You may first want to check the type of transaction costs and taxes that you will have to pay both at the time of purchase and while you own the property as running cost.
1. Type of tax when purchasing property.
|Type of tax||Tax rate|
3% of the government valuation*¹ of the land ×1/2 and 3% of valuation of the building. Tax deduction can be applied depending on whether the property is newly built one or the secondhand or whether the purpose of the purchase is for renting out or living for yourself.
|Registration Tax||15/1000 of government valuation of land and 20/1000 of the valuation of building. Registration tax is also payable on mortgage at rate of 4/1000 of the loan amount.|
|Fixed Asset Tax (FAT)||1.4% of the government valuation of the land and building. Tax deduction can be applied depending on size of property. Buyer need to pay seller for period between the date ownership has changed and year end.|
|City Planning Tax (CPX)||0.3% of the government valuation of the land and building. Buyer need to pay seller for period between the date ownership has changed and year end.|
|Stamp Duty||Stamp duty is levied on the sale contract and mortgage agreement and varies on the contract type and amount.|
*¹ The government valuation is usually set about 70% of the market price of the property.
2. Type of transaction cost associated to purchasing and maintaing property.
|Type of cost||Detail|
Maximum agent fee is set at 3% of sale price + JPY60,000 by Japanese law*²
|Judicial Scrivener Fee||Fee for property registration by Judicial Scrivener. Fee vary depending on type of property but range between JPY100,000 and JPY150,000.|
|Fire Insurance Premium||Premium vary depending on whether the property`s structure is the reinforced concrete(RC) or non-RC and apartment or independent housing. Premium can be paid by lump-sum for 35 years or by pay by the month. As rough estimate, it cost around JPY200,000 - 300,000 for newly build/80-90 square meter for 35 years.|
|Fixed Asset Tax & City Planning Tax|
FAT: 1.4% of the government valuation of the land and building.
CPX: 0.3% of the government valuation of the land and building.
Tax notice sheet is automatically sent to the tax payer in June.
|Repair and Building Management Fee||Repair fund go towards a 'sinking fund' which is used for scheduled and necessary repairs and maintainance.|
Outlined below is general process flow for purchasing property in Japan.
Unless you pay ready cash, we recommend you to consult with your bank to see how much you can get bank loan.
Contact us and let us know your budget, purpose of investment, and target area in Tokyo. Then we will be able to search for apartments that fits to your ineterest and povide you with recent sales price as well as sold prices of similar properties located in the same area.
Before selecting one property, we recommend you to visit properties with us to check not only inside properties (rooms, daylight, and view) but also surrounding neighborhood (noise, traffic, weather, access to school etc) as these a re very important factors for lessee.
When you select one property, you need to submit a ''Letter of Intent'' to us. This is non-binding written form of your interest to buy the property at cetain prices. Based on this form, we as buyer's agent wil start the negotiation process with seller's agent.
Once the price is agreed between you and seller, we will then provide you with dpocuments called''Explanation of Important Matters'' that details the important aspects of the property and you need to read and fully understand the documents before signing the contract.
The execution of Sale and Purchase Agreement usually takes place at the agent’s offices. It is typical to pay the owner a deposit of 10% at the time of the contract.
The final settlement usually takes place at the lending bank and is handled by a judicial scrivener. The buyer will transfer the remaining balance to the sellers account and the title of the property will be transferred to the buyer. On completion, the seller gives all the keys to the property to the buyer.