The below is the Taxes to sort out during the conveyancing process in Japan.
1. Stamp Duty （印紙税）
Stamps shall be obtained at a post office.
For this transaction, the duty is 100,000 Japanese Yen for a Sales and Purchase Agreement of over 100 million Japanese Yen and less than 500 million Japanese Yen in principle but when the date of agreement is before 31 March 2022, the stamp duty is 60,000 Japanese Yen.
Regarding a contract, in the Civil Code, no written agreement is necessary but under the Real Estate Brokerage Act, Article 37(1), an estate agent must issue a document concerning a property sale.
2. VAT (Consumption tax) （消費税）
Land itself is tax-free but a building is taxable, so that VAT is required when acquiring a building.
VAT is 10% as of 2020.
In addition, VAT will be applied on brokerage fee for an estate agent on the amount of the fee base.
3. Registration and license tax （登録免許税）
The tax applies when registering rights of land and a building at the Legal Affairs Bureau.
The tax amount is calculated by multiplying the assessed value of the fixed assets by the tax rate 2% for a building and 1.5% for land.
“The assessed value of the fixed assets” is not the same of the market value. It is determined by a local council on the Standard Valuation Code of the fixed assets basis by the Ministry of Internal Affairs and Communications. This assessment is renewed once every three years.
The valued price is stated on a certificate of evaluation for fixed asset tax.
4. A pro rata payment for Fixed assets tax and City planning tax （固定資産税・都市計画税の精算金）
A taxpayer for Fixed assets tax and City planning tax is the person that is the owner or the real property as of 1st January, so that the taxpayer doesn’t change even though a real property is transferred after 1st January. It is common for a seller and a buyer to agree to prorate Fixed assets tax and City planning tax per diem based on the delivery date for real property transaction.
5. Acquisition tax （不動産取得税）
In principle, the tax amount is calculated by multiplying the assessed value of the fixed assets by the tax rate 4%.
However, the tax rate applied to the acquisition of residential land and a building is at 3% because of the special measures as of 2020.
A payment notice is issued after a few months of the delivery date.
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