Property Tax Overview in Japan

Japan's property tax framework is administered primarily at the municipal level under the Local Tax Act (Chiho Zeiho, Act No. 226 of 1950). Ownership triggers annual recurring taxes and a separate layer of one-time acquisition-related levies. All monetary figures are in Japanese yen (JPY). The rules below reflect the position as of 2026; several temporary reduced rates run through March 31, 2027.

Who pays Japan's annual property tax and when?

The Fixed Asset Tax (kotei shisan zei) and City Planning Tax (toshi keikaku zei) are owed by the person registered as owner in the real-property register as of January 1 each year [1]. Municipal authorities issue tax notices in April or May; payment may be made in four installments (typically due in June, September, December, and February) or as a lump sum before the first due date [2]. When a property sells mid-year, buyer and seller commonly negotiate a prorated reimbursement at closing, though legally the January 1 owner bears the full annual bill. Non-Japanese nationals who own Japanese real estate are fully subject to these taxes regardless of residency status [3].

How is the Fixed Asset Tax (kotei shisan zei) calculated?

The standard rate is 1.4% of the assessed value (kotei shisan hyoka-gaku) of land, buildings, and certain depreciable business assets [1]. Assessed value is set by the municipality using national valuation standards published by the Ministry of Internal Affairs and Communications (MIC/Somusho) and is reassessed on a fixed three-year cycle; the current cycle runs from the 2024 base year through 2027 [4]. For residential land, assessed value is typically set at approximately 70% of the officially announced land price (koji chika), and building assessments use construction cost less accumulated depreciation. Municipalities may set a rate above 1.4% if their local ordinance authorizes it, but 1.4% is the statutory standard and the vast majority of municipalities apply it unchanged [1].

The tax is levied on both land and buildings as separate components. A property tax floor (menseki genri) exempts assets below a minimum assessed value threshold (JPY 300,000 for land; JPY 200,000 for buildings; JPY 1,500,000 for depreciable business assets) from taxation entirely [4].

What is the residential-land reduction (the 1/6 rule)?

Residential land attached to a building that qualifies as residential under the Building Standards Act receives a statutory reduction on the land's assessed value before the 1.4% rate is applied [1][4]:

The reduction applies only to the land component; the building portion is taxed at 1.4% of its full assessed value without a proportional reduction. New-build residential properties also receive a 50% reduction on the building's fixed asset tax for the first three years of construction (five years for certified long-life or energy-efficient housing) [4].

What is the City Planning Tax (toshi keikaku zei)?

The City Planning Tax (toshi keikaku zei) is a municipal surcharge levied on property located within a designated urbanization-promotion area (shigaika kuiki) as defined under the City Planning Act [1]. The maximum rate is 0.3% of assessed value; most major urban municipalities including all 23 wards of Tokyo apply the maximum 0.3% rate, while some smaller cities apply 0.2% or lower [3]. The total annual tax burden in a city-planning-tax area is therefore up to 1.7% of assessed value on buildings, and on residential land after the 1/6 reduction: (assessed value / 6) x 1.7%, producing an effective combined rate of roughly 0.28% on small residential land.

Residential land within a city-planning-tax zone also benefits from a partial reduction: 1/3 of assessed value for small residential land (200 sqm and under), and 2/3 of assessed value for general residential land above 200 sqm [1].

What taxes apply when acquiring Japanese property?

Three distinct levies arise on acquisition of Japanese real estate:

Real-Estate Acquisition Tax (fudosan shutoku zei): A one-time prefectural tax under Section 73-2 of the Local Tax Act. The standard rate is 4%, reduced by special measures to 3% for residential land and residential buildings through March 31, 2027 [5]. The tax base is the assessed value (kotei shisan hyoka-gaku), not the purchase price. For residential land, an additional base reduction further halves the taxable land value to 50% of assessed value before applying the 3% rate, materially lowering effective cost. New-build residential properties meeting size criteria (50-240 sqm floor area) receive a JPY 12,000,000 deduction from the assessed value before the acquisition tax rate applies [5]. The prefectural authority typically issues the acquisition tax notice three to six months after registration.

Registration and License Tax (toroku menkyo zei): Levied under the Registration and License Tax Act (Act No. 35 of 1967) when ownership is recorded in the real-property register. The standard rate on land transfer by sale is 2.0%, reduced to 1.5% through March 31, 2027 [2][6]. For new-build residential buildings meeting qualifying criteria, the rate on ownership preservation registration is reduced to 0.15% (standard: 0.4%). Mortgage registration carries a 0.4% standard rate, reduced to 0.1% for qualifying housing [2]. Both buyer and seller are legally liable, though in practice the buyer typically bears the cost.

Stamp Duty (inshi zei): A flat document tax on sales contracts and loan agreements, calculated by bracket against the contract amount. Reduced rates apply to real-estate sales contracts executed between April 1, 2014 and March 31, 2027 [7]. Representative reduced amounts: contracts between JPY 10 million and JPY 50 million carry JPY 10,000 duty (standard: JPY 20,000); JPY 50 million to JPY 100 million carry JPY 30,000 (standard: JPY 60,000); JPY 100 million to JPY 500 million carry JPY 60,000 (standard: JPY 100,000). Physical revenue stamps are affixed to the executed contract.

For more detail on Japan's overall tax profile, see the Japan country overview. Capital-gains treatment on property disposals is covered in the Japan capital-gains crossover.

Property tax rules change and municipal variations exist. Engaging a qualified tax professional (zeirishi) before acquiring or restructuring ownership of Japanese real estate helps ensure the applicable reductions and thresholds are correctly applied to your specific circumstances.