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The Cost of Property Investment in Japan

Posted by Solid Real Estate on May 29, 2016
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Purchase Cost & Post Purchase Fees for Apartment, House and Whole Building Investment


For purchasing the property, you need to pay the related expenses. Using 3 different types of properties, we will explain the detailed breakdown of expenses and fees after the purchase.

Apartment

expenses-diagram-japan-apartment

Apartment type has many items to pay. Significant difference is Management Fee and Repair Reserve. You need to pay this monthly to building’s Property Management Company. Old building tends to have higher Repair Reserve fee. Compared to house, real estate and city panning tax is lower, since the possession of land is smaller.

1) Contract Signing

Deposit 10 to 20% of the sales price.
Revenue Stamp Documentary stamp tax required for the sales contract.
Stamp amount is decided according to the sales price, until Mar 31st 2018 reduced tax rate.
More details – National Tax Agency [Japanese]

2) Housing Loan Application

Revenue Stamp Documentary stamp tax required for the loan contract.
More details – National Tax Agency [Japanese]

3) Remaining Costs Settlement

Loan Bank Commission and Guarantee Charges are required.
Remaining of Sales Amount Sales Price - Deposit
Settlement ( Real Esate Tax + City Planning Tax ) / 365 x the remaining dates to Dec 31

Real Estate Tax and City Planning Tax is charged on the owner of the property of Jan 1. You will pay the settlement amount to the current owner.

Brokerage Fee Sales Price x 3% + 60,000 + Consumption Tax 8%
Registration Costs
  1. Establishment Cost (Registration Tax)
    Assessed Land Value x 1.5%
    Assessed Building Value x 2%
  2. Judicial Scrivener FeeIn Japan, Judicial Scrivener is the special worker for registering the property.
Fire Insurance Bank will require to have fire insurance. You can pay as annual or longer duration.

If you contract in longer duration, the fee is cheaper.

4) 3~6 months after closing

Real Estate Acquisition Tax Tax invoice will be sent to you after 3~6 months after the closing.

This is one time payment.

5) Others

Moving Please ask Moving company to make an estimate.
Reform If you want to reform the place with waters, the reform fee might get expensive.

Please ask Interior Designer or Architect to make an estimate.

Upon on the request, we can introduce designers with good price.

During Ownership

Real Estate Tax

City Planning Tax

You will receive tax payment slips from your residing city. You can select install payment or lump-sum payment.
Management Fee Pay monthly to your building Property Management Company.
Repair Reserve Pay monthy to your building Property Management Company.
Parking Fee For car and bike.

 

House

expenses-diagram-japan-house

Difference from Apartment Type

Apartment is required to pay Repair Reserve every month for future building repair. If you purchase House, you need to save some moneys for the future repair. Ex. Roof Repair, outer wall paint and etc.

Fire Insurance and others

You might want to have water insurance and earthquake insurance as well.
Depends on the building location, you might want to consider these options.

Whole Building

expenses-diagram-japan-whole-building

Whole Building Expenses

Since you own the whole building, Tax is normally higher than house and apartment type.
But you can consider decreasing your tax payment using this large amount of acquisition expenses and building depreciation.

Assessed Value

Bank considers differently for investment property. For housing loan, bank will assess customer’s income and property value. For investment loan, they will focus on rental income and property’s value. Shizuoka Bank likes to have high assessed value. Suruga Bank likes to have high rental income property. Overall of many banks, they tend to like high assessed value property.

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