
Putting Japanese property directly in an overseas holding company might not be an effective way to save taxes. In such circumstances the tax rate would be 20% of the rent without allowing any deductions. Also the property manager would have to file a withholding tax form and make a payment with the tax office for EVERY rent payment. If overseas ownership is required a special construction called a [http://www.venturejapan.com/tokumei-kumiai-tk.htm Tokumei Kumiai (TK)] should be set up instead. However this is only suitable for larger investments (JPY 200 million and over) given the fact that non-residents pay very low tax rates on smaller investments.</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=Our_Company&diff=42Our Company2020-07-01T09:27:28Z<p>Erik: </p>
<hr />
<div>Akasaka Real Estate focuses on helping foreigners buy property in Tokyo, including both primary residences and investment properties. Other services include property management, help with obtaining financing, and organizing renovations. Akasaka Real Estate’s website also features property listings translated into English, as well as detailed statistics on the local market.<br />
<br />
<br />
== Team ==<br />
<br />
Akasaka Real Estate has assembled a team of seasoned real estate professionals with a wealth of knowledge and experience to draw upon when performing real estate brokerage, investment, consulting and management.<br />
<br />
=== Erik Oskamp ===<br />
'''Founder/President'''<br />
<br />
[[image:oskamp.jpg|right|150px|x]]<br />
<br />
Erik Oskamp came to Japan in 2004 and applied for a mortgage the first day. Within 2 months of research he bought his first property in Tokyo, a 3 bedroom house in Shirokane. By 2005 he bought his first investment property. During this process Mr. Oskamp encountered a lack of transparency in the Japanese real estate market and so proceeded to built computer models to assist with the statistical analysis. By 2006 he was able to realize his first capital gains with a 60% profit on the house in Shirokane. This encouraged him to take a more serious look at real estate. When many friends and colleagues started asking for information he realized the need for a real estate agency specialized in helping foreigners dealing with the Japanese market. He started Akasaka Real Estate in September 2007. He took advantage of the financial crisis by purchasing more properties in the dark days of early 2009. By 2010 many investors started following this strategy.<br />
<br />
Before Mr. Oskamp started Akasaka Real Estate he spent over 15 years working in finance for companies such as Credit Suisse, Citibank, UBS and Barclays in New York, London and Tokyo as well as his native Amsterdam. In his last position at Barclays he was working as a quantitative analyst, modeling the yen yield curve for swap traders. For his full resume look [http://www.akasakarealestate.com/articles/ErikOskamp.doc here].<br />
<br />
Mr. Oskamp divides his time between Tokyo, Manila, Hong Kong and Bangkok. He currently owns over two dozen properties in Japan, but rents the apartment he lives in. In his rare free time you might find him at the beach with his daughters or enjoying [http://www.oskamp.com/TRAVELING.html traveling].<br />
<br />
=== Chito Kera ===<br />
'''Licensed Realtor'''<br />
<br />
Chito Kera joined Akasaka Real Estate in October 2011. He has worked as a real estate agent for over 5 years as such has extensive experience with all aspects of real estate transactions. Kera-san speaks native Japanese and business level English.<br />
<br />
=== Mio Yagi ===<br />
'''Bookkeeper'''<br />
<br />
=== Yoshiaki Nakano===<br />
'''Property Manager'''<br />
<br />
=== Kaoru Arfaoui ===<br />
'''Property Manager'''<br />
<br />
=== Saya Yabusaki ===<br />
'''Property Manager'''<br />
<br />
=== Noriko Murray ===<br />
'''Property Manager'''<br />
<br />
=== Namihiko Wakabayashi ===<br />
<br />
In accordance with Japanese law no information is made public about Mr Namihiko Wakabayashi's time with Akasaka Real Estate.</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=Property_Management_Agreement&diff=41Property Management Agreement2020-06-10T07:43:38Z<p>Erik: /* Fund Transfers */</p>
<hr />
<div>== Responsibilities of Manager ==<br />
<br />
The Owner appoints the Manager as his lawful agent and attorney-in-fact with full authority to do any and all lawful things necessary for the fulfillment of this Agreement, including the following: <br />
<br />
==== Collect rent ====<br />
The Manager collects the rent on behalf of the Owner. If the renter does not pay the rent the Manager will use all legal means to pursue the renter. The Manager will report a delinquent renter quickly to the guarantor or guarantor company. The Manager will contact the renter and any contact person related to the renter to make clear the rent must be paid. If that does not resolve the issue the Manager will visit the renter personally. In Japan it is not allowed to threaten the renter, change the locks or in other ways intimidate a delinquent renter. Doing so could result in legal complications so the Manager will avoid any such action if possible. Instead in the extreme situation that a renter has a delay of over 3 months the Manager will negotiate with the renter about him leaving voluntary to avoid costly litigation. If such negotiations fail the Manager will sue the renter on behalf of the Owner. The costs of this would be for the Owner. In Japan this can take an extra 6 months and about 1 million yen in legal fees.<br />
<br />
==== Repairs and Maintenance ====<br />
The Manager will handle all repairs and maintenance issues related to the property. The Manager will always strive to keep such costs to a minimum. For this the Manager will either hire outside contractors or have their own staff fix any issues at cost. Also the manager will assess if the repair is truly needed and if the renter is liable. Under normal circumstances an estimate of the costs will be presented to the Owner for approval. However for small issues (for example fixing a doorbell) and in emergency situations (for example a water leak) the Manager may need to go ahead with the repairs without the Owner's approval. However in such cases the Owner will be notified at the soonest possible opportunity.<br />
<br />
To keep costs low some work can be done in-house. When outside contractors are used the Manager will always try to get the best price. No gifts will be accepted from contractors if that could lead in any way to a conflict of interest.<br />
<br />
When managing buildings the owner will not be charged for inspections of the common spaces. However for any cleaning of common spaces the owner will be charged the actual cleaning fees. The manager will use part-time cleaners instead of cleaning companies to reduce the cost of this when possible.<br />
<br />
==== Find Renters ====<br />
<br />
In case of vacancy the Manager will advertise the property widely and make sure any prospective renters get quick and easy access to view the property. The Manager will advise the Owner about the appropriate market rent and deposit. However the Owner has final say in this.<br />
<br />
==== Rental Contract Cancellations ====<br />
After a renter cancels the lease the Manager will inspect the property and refund the renter the deposit minus any damages and cleaning fees that can legally be claimed. As the deposit is held by the Owner, if the balance is low it might be necessary that the Owner makes a money transfer to the Manager to be able to make the refund. The Manager will get the apartment advertised, cleaned up and ready for the next tenant. The manager will strive to get this done within 3 weeks. However as with so many things in Japan things can take more time so it is not guaranteed that it will be done so quickly.<br />
<br />
==== Rental Contract Renewals ====<br />
In Japan most rental contracts are for 2 years with an option for renewal. It is very hard legally to force a renter to leave, especially if the rent is being paid on time. As a result the Manager will always offer a renter a renewal. At that time the rent can be negotiated. If the market rent is above the actual rent the Manager will try to negotiate a rent increase.<br />
<br />
If the Owner is planning to use the apartment as a primary residence and if the renter cooperates it might be possible to ask the renter to leave. This needs to be done at least 6 months before the rental contract expires. If the renter does not cooperate and pays the rent timely the Manager will not pursue any means of forcefully removing such a renter.<br />
<br />
==== Pay Bills ====<br />
The Manager will pay all bills related to the property using the rental income. This included building and association fees, utilities (when payable by the Owner), insurances fees, acquisition and annual possession tax, utilities, etc..<br />
<br />
For some buildings, it is not possible to set up automatic payments of the monthly building fees. To avoid excessive transfer fees and to save the amount of time the Manager spends at the bank in such cases payments are made once a year, usually at the beginning.<br />
<br />
==== Fund Transfers ====<br />
<br />
The Manager will transfer all profits to the Owner. This can be done by bank transfer or cash. The transfers will be made anytime the Owner makes a request. The costs of such transfers will be charged to the Owner.<br />
<br />
Japan domestic bank transfers are 275 yen per transfer. International transfers however cost 3,500 yen (see [http://akasakarealestate.com/wiki/index.php/Transaction_Costs#Remittance_Fees Remittance Fees]) on the Japanese side and possibly another 2,500 fee on the overseas side. Also in Japan such transfers get the attention from the authorities. We regularly get requests to provide documentation for compliance with the anti-money-laundering (AML) law. This can be over a 100 pages for a single transfer and sometimes must include copies of the property titles, sales contracts, rental contracts and full transaction records for all properties managed.<br />
<br />
To minimize the bureaucratic burden the Manager keeps the right to charge the Owner for the time it takes to make the transfer in case the Owner requests more than two international transfers a year, for more than 4 domestic transfers per year or for international transfers below 1 million yen. However the Manager will never charge the Owner for transfers over 2 million yen.<br />
<br />
==== Reporting ====<br />
The reporting will be done through the website of the Manager. At any time a recent transaction report, profit and loss statement, balance sheet and rent roll will be available online. If the Owner chooses so he can receive automatic email alerts notifying him of new transactions like incoming rent, missed rent payments and rental contract renewals/cancellations.<br />
<br />
The Manager will keep all the records at his office. The Owner or his representative can inspect these records anytime by making an appointment and coming over to the office of the Manager. After purchase the original property title will be sent to the Owner by the judicial scrivener handling the transaction unless the Owner specifies otherwise. The Owner can also at any time request copies of important documents such as sales and rental contracts.<br />
<br />
==== Income Tax Filing ====<br />
<br />
At the latest by the end of February of each year the Manager will prepare the tax forms related to the property income required for filing personal income taxes. These forms will include a calculation for the taxable depreciation of the property. At that time the Owner or his accountant can then use these forms for the income tax filing. This is easy, even for someone who doesn't speak Japanese as it will require only one number to be copied onto the main income tax form. On top of that there is also a profit and loss statement available online. If the Owner is a non-resident the Manager will also file the non-resident income tax on behalf of the Owner as long as the rental income from properties managed by the Manager is the only income. The Manager will also apply for any tax refunds if the owner is eligible and handle any audits of the real estate income by the tax office.<br />
<br />
== Liability of Manager ==<br />
<br />
Owner hereby agrees to hold Manager harmless from any and all claims, charges, debts, demands and lawsuits, including attorney's fees related to his management of the herein-described property, and from any liability for injury on or about the property which may be suffered by any employee, tenant or guest upon the property.<br />
<br />
== Compensation of Manager ==<br />
<br />
The Manager will charge the Owner 5.50% (5% plus sales tax) of the collected rent.<br />
<br />
For finding a new renter the Manager will receive one month rent from the Owner. However often this is paid for by the renter in the form of one month key money. In case it takes a long time to find the renter the Manager will offer a part or all of this finder's fee to local agents as extra incentive to find renter and reduce the length of the vacancy. If the Manager finds a renter himself he can charge one month commission to the renter as well. However the Manager will always allow other real estate agents to find renters and will not discriminate against such agents.<br />
<br />
If the Manager can collect a renewal fee from the renter he will keep this fee. However if an existing rental contract does not specify a renewal fee the Manager will not change the contract offered to the renter and the Manager will provide the rental renewal contract free of charge. The renewal fee will never exceed more than one month per two year renewal period.<br />
<br />
In case of a new rental application occasionally a renter will require a guarantor company. The guarantor company offers a discount to real estate agents paying the guarantor fees. These discounts are not offered to individual renters. The Manager can keep this difference. <br />
<br />
The Manager will charge 16,500 yen (15,000 + 10% sales tax) for preparing the documentation for a non-resident income tax filing. If the tax filing is done by the Owner himself the document preparation is free of charge.<br />
<br />
The Manager will not pay out any interest over the balance the Owner holds with the Manager. Any interest received from the bank therefore is income for the Manager. However currently the interest rates are so low that the 2012 interest income was just 1,039 yen.<br />
<br />
Besides the compensation mentioned above the manager will not accept any gifts in any form from contractors, renters or anyone else if it could lead to a potential conflict of interest with the Owner.<br />
<br />
If the Manager changes the fee structure he will give the Owner at least 3 months notice of this.<br />
<br />
== Termination ==<br />
<br />
The agreement can be terminated in writing by either party by providing written notice which will take effect within 1 month upon receipt of the termination notice. This Agreement may also be terminated by mutual agreement of the parties at any time. There is no notice period and no penalty will be charged. The Owner will notify the renters, the building association and the tax office of the change in management. The Manager will hand over the property documentation immediately. Upon termination the Owner and Manager will settle accounts at the soonest opportunity. <br />
<br />
In case the Manager is not capable of executing his duties (for example due to accident or bankruptcy) the Manager will bring all Owners into contact with each other so that they can look for another property manager collectively. The Owner gives permission to provide his email address to other Owners for this case only.</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=Property_Management_Agreement&diff=40Property Management Agreement2020-06-04T04:05:48Z<p>Erik: /* Fund Transfers */</p>
<hr />
<div>== Responsibilities of Manager ==<br />
<br />
The Owner appoints the Manager as his lawful agent and attorney-in-fact with full authority to do any and all lawful things necessary for the fulfillment of this Agreement, including the following: <br />
<br />
==== Collect rent ====<br />
The Manager collects the rent on behalf of the Owner. If the renter does not pay the rent the Manager will use all legal means to pursue the renter. The Manager will report a delinquent renter quickly to the guarantor or guarantor company. The Manager will contact the renter and any contact person related to the renter to make clear the rent must be paid. If that does not resolve the issue the Manager will visit the renter personally. In Japan it is not allowed to threaten the renter, change the locks or in other ways intimidate a delinquent renter. Doing so could result in legal complications so the Manager will avoid any such action if possible. Instead in the extreme situation that a renter has a delay of over 3 months the Manager will negotiate with the renter about him leaving voluntary to avoid costly litigation. If such negotiations fail the Manager will sue the renter on behalf of the Owner. The costs of this would be for the Owner. In Japan this can take an extra 6 months and about 1 million yen in legal fees.<br />
<br />
==== Repairs and Maintenance ====<br />
The Manager will handle all repairs and maintenance issues related to the property. The Manager will always strive to keep such costs to a minimum. For this the Manager will either hire outside contractors or have their own staff fix any issues at cost. Also the manager will assess if the repair is truly needed and if the renter is liable. Under normal circumstances an estimate of the costs will be presented to the Owner for approval. However for small issues (for example fixing a doorbell) and in emergency situations (for example a water leak) the Manager may need to go ahead with the repairs without the Owner's approval. However in such cases the Owner will be notified at the soonest possible opportunity.<br />
<br />
To keep costs low some work can be done in-house. When outside contractors are used the Manager will always try to get the best price. No gifts will be accepted from contractors if that could lead in any way to a conflict of interest.<br />
<br />
When managing buildings the owner will not be charged for inspections of the common spaces. However for any cleaning of common spaces the owner will be charged the actual cleaning fees. The manager will use part-time cleaners instead of cleaning companies to reduce the cost of this when possible.<br />
<br />
==== Find Renters ====<br />
<br />
In case of vacancy the Manager will advertise the property widely and make sure any prospective renters get quick and easy access to view the property. The Manager will advise the Owner about the appropriate market rent and deposit. However the Owner has final say in this.<br />
<br />
==== Rental Contract Cancellations ====<br />
After a renter cancels the lease the Manager will inspect the property and refund the renter the deposit minus any damages and cleaning fees that can legally be claimed. As the deposit is held by the Owner, if the balance is low it might be necessary that the Owner makes a money transfer to the Manager to be able to make the refund. The Manager will get the apartment advertised, cleaned up and ready for the next tenant. The manager will strive to get this done within 3 weeks. However as with so many things in Japan things can take more time so it is not guaranteed that it will be done so quickly.<br />
<br />
==== Rental Contract Renewals ====<br />
In Japan most rental contracts are for 2 years with an option for renewal. It is very hard legally to force a renter to leave, especially if the rent is being paid on time. As a result the Manager will always offer a renter a renewal. At that time the rent can be negotiated. If the market rent is above the actual rent the Manager will try to negotiate a rent increase.<br />
<br />
If the Owner is planning to use the apartment as a primary residence and if the renter cooperates it might be possible to ask the renter to leave. This needs to be done at least 6 months before the rental contract expires. If the renter does not cooperate and pays the rent timely the Manager will not pursue any means of forcefully removing such a renter.<br />
<br />
==== Pay Bills ====<br />
The Manager will pay all bills related to the property using the rental income. This included building and association fees, utilities (when payable by the Owner), insurances fees, acquisition and annual possession tax, utilities, etc..<br />
<br />
For some buildings, it is not possible to set up automatic payments of the monthly building fees. To avoid excessive transfer fees and to save the amount of time the Manager spends at the bank in such cases payments are made once a year, usually at the beginning.<br />
<br />
==== Fund Transfers ====<br />
<br />
The Manager will transfer all profits to the Owner. This can be done by bank transfer or cash. The transfers will be made anytime the Owner makes a request. The costs of such transfers will be charged to the Owner.<br />
<br />
Japan domestic bank transfers are 275 yen per transfer. International transfers however cost 3,500 yen (see [http://akasakarealestate.com/wiki/index.php/Transaction_Costs#Remittance_Fees Remittance Fees]) on the Japanese side and possible another 2,500 fee on the overseas side. Also in Japan such transfers get the attention from the authorities. We regularly get requests to provide documentation for compliance with the anti-money-laundering (AML) law. This can be over a 100 pages for a single transfer and sometimes must include copies of the property titles, sales contracts, rental contracts and full transaction records for all properties managed.<br />
<br />
To minimize the bureaucratic burden the Manager keeps the right to charge the Owner for the time it takes to make the transfer in case the Owner requests more than two international transfers a year, for more than 4 domestic transfers per year or for international transfers below 1 million yen. However the Manager will never charge the Owner for transfers over 2 million yen.<br />
<br />
==== Reporting ====<br />
The reporting will be done through the website of the Manager. At any time a recent transaction report, profit and loss statement, balance sheet and rent roll will be available online. If the Owner chooses so he can receive automatic email alerts notifying him of new transactions like incoming rent, missed rent payments and rental contract renewals/cancellations.<br />
<br />
The Manager will keep all the records at his office. The Owner or his representative can inspect these records anytime by making an appointment and coming over to the office of the Manager. After purchase the original property title will be sent to the Owner by the judicial scrivener handling the transaction unless the Owner specifies otherwise. The Owner can also at any time request copies of important documents such as sales and rental contracts.<br />
<br />
==== Income Tax Filing ====<br />
<br />
At the latest by the end of February of each year the Manager will prepare the tax forms related to the property income required for filing personal income taxes. These forms will include a calculation for the taxable depreciation of the property. At that time the Owner or his accountant can then use these forms for the income tax filing. This is easy, even for someone who doesn't speak Japanese as it will require only one number to be copied onto the main income tax form. On top of that there is also a profit and loss statement available online. If the Owner is a non-resident the Manager will also file the non-resident income tax on behalf of the Owner as long as the rental income from properties managed by the Manager is the only income. The Manager will also apply for any tax refunds if the owner is eligible and handle any audits of the real estate income by the tax office.<br />
<br />
== Liability of Manager ==<br />
<br />
Owner hereby agrees to hold Manager harmless from any and all claims, charges, debts, demands and lawsuits, including attorney's fees related to his management of the herein-described property, and from any liability for injury on or about the property which may be suffered by any employee, tenant or guest upon the property.<br />
<br />
== Compensation of Manager ==<br />
<br />
The Manager will charge the Owner 5.50% (5% plus sales tax) of the collected rent.<br />
<br />
For finding a new renter the Manager will receive one month rent from the Owner. However often this is paid for by the renter in the form of one month key money. In case it takes a long time to find the renter the Manager will offer a part or all of this finder's fee to local agents as extra incentive to find renter and reduce the length of the vacancy. If the Manager finds a renter himself he can charge one month commission to the renter as well. However the Manager will always allow other real estate agents to find renters and will not discriminate against such agents.<br />
<br />
If the Manager can collect a renewal fee from the renter he will keep this fee. However if an existing rental contract does not specify a renewal fee the Manager will not change the contract offered to the renter and the Manager will provide the rental renewal contract free of charge. The renewal fee will never exceed more than one month per two year renewal period.<br />
<br />
In case of a new rental application occasionally a renter will require a guarantor company. The guarantor company offers a discount to real estate agents paying the guarantor fees. These discounts are not offered to individual renters. The Manager can keep this difference. <br />
<br />
The Manager will charge 16,500 yen (15,000 + 10% sales tax) for preparing the documentation for a non-resident income tax filing. If the tax filing is done by the Owner himself the document preparation is free of charge.<br />
<br />
The Manager will not pay out any interest over the balance the Owner holds with the Manager. Any interest received from the bank therefore is income for the Manager. However currently the interest rates are so low that the 2012 interest income was just 1,039 yen.<br />
<br />
Besides the compensation mentioned above the manager will not accept any gifts in any form from contractors, renters or anyone else if it could lead to a potential conflict of interest with the Owner.<br />
<br />
If the Manager changes the fee structure he will give the Owner at least 3 months notice of this.<br />
<br />
== Termination ==<br />
<br />
The agreement can be terminated in writing by either party by providing written notice which will take effect within 1 month upon receipt of the termination notice. This Agreement may also be terminated by mutual agreement of the parties at any time. There is no notice period and no penalty will be charged. The Owner will notify the renters, the building association and the tax office of the change in management. The Manager will hand over the property documentation immediately. Upon termination the Owner and Manager will settle accounts at the soonest opportunity. <br />
<br />
In case the Manager is not capable of executing his duties (for example due to accident or bankruptcy) the Manager will bring all Owners into contact with each other so that they can look for another property manager collectively. The Owner gives permission to provide his email address to other Owners for this case only.</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=Property_Management_Agreement&diff=39Property Management Agreement2020-06-04T04:04:37Z<p>Erik: /* Fund Transfers */</p>
<hr />
<div>== Responsibilities of Manager ==<br />
<br />
The Owner appoints the Manager as his lawful agent and attorney-in-fact with full authority to do any and all lawful things necessary for the fulfillment of this Agreement, including the following: <br />
<br />
==== Collect rent ====<br />
The Manager collects the rent on behalf of the Owner. If the renter does not pay the rent the Manager will use all legal means to pursue the renter. The Manager will report a delinquent renter quickly to the guarantor or guarantor company. The Manager will contact the renter and any contact person related to the renter to make clear the rent must be paid. If that does not resolve the issue the Manager will visit the renter personally. In Japan it is not allowed to threaten the renter, change the locks or in other ways intimidate a delinquent renter. Doing so could result in legal complications so the Manager will avoid any such action if possible. Instead in the extreme situation that a renter has a delay of over 3 months the Manager will negotiate with the renter about him leaving voluntary to avoid costly litigation. If such negotiations fail the Manager will sue the renter on behalf of the Owner. The costs of this would be for the Owner. In Japan this can take an extra 6 months and about 1 million yen in legal fees.<br />
<br />
==== Repairs and Maintenance ====<br />
The Manager will handle all repairs and maintenance issues related to the property. The Manager will always strive to keep such costs to a minimum. For this the Manager will either hire outside contractors or have their own staff fix any issues at cost. Also the manager will assess if the repair is truly needed and if the renter is liable. Under normal circumstances an estimate of the costs will be presented to the Owner for approval. However for small issues (for example fixing a doorbell) and in emergency situations (for example a water leak) the Manager may need to go ahead with the repairs without the Owner's approval. However in such cases the Owner will be notified at the soonest possible opportunity.<br />
<br />
To keep costs low some work can be done in-house. When outside contractors are used the Manager will always try to get the best price. No gifts will be accepted from contractors if that could lead in any way to a conflict of interest.<br />
<br />
When managing buildings the owner will not be charged for inspections of the common spaces. However for any cleaning of common spaces the owner will be charged the actual cleaning fees. The manager will use part-time cleaners instead of cleaning companies to reduce the cost of this when possible.<br />
<br />
==== Find Renters ====<br />
<br />
In case of vacancy the Manager will advertise the property widely and make sure any prospective renters get quick and easy access to view the property. The Manager will advise the Owner about the appropriate market rent and deposit. However the Owner has final say in this.<br />
<br />
==== Rental Contract Cancellations ====<br />
After a renter cancels the lease the Manager will inspect the property and refund the renter the deposit minus any damages and cleaning fees that can legally be claimed. As the deposit is held by the Owner, if the balance is low it might be necessary that the Owner makes a money transfer to the Manager to be able to make the refund. The Manager will get the apartment advertised, cleaned up and ready for the next tenant. The manager will strive to get this done within 3 weeks. However as with so many things in Japan things can take more time so it is not guaranteed that it will be done so quickly.<br />
<br />
==== Rental Contract Renewals ====<br />
In Japan most rental contracts are for 2 years with an option for renewal. It is very hard legally to force a renter to leave, especially if the rent is being paid on time. As a result the Manager will always offer a renter a renewal. At that time the rent can be negotiated. If the market rent is above the actual rent the Manager will try to negotiate a rent increase.<br />
<br />
If the Owner is planning to use the apartment as a primary residence and if the renter cooperates it might be possible to ask the renter to leave. This needs to be done at least 6 months before the rental contract expires. If the renter does not cooperate and pays the rent timely the Manager will not pursue any means of forcefully removing such a renter.<br />
<br />
==== Pay Bills ====<br />
The Manager will pay all bills related to the property using the rental income. This included building and association fees, utilities (when payable by the Owner), insurances fees, acquisition and annual possession tax, utilities, etc..<br />
<br />
For some buildings, it is not possible to set up automatic payments of the monthly building fees. To avoid excessive transfer fees and to save the amount of time the Manager spends at the bank in such cases payments are made once a year, usually at the beginning.<br />
<br />
==== Fund Transfers ====<br />
<br />
The Manager will transfer all profits to the Owner. This can be done by bank transfer or cash. The transfers will be made anytime the Owner makes a request. The costs of such transfers will be charged to the Owner.<br />
<br />
Japan domestic bank transfers are 270 yen per transfer. International transfers however cost 3,500 yen (see [http://akasakarealestate.com/wiki/index.php/Transaction_Costs#Remittance_Fees Remittance Fees]) on the Japanese side and possible another 2,500 fee on the overseas side. Also in Japan such transfers get the attention from the authorities. We regularly get requests to provide documentation for compliance with the anti-money-laundering (AML) law. This can be over a 100 pages for a single transfer and sometimes must include copies of the property titles, sales contracts, rental contracts and full transaction records for all properties managed.<br />
<br />
To minimize the bureaucratic burden the Manager keeps the right to charge the Owner for the time it takes to make the transfer in case the Owner requests more than two international transfers a year, for more than 4 domestic transfers per year or for international transfers below 1 million yen. However the Manager will never charge the Owner for transfers over 2 million yen.<br />
<br />
==== Reporting ====<br />
The reporting will be done through the website of the Manager. At any time a recent transaction report, profit and loss statement, balance sheet and rent roll will be available online. If the Owner chooses so he can receive automatic email alerts notifying him of new transactions like incoming rent, missed rent payments and rental contract renewals/cancellations.<br />
<br />
The Manager will keep all the records at his office. The Owner or his representative can inspect these records anytime by making an appointment and coming over to the office of the Manager. After purchase the original property title will be sent to the Owner by the judicial scrivener handling the transaction unless the Owner specifies otherwise. The Owner can also at any time request copies of important documents such as sales and rental contracts.<br />
<br />
==== Income Tax Filing ====<br />
<br />
At the latest by the end of February of each year the Manager will prepare the tax forms related to the property income required for filing personal income taxes. These forms will include a calculation for the taxable depreciation of the property. At that time the Owner or his accountant can then use these forms for the income tax filing. This is easy, even for someone who doesn't speak Japanese as it will require only one number to be copied onto the main income tax form. On top of that there is also a profit and loss statement available online. If the Owner is a non-resident the Manager will also file the non-resident income tax on behalf of the Owner as long as the rental income from properties managed by the Manager is the only income. The Manager will also apply for any tax refunds if the owner is eligible and handle any audits of the real estate income by the tax office.<br />
<br />
== Liability of Manager ==<br />
<br />
Owner hereby agrees to hold Manager harmless from any and all claims, charges, debts, demands and lawsuits, including attorney's fees related to his management of the herein-described property, and from any liability for injury on or about the property which may be suffered by any employee, tenant or guest upon the property.<br />
<br />
== Compensation of Manager ==<br />
<br />
The Manager will charge the Owner 5.50% (5% plus sales tax) of the collected rent.<br />
<br />
For finding a new renter the Manager will receive one month rent from the Owner. However often this is paid for by the renter in the form of one month key money. In case it takes a long time to find the renter the Manager will offer a part or all of this finder's fee to local agents as extra incentive to find renter and reduce the length of the vacancy. If the Manager finds a renter himself he can charge one month commission to the renter as well. However the Manager will always allow other real estate agents to find renters and will not discriminate against such agents.<br />
<br />
If the Manager can collect a renewal fee from the renter he will keep this fee. However if an existing rental contract does not specify a renewal fee the Manager will not change the contract offered to the renter and the Manager will provide the rental renewal contract free of charge. The renewal fee will never exceed more than one month per two year renewal period.<br />
<br />
In case of a new rental application occasionally a renter will require a guarantor company. The guarantor company offers a discount to real estate agents paying the guarantor fees. These discounts are not offered to individual renters. The Manager can keep this difference. <br />
<br />
The Manager will charge 16,500 yen (15,000 + 10% sales tax) for preparing the documentation for a non-resident income tax filing. If the tax filing is done by the Owner himself the document preparation is free of charge.<br />
<br />
The Manager will not pay out any interest over the balance the Owner holds with the Manager. Any interest received from the bank therefore is income for the Manager. However currently the interest rates are so low that the 2012 interest income was just 1,039 yen.<br />
<br />
Besides the compensation mentioned above the manager will not accept any gifts in any form from contractors, renters or anyone else if it could lead to a potential conflict of interest with the Owner.<br />
<br />
If the Manager changes the fee structure he will give the Owner at least 3 months notice of this.<br />
<br />
== Termination ==<br />
<br />
The agreement can be terminated in writing by either party by providing written notice which will take effect within 1 month upon receipt of the termination notice. This Agreement may also be terminated by mutual agreement of the parties at any time. There is no notice period and no penalty will be charged. The Owner will notify the renters, the building association and the tax office of the change in management. The Manager will hand over the property documentation immediately. Upon termination the Owner and Manager will settle accounts at the soonest opportunity. <br />
<br />
In case the Manager is not capable of executing his duties (for example due to accident or bankruptcy) the Manager will bring all Owners into contact with each other so that they can look for another property manager collectively. The Owner gives permission to provide his email address to other Owners for this case only.</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=The_Buying_Process&diff=38The Buying Process2020-05-04T03:49:02Z<p>Erik: </p>
<hr />
<div>== Finding Property ==<br />
<br />
== Bidding ==<br />
<br />
In the current market it is difficult to negotiate the price down as there are many bidders and almost no sellers. However in a normal market a discount of 5 to 10% of the asking price is reasonable, but it really depends on the property and the seller. Some properties are priced very reasonable and in such a case you should bid the asking price immediately, as otherwise someone else will take it. Other properties are priced too high and in such cases asking a discount of 20 to 30% is prudent. But in times when market prices are moving upwards it is common not to be able to get a discount at all.<br />
<br />
Normally we start with making an initial low bid without asking for details about the property. Make sure not to bid too low: it offends the seller and you will not be considered anymore afterward.<br />
If the seller is interested, ask for more documentation and raise the bid.<br />
Be patient and respectful: most sellers are in their 70s and they are selling due to their advanced age, not because there is anything wrong with the property.<br />
<br />
== Due Diligence ==<br />
<br />
When a bid is accepted the seller’s broker will prepare the contract. We then proceed with the due diligence. During this process we check all the relevant details of the property. This includes the land, building maintenance records and management, rental payments (if any), zoning, etc.. When this is completed we provide a single page summary of the contract and the conclusions of the due diligence. This process normally takes 2-3 weeks. However it depends on how quickly the seller provides the required documentation.<br />
<br />
== The Contract ==<br />
<br />
You can sign the contract either with a registered seal (hanko) or your signature. <br />
You will need proof of residency. For Japanese citizens this is called a [http://en.wikipedia.org/wiki/J%C5%ABminhy%C5%8D juminhyo], for foreign residents in Japan it is a touroku genpyou kisai jikou syoumeisyo (登録原票記載事項証明書). For non-residents a notarized [[statutory declaration]] is required for which we will provide the template. The scrivener who handles the title transfer will confirm your identity and intentions. In case where the settlement is not done at contract date the buyer normally has to put up a 10% deposit. This deposit does not go into escrow. Therefore we check if the owner has excessive mortgage obligations or other debts related to the property. If that is the case we request the selling broker to hold the deposit until closing<br />
<br />
== Settlement ==<br />
At the closing day everyone will come together. The transfer of the title deed and the payments will be made simultaneously.<br />
Large payments are normally done by domestic bank transfer, smaller ones by registered check and sometimes even in cash. If you can not make it to the closing, everything can be done through a Power of Attorney as well.<br />
<br />
=== Non resident bank account in Japan ===<br />
<br />
No bank in Japan is allowed to open a regular bank account for a non-resident without marking it as an overseas account. This means that anyone transferring funds into such an account would have to use the international wire transfer form and pay the associated 6,500 yen transfer fee per transaction. And recently banks are increasingly checking the residency status of existing account holders as well. Several clients had their accounts closed after they moved out of Japan. To get a local bank account as a non-resident you would have to set up a local corporation, with all the tax and accounting consequences.<br />
<br />
Non-residents therefore can have a trusted friend come to the closing and make the payment. Otherwise they can transfer the funds to Akasaka Real Estate a few days before. For the [http://www.akasakarealestate.com/wiki/index.php/Property_Management_Agreeement property management] there is no need to get a Japanese bank account as Akasaka Real Estate will handle all the transactions.<br />
<br />
== The Title ==<br />
After the closing the scrivener will register the new owner with the local registration office. They issue a new title normally within 2-3 weeks. The scrivener can send the title to the new owner. For owners living abroad we recommend that we keep the title in the safe at our office as some overseas postal services are not reliable enough to be entrusted with such a hard to replace document. If required, we can send a title with a special mail delivery, but this will come with an extra cost and still is not without risk of losing the title.</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=Main_Page&diff=37Main Page2020-03-09T05:16:00Z<p>Erik: </p>
<hr />
<div>Welcome to JapanRealEstateWiki. <br />
<br />
Here you will find information about buying and managing residential real estate in Japan.<br />
<br />
* [[Investment]]<br />
* [[Transaction Costs]]<br />
* [[Financing]]<br />
* [[Taxes]]<br />
* [[Property Valuation]]<br />
* [[Property Management]]<br />
* [[The Buying Process]]<br />
* [[User's Guide akasakarealestate.com]]<br />
* [[The Yen Foreign Exchange Rate]]<br />
* [[ARE Price Index (Central Tokyo)]]<br />
* [[Our Company]]<br />
* [[Links]]</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=Links&diff=36Links2020-03-08T05:55:40Z<p>Erik: Created page with "= Akasaka Real Estate in the Press = {| border="0" cellpadding="0" cellspacing="0" |- |October 14 2015 || |width="10px"| || [http://mobile.nytimes.com/2015/10/15/realesta..."</p>
<hr />
<div>= Akasaka Real Estate in the Press =<br />
<br />
{| border="0" cellpadding="0" cellspacing="0" <br />
<br />
|-<br />
|October 14 2015 <br />
||<br />
|width="10px"|<br />
|| <br />
[http://mobile.nytimes.com/2015/10/15/realestate/house-hunting-in-in-japan.html?_r=0 New York Times: House hunting in ... Japan]<br />
|-<br />
|November 23 2013 <br />
||<br />
|width="10px"|<br />
|| <br />
[http://beaconreports.net/reaching-yield-tokyos-buy-let-market/# Beacon Reports: Reaching for yield in Tokyo’s buy-to-let market]<br />
|-<br />
|June 18 2013 <br />
||<br />
|width="10px"|<br />
|| <br />
[http://www.scmp.com/comment/blogs/article/1263711/tokyo-property-market-set-olympic-bounce South China Morning Post: Tokyo property market set for Olympic bounce]<br />
|-<br />
|December 26 2012 <br />
||<br />
|width="10px"|<br />
|| <br />
[http://www.nytimes.com/2012/12/27/greathomesanddestinations/real-estate-in-japan.html?_r=0 New York Times: House Hunting in ... Japan]<br />
|-<br />
|November 28 2011 <br />
||<br />
|width="10px"|<br />
|| <br />
[http://www.realestate.co.jp/2011/11/28/webinar-upload-how-to-spot-a-good-investment-in-tokyo-real-estate-with-erik-oskamp/ realestate.co.jp: Live Webinar: How to Spot a Good Investment in Tokyo Real Estate with Erik Oskamp]<br />
|-<br />
|November 14 2011<br />
||<br />
|width="10px"|<br />
|| <br />
[http://akasakarealestate.com/articles/FD%20JAPAN%20VASTGOED%20OSKAMP%2014-11-2011.pdf Het Financieele Dagblad: Vastgoedmarkt Japan klautert uit dal na domper door aardbeving (in Dutch)]<br />
|-<br />
|February 25 2011<br />
||<br />
|width="10px"|<br />
|| <br />
[http://metropolis.co.jp/specials/883/883_top.htm Metropolis: Real Estate Special]<br />
|-<br />
|February 25 2011 <br />
||<br />
|width="10px"|<br />
|| <br />
[http://www.realestate.co.jp/2011/02/28/practical-guide-to-the-tokyo-real-estate-market-webinar-upload/ realestate.co.jp: Live Webinar: A Practical Investor’s Guide to the Tokyo Real Estate Market]<br />
|-<br />
|February 7 2011 <br />
||<br />
|width="10px"|<br />
|| <br />
[http://www.japantoday.com/category/commentary/view/how-to-make-money-on-property-in-tokyo JapanToday: How to make money on property in Tokyo]<br />
|-<br />
|January 20 2011 <br />
||<br />
|width="10px"|<br />
|| <br />
[http://www.realestate.co.jp/2011/01/20/reasons-to-invest-in-residential-property-in-tokyo-part-1/ realestate.co.jp: Reasons to invest in residential property in Tokyo]<br />
|-<br />
|October 28 2010 <br />
||<br />
|width="10px"|<br />
|| <br />
[http://www.ftchinese.com/story/001035198?page=2 Financial Times China: 该去东京投资房产了]<br />
|-<br />
|September 22 2010<br />
||<br />
|width="10px"|<br />
|| <br />
[http://www.globalpropertyguide.com/news-What-you-need-to-know-about-Tokyo-residential-property-investment-447 Global Property Guide: What you need to know about Tokyo residential property investment]<br />
|-<br />
|September 17 2010 <br />
||<br />
|width="10px"|<br />
|| <br />
[http://www.ft.com/cms/s/2/249881ba-c11e-11df-afe0-00144feab49a.html Financial Times: Tokyo turns to tomorrow]<br />
|-<br />
|March 20 2009 <br />
||<br />
|width="10px"|<br />
|| <br />
[http://archive.metropolis.co.jp/specials/782/782_top.htm Metropolis: Real Estate Special]<br />
|-<br />
|October 3 2008 <br />
||<br />
|width="10px"|<br />
|| <br />
[http://metropolis.co.jp/specials/758/758_top.htm Metropolis: Real Estate Special]<br />
|}<br />
<br />
= Other Real Estate Articles =<br />
[http://www.kensetsu.metro.tokyo.jp/suigai_taisaku/index/menu03.htm Tokyo Flood Hazard maps] (In japanese)<br />
<br />
[http://doboku.metro.tokyo.jp/start/03-jyouhou/ekijyouka/lhmap1.aspx Tokyo Liquefaction Map]<br />
<br />
[http://www.akasakarealestate.com/articles/PMKan092010.pdf Nikkei Real Estate Market Report: "Prime Minister Kan: A Little-Known Expert on Land Policy"]<br />
<br />
[http://www.joneslanglasalle.com/pages/greti_home.aspx Jones Lang LaSalle: "Real Estate Transparency"]<br />
<br />
[http://www.joneslanglasalle.com/Pages/GRETI_cameo_japanskorea.aspx Jones Lang LaSalle: "Japan and South Korea: Real estate transparency lags economic development"]<br />
<br />
Aug 31 2013 [http://www.economist.com/news/finance-and-economics/21584361-america-surges-much-europe-sinks-mixed-messages?zid=295&ah=0bca374e65f2354d553956ea65f756e0 Economist "Global house prices"]<br />
<br />
Jul 7 2011 [http://www.economist.com/node/18925999 Economist "Global house prices"]<br />
<br />
Mar 3 2011 [http://www.economist.com/node/18285595 Economist "Global house prices"]<br />
<br />
Oct 21 2010 [http://www.economist.com/node/17311841?story_id=17311841 Economist "Global house prices"]<br />
<br />
Dec 30 2009 [http://www.economist.com/node/15179388?story_id=15179388 Economist: "Ratio rentals"]<br />
<br />
[http://www.globalpropertyguide.com/Asia/Japan Global Property Guide: "Japan"]<br />
<br />
[http://www.lij.jp/index.phtml?page=lij_english/monthly_data_of_real_estate_economy/list The Land Institute of Japan: "Monthly Data of Real Estate Economy"]<br />
<br />
[http://www.breitbart.com/article.php?id=D9IK0THO0&show_article=1 Breithart: "Property purchases with foreign capital may be regulated"]<br />
<br />
[http://injapan.gaijinpot.com/2010/09/30/tokyo-investment-properties-what-to-look-for GaijinPot: "Tokyo Investment Properties; What To Look For"]<br />
<br />
Oct 18 2010 [http://www.japantoday.com/category/politics/view/kan-to-review-rules-on-land-acquisitions-by-foreigners Japan Today: Kan to review rules on land acquisitions by foreigners]<br />
<br />
[http://landprice.m47.jp/ Land Price Survey]<br />
<br />
[http://tochi.mlit.go.jp/english/index.html Ministry of Land, Infrastructure, Transport and Tourism: "Land and Real Property in Japan"]<br />
<br />
[http://www.rosenka.nta.go.jp/ Rosenka] The official land valuation published by the National Tax Administration Agency (Japanese)<br />
<br />
[http://www.the-earth.tv/TheEarth/map?iconId=block_diff_market&lng=139.688788&lat=35.650828&mapTypeNo=3&zoomLevel=13 The Earth]: "Price, Yield, <br />
[http://www.the-earth.tv/TheEarth/map?iconId=populations&lng=139.755964&lat=35.671051&mapTypeNo=3&zoomLevel=16 Population],<br />
[http://www.the-earth.tv/TheEarth/map?iconId=disaster&lng=139.745447&lat=35.65861&mapTypeNo=2&zoomLevel=5 Fault Line] and [http://www.the-earth.tv/TheEarth/map?iconId=useZone&lng=139.701365&lat=35.658517&mapTypeNo=1&zoomLevel=16 Zoning maps]" (Japanese)<br />
<br />
[http://translate.google.com/translate?hl=en&sl=ja&tl=en&u=http%3A%2F%2Fj-jis.com%2Fdanso%2F JIS: Fault line details]<br />
<br />
[http://www.jishin.go.jp/main/chousa/09_yosokuchizu/b1_kanto.pdf JIS: Probabilistic seismic hazard maps for the Tokyo area] (Japanese)<br />
<br />
[http://www.shiawasehome-eigoban.com/saisinjyouhou.1.html Shiawase Home: Beautiful old houses for sale in Niigata]<br />
<br />
[http://www.interlinknagoya.com Interlink: A foreign owned real estate company in Nagoya]<br />
<br />
[http://www.ex-pat-apartments.com/index.html Expat Apartments: Real Estate agent in Osaka specialized in renting to foreigners]<br />
<br />
[http://www.ft.com/cms/s/0/e5615554-592a-11df-adc3-00144feab49a.html Financial Times: "Reasons to fall for Japanese love hotel fundraiser"]<br />
<br />
Nov 30 2010 [http://japantoday.com/category/executive-impact/view/real-estate-in-japan-a-good-time-to-buy-or-not Japan Today: "Real estate in Japan: A good time to buy or not?"]<br />
<br />
[http://www.realmarkits.com./realestate/propertyvalueovertime.html#herengracht Herengracht Location Value Index], [http://www.akasakarealestate.com/articles/herengracht.jpg chart] and accompanying article in New York Times: [http://www.nytimes.com/2006/03/05/magazine/305tulips_shorto.1.html?pagewanted=all This Very, Very Old House ]<br />
<br />
[http://www.realestate.co.jp/2010/12/07/introduction-to-buying-property-in-japan-webinar-upload/ Webinar with Chris Dillon, the author of 'Landed: The guide to buying property in Japan']<br />
<br />
[http://squeeze-box.ca/?cat=57 Andrew Woolner's blog: "House Hunting in Japan"]<br />
<br />
[http://www.bbc.co.uk/news/world-asia-pacific-12397216 BBC: "The stigma of Japan's 'suicide apartments'"]<br />
<br />
[http://www.bloomberg.com/news/2011-03-08/billionaire-sons-aspire-to-make-snowbound-niseko-asia-s-aspen.html Bloomberg: "Billionaire Sons Aspire to Make Snowbound Niseko Asia's Aspen"]<br />
<br />
[http://www.gtjapan.com/english/pdf/publications/taxpub/20100601_Taxation_of_Real_Property_Investment_in_Japan.pdf Grant Thorton: "Taxation of Real Property Investment in Japan"]<br />
<br />
[http://www.gtjapan.com/english/pdf/publications/taxpub/200810_JapanRealEstatePropertyTaxGuide.pdf Grant Thorton: "Investing in real estate in Japan"]<br />
<br />
[http://www.tse.or.jp/english/market/data/homeprice_indices/index.html TSE Home Price Indices]<br />
<br />
[http://japantax.org/?page_id=36 The Japan Tax Site: "The Japanese taxation of real estate income for individuals"]<br />
<br />
[http://www.oshimaland.co.jp/index_en.html Oshimaland: "Map of properties where violent deaths and suicides occurred"]<br />
<br />
[http://www.ipdindex.co.jp/library/rrpi.html IPD/RECRUIT Residential Index]<br />
<br />
[http://to-ekijoukayosoku.jp/start/03-jyouhou/ekijyouka/yosokuzu.aspx Liquefaction Risk Map]<br />
<br />
[http://www.toshiseibi.metro.tokyo.jp/bosai/chousa_6/home.htm Earthquake Hazard Map]<br />
<br />
= Japan Links =<br />
<br />
[http://www.lydayfinancialplanning.com/ John Lyday Financial Planning]<br />
<br />
[http://www.japan-guide.com/e/e2029_reservations.html Making online reservations at hotels and guesthouses]<br />
<br />
[http://www.rentafonejapan.com/Cost-Comparison.html Cost comparison mobile phone rental]<br />
<br />
[http://www.gtjapan.com/english/pdf/doing/2010_doing_b_j.pdf Grant Thornton: "Doing business in japan"]</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=File:Oskamp.jpg&diff=35File:Oskamp.jpg2020-03-08T05:55:24Z<p>Erik: </p>
<hr />
<div></div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=Our_Company&diff=34Our Company2020-03-08T05:55:15Z<p>Erik: Created page with "Akasaka Real Estate focuses on helping foreigners buy property in Tokyo, including both primary residences and investment properties. Other services include property managemen..."</p>
<hr />
<div>Akasaka Real Estate focuses on helping foreigners buy property in Tokyo, including both primary residences and investment properties. Other services include property management, help with obtaining financing, and organizing renovations. Akasaka Real Estate’s website also features property listings translated into English, as well as detailed statistics on the local market.<br />
<br />
<br />
== Team ==<br />
<br />
Akasaka Real Estate has assembled a team of seasoned real estate professionals with a wealth of knowledge and experience to draw upon when performing real estate brokerage, investment, consulting and management.<br />
<br />
=== Erik Oskamp ===<br />
'''Founder/President'''<br />
<br />
[[image:oskamp.jpg|right|150px|x]]<br />
<br />
Erik Oskamp came to Japan in 2004 and applied for a mortgage the first day. Within 2 months of research he bought his first property in Tokyo, a 3 bedroom house in Shirokane. By 2005 he bought his first investment property. During this process Mr. Oskamp encountered a lack of transparency in the Japanese real estate market and so proceeded to built computer models to assist with the statistical analysis. By 2006 he was able to realize his first capital gains with a 60% profit on the house in Shirokane. This encouraged him to take a more serious look at real estate. When many friends and colleagues started asking for information he realized the need for a real estate agency specialized in helping foreigners dealing with the Japanese market. He started Akasaka Real Estate in September 2007. He took advantage of the financial crisis by purchasing more properties in the dark days of early 2009. By 2010 many investors started following this strategy.<br />
<br />
Before Mr. Oskamp started Akasaka Real Estate he spent over 15 years working in finance for companies such as Credit Suisse, Citibank, UBS and Barclays in New York, London and Tokyo as well as his native Amsterdam. In his last position at Barclays he was working as a quantitative analyst, modeling the yen yield curve for swap traders. For his full resume look [http://www.akasakarealestate.com/articles/ErikOskamp.doc here].<br />
<br />
Mr. Oskamp divides his time between Tokyo, Manila, Hong Kong and Bangkok. He currently owns over two dozen properties in Japan, but rents the apartment he lives in. In his rare free time you might find him at the beach with his daughters or enjoying [http://www.oskamp.com/TRAVELING.html traveling].<br />
<br />
=== Yuko Tsuihiji ===<br />
'''Property Manager'''<br />
<br />
Yuko Tsuhiji joined Akasaka Real Estate in February 2010. Prior she worked for about 10 years for a small real estate agent in Tokyo. Her responsibilities include managing over 300 apartments. She loves the island of Palau and travels there every year.<br />
<br />
=== Chito Kera ===<br />
'''Licensed Realtor'''<br />
<br />
Chito Kera joined Akasaka Real Estate in October 2011. He has worked as a real estate agent for over 5 years as such has extensive experience with all aspects of real estate transactions. Kera-san speaks native Japanese and business level English.<br />
<br />
=== Akane Yokoo ===<br />
'''Property Manager'''<br />
<br />
=== Mio Yagi ===<br />
'''Bookkeeper'''<br />
<br />
=== Namihiko Wakabayashi ===<br />
<br />
In accordance with [http://www.globalhrbusiness.com/story.asp?sid=958 Japanese law] no information is made public about Mr Namihiko Wakabayashi's time with Akasaka Real Estate.</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=File:Recruit_index.jpg&diff=33File:Recruit index.jpg2020-03-08T05:54:33Z<p>Erik: </p>
<hr />
<div></div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=File:Comparison_ARE_Index_with_Land_Institute.jpg&diff=32File:Comparison ARE Index with Land Institute.jpg2020-03-08T05:54:12Z<p>Erik: == Summary ==
This data is compiled using the following sources:
* Akasaka Real Estate: ARE Price Index (Central Tokyo)
* The Land Institute of Japan: [http://www.lij.jp/index.phtml?page=lij_english/monthly_data_of_real_estate_economy/list Existing Condominium Sales in Tokyo Metropolitan Area]
The data and chart can be found in [http://www.akasakarealestate.com/articles/Comparison%20ARE%20Index%20vs%20Land%20Institute%20of%20Japan.xls this] Excel file.</p>
<hr />
<div>== Summary ==<br />
This data is compiled using the following sources:<br />
<br />
* Akasaka Real Estate: [[ARE Price Index (Central Tokyo)]]<br />
* The Land Institute of Japan: [http://www.lij.jp/index.phtml?page=lij_english/monthly_data_of_real_estate_economy/list Existing Condominium Sales in Tokyo Metropolitan Area]<br />
<br />
The data and chart can be found in [http://www.akasakarealestate.com/articles/Comparison%20ARE%20Index%20vs%20Land%20Institute%20of%20Japan.xls this] Excel file.</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=File:Quadraticregression.gif&diff=31File:Quadraticregression.gif2020-03-08T05:53:48Z<p>Erik: == Summary ==
The latest prices can be found here: [http://www.akasakarealestate.com/main.pl?page=chart.htm&chart_type=Detailed&ward=Custom&ward_custom=ward0x200x3D0x200x27Chiyoda-ku0x2CChuo-ku0x2CMinato-ku0x2CShibuya-ku0x27&sort=Price&sortorder=]</p>
<hr />
<div>== Summary ==<br />
The latest prices can be found here: [http://www.akasakarealestate.com/main.pl?page=chart.htm&chart_type=Detailed&ward=Custom&ward_custom=ward0x200x3D0x200x27Chiyoda-ku0x2CChuo-ku0x2CMinato-ku0x2CShibuya-ku0x27&sort=Price&sortorder=]</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=File:Average_age.gif&diff=30File:Average age.gif2020-03-08T05:53:19Z<p>Erik: == Summary ==
The latest prices can be found here: [http://www.akasakarealestate.com/main.pl?page=chart.htm&ward=Custom&ward_custom=ward0x200x3D0x200x27Chiyoda-ku0x2CChuo-ku0x2CMinato-ku0x2CShibuya-ku0x27&regression=None&points=30&y-axis=Age&sort=Price&sortorder=]</p>
<hr />
<div>== Summary ==<br />
The latest prices can be found here: [http://www.akasakarealestate.com/main.pl?page=chart.htm&ward=Custom&ward_custom=ward0x200x3D0x200x27Chiyoda-ku0x2CChuo-ku0x2CMinato-ku0x2CShibuya-ku0x27&regression=None&points=30&y-axis=Age&sort=Price&sortorder=]</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=File:Areindex.gif&diff=29File:Areindex.gif2020-03-08T05:52:49Z<p>Erik: == Summary ==
The latest prices can be found here: [http://www.akasakarealestate.com/main.pl?page=chart.htm&ward=Custom&ward_custom=ward0x200x3D0x200x27Chiyoda-ku0x2CChuo-ku0x2CMinato-ku0x2CShibuya-ku0x27&points=20&averaging=300x20Days&sort=Price&sortorder=]</p>
<hr />
<div>== Summary ==<br />
The latest prices can be found here: [http://www.akasakarealestate.com/main.pl?page=chart.htm&ward=Custom&ward_custom=ward0x200x3D0x200x27Chiyoda-ku0x2CChuo-ku0x2CMinato-ku0x2CShibuya-ku0x27&points=20&averaging=300x20Days&sort=Price&sortorder=]</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=ARE_Price_Index_(Central_Tokyo)&diff=28ARE Price Index (Central Tokyo)2020-03-08T05:52:31Z<p>Erik: Created page with "The Akasaka Real Estate Price Index indicates the latest trends in central Tokyo apartment prices. image:areindex.gif It shows the asking square meter price of an averag..."</p>
<hr />
<div>The Akasaka Real Estate Price Index indicates the latest trends in central Tokyo apartment prices.<br />
<br />
[[image:areindex.gif]]<br />
<br />
It shows the asking square meter price of an average 20 year old apartment in the 4 most central wards of Tokyo: Minato-ku, Shibuya-ku, Chiyoda-ku and Chuo-ku. It is updated several times a week and corrected for the age of the units on the market. It is not corrected for inflation.<br />
<br />
==== Time Series ====<br />
<br />
To get the updated time series for this chart click [http://www.akasakarealestate.com/main.pl?page=chart.htm&debug=timeseries&ward=Custom&ward_custom=ward0x200x3D0x200x27Chiyoda-ku0x2CChuo-ku0x2CMinato-ku0x2CShibuya-ku0x27&points=20&averaging=300x20Days&sort=Price&sortorder= here]. I will take a minute or two to generate.<br />
<br />
==== Asking Price ====<br />
<br />
In Japan there is no central registry of real estate transactions and as such the transaction prices are only sporadically known. There are however several websites listing properties on the market. For central Tokyo these data sources are comprehensive and the data set is rather reliable. Given that the discount on the asking price is fairly constant at about 5% of the lowest listed price it makes sense to use the largest and most reliable data-set in Tokyo to calculate the trends in property prices.<br />
<br />
==== Apartments ====<br />
<br />
Traditional ways of measuring property prices in Japan involve measuring land prices. The advantages of measuring apartment prices instead are:<br />
* In Tokyo there are many more apartments than pieces of land and houses for sale. With more data it is easier to create reliable statistics<br />
* Land prices are dependent on the zoning, size, shape of the lot and direction of the land. Apartments are more uniform and are therefore easier to compare. The valuation of land is more complex and is dependent on the personal view of the appraiser. This can also lead to bias.<br />
* There is almost no rental market for land and it is very limited for houses in Tokyo. There is however a large apartment rental market and so the same methodology can be used for measuring rents. As a result the rental ratio can be calculated very accurately as it is calculated on the same properties.<br />
* Most indexes of cities around the world are based on apartment prices and not on land prices. Measuring apartments in Tokyo makes international comparison easier.<br />
Houses in Japan normally depreciate completely within 20 to 30 years. House prices therefore reflect land value closely. Measuring house prices therefore suffers from the same disadvantages as measuring land prices.<br />
<br />
==== Removal of Outliers ====<br />
<br />
Listings with prices that are extremely outside the norm are automatically removed from the sample. Points with a square meter price more than 5 times higher or less than 5 times lower than average for their age are discarded.<br />
<br />
==== Correction for Age ====<br />
<br />
The average age of an apartment in Tokyo is not constant. The amount of construction fluctuates and as a result during boom times more new apartments come on the market than usual<br />
<br />
[[image:average_age.gif]]<br />
<br />
In the above chart you can see that the average age of an apartment for sale has slowly declined from 2005 and only started rising recently.<br />
<br />
As shown below on average new apartments are around 2 1/2 times more expensive than 30 year old ones. During boom times the average price of an apartment increases much more due to the newer units on the market. <br />
<br />
[[image:pricedepreciationakasaka.gif]]<br />
<br />
To counter this effect the price of an average 20 year old unit is chosen. Between 2005 and 2010 this is about the average age of an apartment in the involved area is about 20 year. The calculate the value of an average 20 year apartment every day a quadratic regression is done on all the available apartments in the involved area. The 20 year point on resulting regression is taken.<br />
<br />
[[image:quadraticregression.gif]]<br />
<br />
<br />
==== Comparison of the ARE Index with the Land Institute of Japan ====<br />
<br />
Every month the Land Institute of Japan brings out a [http://www.lij.jp/index.phtml?page=lij_english/monthly_data_of_real_estate_economy/list report] on Japanese real estate prices. In that report they publish the average square meter prices for "Existing Condominium Sales in Tokyo Metropolitan Area".<br />
<br />
The differences between those numbers and the ARE Index are:<br />
* The Land Institute takes into account all wards of Tokyo, which includes sub-urban areas like Adachi-ku and Nerima-ku. Prices in those areas move in a different pattern from the inner-city.<br />
* The Land Institute calculates their numbers based on only the reported transactions. This is likely only around 10 to 20% of the total. The ARE Index takes into account all apartments on the market.<br />
* The Land Institute does not filter out the effect of the average age. As a result it over-reported the price increases for all of Tokyo in 2006 and 2007 when many new buildings came on the market.<br />
<br />
[[image:comparison ARE Index with Land Institute.jpg]]<br />
<br />
From the chart it is clear the two indexes reported similar gains in 2006 and 2007. Even though the Land Institute over-reported the price increases in all of Tokyo, the overall numbers are comparable as the sub-urban areas did not increase so much. But around 2008 the indexes started to diverge. While the sub-urban areas were not so affected by the financial crisis, central Tokyo prices declined rapidly. At the same time the average age of the apartments stabilized as new construction was halted. Given that the Land Institute includes the sub-urban areas the difference between the two indexes became pronounced.<br />
<br />
Even with their differences both numbers though however are superior indicators compared to the Land Price statistics that are commonly reported internationally.<br />
<br />
==== IPD Recruit Residential Price Index (RRPI) ====<br />
<br />
This is a transaction price-based investment index using a hedonic regression. Factors considered in the RRPI calculation:<br />
# Floor space<br />
# Minute to the nearest station<br />
# Accessibility measured by minutes by train to the nearest train terminal<br />
# Building age<br />
# Balcony space<br />
# Number of units in building <br />
# Other characteristics<br />
<br />
It gives final asking prices in magazines or online prices in magazines or online, according to the RRPI description . It is monthly, and uses hedonic regression. An Excel file is available [http://www.ipdindex.co.jp/library/rrpi.html here].<br />
<br />
The resulting numbers seem reasonably correct. Compared to the ARE Index there is about a 3-4 month lag, clearly noticeable after the March 11 Earthquake. This index covers all of Tokyo so the price decline in 2011 is not as great as reported in the ARE Index, which covers just the central wards.<br />
<br />
<br />
[[image:recruit index.jpg]]</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=File:Jpy_usd_inflation_corrected.jpg&diff=27File:Jpy usd inflation corrected.jpg2020-03-08T05:52:16Z<p>Erik: </p>
<hr />
<div></div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=The_Yen_Foreign_Exchange_Rate&diff=26The Yen Foreign Exchange Rate2020-03-08T05:52:00Z<p>Erik: Created page with "To compare the value of two currencies it is important to correct for inflation. After all a US dollar now can buy significantly less than a decade ago. The following chart s..."</p>
<hr />
<div>To compare the value of two currencies it is important to correct for inflation. After all a US dollar now can buy significantly less than a decade ago. <br />
The following chart shows the exchange rate corrected by inflation as reported in the CPI.<br />
<br />
[[image:jpy usd inflation corrected.jpg]]<br />
<br />
Looking at this chart the yen currently looks seriously undervalued as it is way above it's long term mean. According to the [http://en.wikipedia.org/wiki/Big_Mac_Index Big Mac Index] by the [http://www.economist.com Economist] the yen is also undervalued [http://www.economist.com/node/16646178?story_id=16646178]. However according to an [http://www.voxeu.org/index.php?q=node/624 article] by David Weinstein the methodology to calculate the CPI in Japan differs from the US and results in an overstatement of inflation by 0.8% compared to the US. This would mean that the yen is even more undervalued. The average inflation corrected rate since the yen started floating after the [http://en.wikipedia.org/wiki/Plaza_Accord Plaza Accord] is 86.15.</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=User%27s_Guide_akasakarealestate.com&diff=25User's Guide akasakarealestate.com2020-03-08T05:51:46Z<p>Erik: Created page with "== User Registration == The advantage of registering as a user are: * When browsing listings, registered users see more information such as floor-plans, pictures and original..."</p>
<hr />
<div>== User Registration ==<br />
<br />
The advantage of registering as a user are:<br />
* When browsing listings, registered users see more information such as floor-plans, pictures and original Japanese advertisements.<br />
* Ability to set up an email alert, notifying the user of new and interesting properties.<br />
* Registered clients who bought property with Akasaka Real Estate can view the details of their account online.<br />
<br />
To register as a user follow the following steps:<br />
* On the [http://www.akasakarealestate.com main page] of Akasaka Real Estate click on 'Sign In' in the top right corner.<br />
* Select 'Register your email address now'. <br />
* Select a unique login name, enter your full email address and choose a password. Prefer to use a personal email address instead of a company email address. The password should be at least six characters. After this click on 'Create my account'.<br />
* Be patient for a few seconds while a confirmation email is sent to your email account. <br />
* Check your email account for a mail from Akasaka Real Estate. Open it and confirm it.<br />
<br />
Your account with Akasaka Real Estate is now set up. You can click on 'Sign In' in the top right corner to log in.<br />
<br />
== Browsing Listings ==<br />
<br />
== Charting ==<br />
<br />
== Email Alerts ==<br />
<br />
It is possible to get an update if a new property comes on the market or a price is changed. When searching for listings click on 'Set Email Alert' to get an email when something changes.<br />
<br />
== Listing Groups ==<br />
<br />
It is possible to put several property listings in a group and display them all on a single map. To create a group open up the property listing you want to put in that group. In the listing screen click on 'Group' and select as group 'New Group'.<br />
<br />
== Account Overview ==<br />
<br />
Available are the recent transaction details such as the rent received and maintenance paid, balance sheet and profit and loss statements. Only registered users can access their accounts. Once you are registered follow this [http://www.akasakarealestate.com/main.pl?page=account.htm link] or sign in and click on 'Account' in the top right corner to access the reports.<br />
<br />
If you have multiple properties it is possible to get an overview per property. To include or exclude a property from the report click the check box on the left side of the property name.<br />
<br />
== Wiki ==<br />
<br />
== Privacy Policy ==<br />
<br />
During the sign-up process we ask you to provide some basic details such as your name, email address and phone number. We need this information to verify that you are who you say you are. As part of this verification process we might need to contact you to confirm your identity. Otherwise the information you supply here will not be used without your express consent. That means we will not sent you spam, nor will share your information with third parties. Your password is encrypted on our server and so we do not have access to it.</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=The_Buying_Process&diff=24The Buying Process2020-03-08T05:51:30Z<p>Erik: Created page with "== Finding Property == == Bidding == In the current market it is nearly impossible to negotiate the price down as there are many bidders and almost no sellers. However in a..."</p>
<hr />
<div>== Finding Property ==<br />
<br />
== Bidding ==<br />
<br />
In the current market it is nearly impossible to negotiate the price down as there are many bidders and almost no sellers. However in a normal market a discount of 5 to 10% of the asking price is reasonable, but it really depends on the property and the seller. Some properties are priced very reasonable and in such a case you should bid the asking price immediately as otherwise someone else will take it. Other properties are priced too high and in such cases asking a discount of 20 to 30% is prudent. But in times when market prices are moving upwards it is common not to be able to get a discount at all.<br />
<br />
Normally we start with making an initial low bid without asking for details about the property. Make sure not bid too low: it offends the seller and you will not be considered anymore afterward.<br />
If the seller is interested, ask for more documentation and raise the bid.<br />
Be patient and respectful: most sellers are in their 70s and they are selling due to their advanced age, not because there is anything wrong with the property.<br />
<br />
== Due Diligence ==<br />
<br />
When a bid is accepted the seller’s broker will prepare the contract. We then proceed to do the due diligence. During this process we check all the relevant details of the property. This includes the land, building maintenance records and management, rental payments (if any), zoning, etc.. When this is completed we provide a single page summary of the contract and the conclusions of the due diligence. This process normally takes 2-3 weeks. However it depends on how quickly the seller provides the required documentation.<br />
<br />
== The Contract ==<br />
<br />
You can sign the contract either with a registered seal (hanko) or your signature. <br />
You will need proof of residency. For Japanese citizens this is called a [http://en.wikipedia.org/wiki/J%C5%ABminhy%C5%8D juminhyo], for foreign residents in Japan it is a touroku genpyou kisai jikou syoumeisyo (登録原票記載事項証明書). For non-residents a notarized [[statutory declaration]] is required for which we will provide the template. The scrivener who handles the title transfer will confirm your identity and intentions. In case where the settlement is not done at contract date the buyer normally has to put up a 10% deposit. This deposit does not go into escrow therefore we check if the owner has excessive mortgage obligations or other debts related to the property. If that is the case we request the selling broker to hold the deposit until closing<br />
<br />
== Settlement ==<br />
At the closing day everyone will come together. The transfer of the title deed and the payments will be made simultaneously.<br />
Large payments are normally done by domestic bank transfer, smaller ones by registered check and sometimes even in cash. If you can not make it to the closing everything can be done through a Power of Attorney as well.<br />
<br />
=== Non resident bank account in Japan ===<br />
<br />
No bank in Japan is allowed to open a regular bank account for a non-resident without marking it as an overseas account. This means that anyone transferring funds into such an account would have to use the international wire transfer form and pay the associated 6,500 yen transfer fee per transaction. And recently banks are increasingly checking the residency status of existing account holders as well. Several clients had their accounts closed after they moved outside of Japan. To get a local bank account properly you would have to set up a local corporation, with all the tax and accounting consequences.<br />
<br />
Non-residents therefore can have a trusted friend come to the closing and make the payment. Otherwise they can transfer the funds to Akasaka Real Estate a few days before. For the [http://www.akasakarealestate.com/wiki/index.php/Property_Management_Agreeement property management] there is no need to get a Japanese bank account as Akasaka Real Estate will handle all the transactions.<br />
<br />
== The Title ==<br />
After the closing the scrivener will register the new owner with the local registration office. They issue a new title normally within 2-3 weeks. The scrivener can send the title to the new owner. For owners living abroad we recommend that we keep the title in the safe at our office as some overseas postal services are not reliable enough to be entrusted with such a hard to replace document. If required we can send a title with a special mail delivery, but this will come with an extra cost and still is not without risk of losing the title.</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=Property_Management_Agreement&diff=23Property Management Agreement2020-03-08T05:51:15Z<p>Erik: Created page with "== Responsibilities of Manager == The Owner appoints the Manager as his lawful agent and attorney-in-fact with full authority to do any and all lawful things necessary for th..."</p>
<hr />
<div>== Responsibilities of Manager ==<br />
<br />
The Owner appoints the Manager as his lawful agent and attorney-in-fact with full authority to do any and all lawful things necessary for the fulfillment of this Agreement, including the following: <br />
<br />
==== Collect rent ====<br />
The Manager collects the rent on behalf of the Owner. If the renter does not pay the rent the Manager will use all legal means to pursue the renter. The Manager will report a delinquent renter quickly to the guarantor or guarantor company. The Manager will contact the renter and any contact person related to the renter to make clear the rent must be paid. If that does not resolve the issue the Manager will visit the renter personally. In Japan it is not allowed to threaten the renter, change the locks or in other ways intimidate a delinquent renter. Doing so could result in legal complications so the Manager will avoid any such action if possible. Instead in the extreme situation that a renter has a delay of over 3 months the Manager will negotiate with the renter about him leaving voluntary to avoid costly litigation. If such negotiations fail the Manager will sue the renter on behalf of the Owner. The costs of this would be for the Owner. In Japan this can take an extra 6 months and about 1 million yen in legal fees.<br />
<br />
==== Repairs and Maintenance ====<br />
The Manager will handle all repairs and maintenance issues related to the property. The Manager will always strive to keep such costs to a minimum. For this the Manager will either hire outside contractors or have their own staff fix any issues at cost. Also the manager will assess if the repair is truly needed and if the renter is liable. Under normal circumstances an estimate of the costs will be presented to the Owner for approval. However for small issues (for example fixing a doorbell) and in emergency situations (for example a water leak) the Manager may need to go ahead with the repairs without the Owner's approval. However in such cases the Owner will be notified at the soonest possible opportunity.<br />
<br />
To keep costs low some work can be done in-house. When outside contractors are used the Manager will always try to get the best price. No gifts will be accepted from contractors if that could lead in any way to a conflict of interest.<br />
<br />
When managing buildings the owner will not be charged for inspections of the common spaces. However for any cleaning of common spaces the owner will be charged the actual cleaning fees. The manager will use part-time cleaners instead of cleaning companies to reduce the cost of this when possible.<br />
<br />
==== Find Renters ====<br />
<br />
In case of vacancy the Manager will advertise the property widely and make sure any prospective renters get quick and easy access to view the property. The Manager will advise the Owner about the appropriate market rent and deposit. However the Owner has final say in this.<br />
<br />
==== Rental Contract Cancellations ====<br />
After a renter cancels the lease the Manager will inspect the property and refund the renter the deposit minus any damages and cleaning fees that can legally be claimed. As the deposit is held by the Owner, if the balance is low it might be necessary that the Owner makes a money transfer to the Manager to be able to make the refund. The Manager will get the apartment advertised, cleaned up and ready for the next tenant. The manager will strive to get this done within 3 weeks. However as with so many things in Japan things can take more time so it is not guaranteed that it will be done so quickly.<br />
<br />
==== Rental Contract Renewals ====<br />
In Japan most rental contracts are for 2 years with an option for renewal. It is very hard legally to force a renter to leave, especially if the rent is being paid on time. As a result the Manager will always offer a renter a renewal. At that time the rent can be negotiated. If the market rent is above the actual rent the Manager will try to negotiate a rent increase.<br />
<br />
If the Owner is planning to use the apartment as a primary residence and if the renter cooperates it might be possible to ask the renter to leave. This needs to be done at least 6 months before the rental contract expires. If the renter does not cooperate and pays the rent timely the Manager will not pursue any means of forcefully removing such a renter.<br />
<br />
==== Pay Bills ====<br />
The Manager will pay all bills related to the property using the rental income. This included building and association fees, utilities (when payable by the Owner), insurances fees, acquisition and annual possession tax, utilities, etc..<br />
<br />
For some buildings, it is not possible to set up automatic payments of the monthly building fees. To avoid excessive transfer fees and to save the amount of time the Manager spends at the bank in such cases payments are made once a year, usually at the beginning.<br />
<br />
==== Fund Transfers ====<br />
<br />
The Manager will transfer all profits to the Owner. This can be done by bank transfer, in cash or using Bitcoin. The transfers will be made anytime the Owner makes a request. The costs of such transfers will be charged to the Owner.<br />
<br />
Japan domestic bank transfers are 270 yen per transfer. International transfers however cost 3,500 yen (see [http://akasakarealestate.com/wiki/index.php/Transaction_Costs#Remittance_Fees Remittance Fees]) on the Japanese side and possible another 2,500 fee on the overseas side. Also in Japan such transfers get the attention from the authorities. We regularly get requests to provide documentation for compliance with the anti-money-laundering (AML) law. This can be over a 100 pages for a single transfer and sometimes must include copies of the property titles, sales contracts, rental contracts and full transaction records for all properties managed.<br />
<br />
To minimize the bureaucratic burden the Manager keeps the right to charge the Owner for the time it takes to make the transfer in case the Owner requests more than two international transfers a year, for more than 4 domestic transfers per year or for international transfers below 1 million yen. However the Manager will never charge the Owner for transfers over 2 million yen.<br />
<br />
==== Reporting ====<br />
The reporting will be done through the website of the Manager. At any time a recent transaction report, profit and loss statement, balance sheet and rent roll will be available online. If the Owner chooses so he can receive automatic email alerts notifying him of new transactions like incoming rent, missed rent payments and rental contract renewals/cancellations.<br />
<br />
The Manager will keep all the records at his office. The Owner or his representative can inspect these records anytime by making an appointment and coming over to the office of the Manager. After purchase the original property title will be sent to the Owner by the judicial scrivener handling the transaction unless the Owner specifies otherwise. The Owner can also at any time request copies of important documents such as sales and rental contracts.<br />
<br />
==== Income Tax Filing ====<br />
<br />
At the latest by the end of February of each year the Manager will prepare the tax forms related to the property income required for filing personal income taxes. These forms will include a calculation for the taxable depreciation of the property. At that time the Owner or his accountant can then use these forms for the income tax filing. This is easy, even for someone who doesn't speak Japanese as it will require only one number to be copied onto the main income tax form. On top of that there is also a profit and loss statement available online. If the Owner is a non-resident the Manager will also file the non-resident income tax on behalf of the Owner as long as the rental income from properties managed by the Manager is the only income. The Manager will also apply for any tax refunds if the owner is eligible and handle any audits of the real estate income by the tax office.<br />
<br />
== Liability of Manager ==<br />
<br />
Owner hereby agrees to hold Manager harmless from any and all claims, charges, debts, demands and lawsuits, including attorney's fees related to his management of the herein-described property, and from any liability for injury on or about the property which may be suffered by any employee, tenant or guest upon the property.<br />
<br />
== Compensation of Manager ==<br />
<br />
The Manager will charge the Owner 5.50% (5% plus sales tax) of the collected rent.<br />
<br />
For finding a new renter the Manager will receive one month rent from the Owner. However often this is paid for by the renter in the form of one month key money. In case it takes a long time to find the renter the Manager will offer a part or all of this finder's fee to local agents as extra incentive to find renter and reduce the length of the vacancy. If the Manager finds a renter himself he can charge one month commission to the renter as well. However the Manager will always allow other real estate agents to find renters and will not discriminate against such agents.<br />
<br />
If the Manager can collect a renewal fee from the renter he will keep this fee. However if an existing rental contract does not specify a renewal fee the Manager will not change the contract offered to the renter and the Manager will provide the rental renewal contract free of charge. The renewal fee will never exceed more than one month per two year renewal period.<br />
<br />
In case of a new rental application occasionally a renter will require a guarantor company. The guarantor company offers a discount to real estate agents paying the guarantor fees. These discounts are not offered to individual renters. The Manager can keep this difference. <br />
<br />
The Manager will charge 16,500 yen (15,000 + 10% sales tax) for preparing the documentation for a non-resident income tax filing. If the tax filing is done by the Owner himself the document preparation is free of charge.<br />
<br />
The Manager will not pay out any interest over the balance the Owner holds with the Manager. Any interest received from the bank therefore is income for the Manager. However currently the interest rates are so low that the 2012 interest income was just 1,039 yen.<br />
<br />
Besides the compensation mentioned above the manager will not accept any gifts in any form from contractors, renters or anyone else if it could lead to a potential conflict of interest with the Owner.<br />
<br />
If the Manager changes the fee structure he will give the Owner at least 3 months notice of this.<br />
<br />
== Termination ==<br />
<br />
The agreement can be terminated in writing by either party by providing written notice which will take effect within 1 month upon receipt of the termination notice. This Agreement may also be terminated by mutual agreement of the parties at any time. There is no notice period and no penalty will be charged. The Owner will notify the renters, the building association and the tax office of the change in management. The Manager will hand over the property documentation immediately. Upon termination the Owner and Manager will settle accounts at the soonest opportunity. <br />
<br />
In case the Manager is not capable of executing his duties (for example due to accident or bankruptcy) the Manager will bring all Owners into contact with each other so that they can look for another property manager collectively. The Owner gives permission to provide his email address to other Owners for this case only.</div>Erikhttps://www.akasakarealestate.com/wiki/index.php?title=Property_Management&diff=22Property Management2020-03-08T05:51:01Z<p>Erik: Created page with "=== Finding Renters === For properties under our management we will handle all the issues with the renters. If the current renter moves out we will inspect the property, get..."</p>
<hr />
<div>=== Finding Renters ===<br />
<br />
For properties under our management we will handle all the issues with the renters. If the current renter moves out we will inspect the property, get the place cleaned up and charge the renter accordingly. Some costs may fall on the owner at that time. We will calculate the amount based on the applicable regulations. We will make an assessment of the market conditions and recommend a new asking rent and advertise the property on the internet and among other brokers to attract a new renter. Once a new renter is found we will prepare the contracts and handle the moving in.<br />
<br />
When a broker finds a renter there are normally two months fees involved. The owner pays one month to his property manager and the renter pays one month to his agent. Many property managers want to get both months and as a result they do not share the listing with other brokers and advertise only in their shop and website. As still most renters in Japan find properties through the offices of their local broker this will make it much harder to find tenants quickly. Akasaka Real Estate will work with local brokers. We allow them to advertise the property and receive one month broker fee from the renter. And as it is still common to receive one month key money for small apartments there is generally no cost to the property owner in finding a new tenant as this key money pays for our 1 month agent's fee<br />
<br />
Small apartments are normally rented out within a month or two, although the duration is dependable on the economic cycle. During a recession it can take a few months more. In such a time we normally recommend to set the asking rent a little lower to avoid a long vacancy.<br />
<br />
=== Repairs and Renovations ===<br />
<br />
Maintenance of the building is done by the union of owners. When a renter moves out some cosmetic work might be required. Occasionally an air conditioner or a water heater will need replacement. As a property manager we will handle all the required tenant requests and necessary repairs. We regularly work with three different contractors to make sure we get the work done at a competitive rate. And naturally we do not accept any presents from these contractors, even though such practice is common in Japan.<br />
<br />
=== Collecting Rent ===<br />
<br />
Renters are seldom behind on their rent payments. A guarantor can be called upon if the renter does not pay, but a polite phone call is usually enough. Legal procedures are expensive and slow so we normally try to resolve any situation with the minimum amount of confrontation. However in extreme situations we consider changing the locks, but this should only be done as an absolutely last measure after repeated efforts to resolve the situation through negotiations.<br />
<br />
As a property manager we take care of all the required steps to collect the rent on behalf of the owner.<br />
<br />
=== Administration ===<br />
<br />
For the properties we manage all the reporting is done online through our website. The owner can look up any time the latest transaction records, including the last rent payment, the P&L statement, balance sheet and rent roll. We also provide a statement for the income tax payable in Japan. For non-residents we even handle the non-resident income tax filing.<br />
<br />
=== Management Contract ===<br />
<br />
[[Property Management Agreement]]</div>Erik