Chapter 7 — What it really costs

The number that matters

The asking price is not what you will spend. Budget for 6% to 10% on top, depending on the price band, whether you commission an inspection, and whether you qualify for any of the residential reductions.

On a ¥28,000,000 house, that is roughly ¥1,700,000 to ¥2,800,000 in addition to the purchase price. On a cheaper house the percentage is higher, because several of the costs are fixed regardless of price — the worked example below shows this.

Foreign buyers underestimate this more than any other figure, usually because they are comparing against a market where the seller absorbs the agency fee.

Costs at purchase

Brokerage commission

The largest single item. Capped by law at 3% + ¥60,000 + 10% consumption tax per party, for property above ¥8,000,000. For property at or below ¥8,000,000, up to ¥330,000 including tax.

On ¥28,000,000: ¥990,000.

Chapter 5 explains why you pay this whether or not you have your own broker.

Stamp duty (印紙税)

A physical revenue stamp on the sale contract. Banded by contract value, and currently subject to a reduction measure. In the ¥10,000,000–50,000,000 band the reduced rate is ¥10,000.

Small, but it surprises people that a physical stamp is still involved.

Registration and licence tax (登録免許税)

Payable to transfer title into your name, calculated on the assessed value for tax purposes (固定資産税評価額) rather than the price you paid.

That assessed value is generally said to sit at around 60–70% of market value, which reduces the bill considerably. Treat that as a rule of thumb rather than a calculation: the only way to know the figure for a specific property is to look at its assessment, and your agent or the judicial scrivener can obtain it.

Standard rate for transfer of ownership on a second-hand building is 2%, with reductions available for owner-occupied residential property meeting certain conditions. Land transfers currently benefit from a reduced rate.

For a non-resident buying a holiday house, assume you do not qualify for the owner-occupier reductions.

You will not calculate this yourself. The judicial scrivener quotes the registration tax together with their own fee, and you pay both to them at settlement as a single sum.

Judicial scrivener's fee (司法書士報酬)

A shihō shoshi handles the registration. Not legally compulsory in every case, but in practice universal — the seller's side and any lender will expect one.

For a domestic buyer, typically ¥50,000–150,000 plus the registration tax above.

A foreign buyer should expect more, and for identifiable reasons. The scrivener has to draft the affidavit that stands in place of a seal certificate (Chapter 9), and drafting it is chargeable work. If you are settling remotely, documents must be couriered internationally in both directions, and that cost lands here. And on settlement day the scrivener travels to wherever the transaction completes, which adds travel and a day rate.

None of these are surcharges for being foreign. They are additional tasks that a domestic purchase does not generate. But they are real, and they are the reason a quote you read on a Japanese website will understate what you pay.

Real estate acquisition tax (不動産取得税)

A one-off prefectural tax, and the one that catches people out because the bill arrives months after you complete — often six months later, when you have stopped thinking about the purchase.

Levied on the assessed value. The standard rate is 4%, currently reduced to 3% for land and for residential buildings under a special measure, with further reductions for qualifying residential property.

Read the word "residential" carefully, because it is where foreign buyers get caught.

The reduced rate applies to buildings used as a dwelling. A property you visit for a few weeks a year is not treated as your dwelling — it is a second home, and it is assessed at the full 4%.

If you are buying without a visa, you are almost certainly in this category. You cannot live in the house, so it cannot be your residence, so the reduction does not reach you. On a ¥28,000,000 property the difference between 3% and 4% on the assessed value is not trivial, and it arrives in a letter six months after you have stopped thinking about the purchase.

Budget on 4% unless someone has confirmed otherwise for your specific circumstances.

Fire and earthquake insurance

Not legally required unless a lender demands it, and unwise to skip. Earthquake cover is sold as a rider on a fire policy, not standalone.

Premiums depend on the condition of the building, its construction and where it stands, so any figure is indicative. As a working number, ¥50,000–100,000 a year buys a policy covering fire and earthquake for a typical second-hand house.

An old wooden house in a high-risk prefecture sits at the upper end or beyond; a newer building in a low-risk one, well below.

Property tax apportionment

Fixed asset tax is levied on whoever owns the property on 1 January. In practice the year's tax is apportioned between seller and buyer at settlement, so you reimburse the seller for the portion covering your ownership from settlement to year end.

Worked example

These are the actual figures from a completed purchase — a ¥12,000,000 second-hand house bought by a non-resident, no mortgage, with a building inspection commissioned.

That is 11.4% on top of the purchase price — above the 6–9% range quoted at the top of this chapter, and worth understanding why.

The percentage is higher on cheaper houses. Brokerage commission has a floor, the scrivener's work is the same whatever the price, and an inspection costs what it costs. On a ¥28,000,000 property the same fixed items would spread across more than twice the price.

This buyer inspected. ¥238,260 is a substantial line, and it is optional. Chapter 6 sets out the trade-off; this is what choosing to inspect actually costs.

Acquisition tax was charged at the full rate, as it will be for most foreign buyers of a second home.

Read the table as a shape rather than a quote. Your registration tax and acquisition tax depend on the assessed value of the specific property, and nobody can tell you those figures until the property exists.

What people forget

Money transfer costs. How you move the money across a border affects what actually arrives. Chapter 10.

Clearing the property. If the previous owner's belongings remain — common with inherited houses — the starting position is that the seller removes them, and that is what you should ask for. Occasionally a property is sold with contents left in place, in which case clearing them falls to you. Depending on how much is there, a contractor will charge from tens of thousands of yen into the hundreds of thousands.

Utility reconnection. A house empty for years may need the water and gas supply recommissioned, and occasionally the electrical supply upgraded.

Immediate repairs. Budget something. Every older Japanese house has a list.

Ongoing costs, briefly

Covered properly in Chapter 11, but worth knowing before you commit.

Fixed asset tax (固定資産税) — 1.4% of assessed value annually, plus city planning tax (都市計画税) at up to 0.3% in urbanisation promotion areas. Residential land benefits from a substantial reduction in the assessed base, though this reduction can be lost if a building is judged to be in a dangerous state of neglect.

Management — if you are not there, someone must be. Ventilation, mail, garden, snow.

Insurance — annually.

Tax representative (納税管理人) — a non-resident owner must appoint one for property tax. This is a requirement of the Local Tax Act rather than a convenience, and it is dealt with in Chapter 11.

Tax filing — if you use the house yourself or leave it empty, there is no annual filing to make. Property tax is billed to you; you pay it; that is the whole obligation. A filing becomes necessary once the property earns — rent, or short-term letting income — because that is Japanese-source income. Chapter 11.

Financing changes the maths

Everything above assumes cash. If you are borrowing, add loan origination fees, guarantee fees, additional stamp duty on the loan agreement, and mortgage registration tax.

Whether you can borrow at all, as a foreign buyer, is Chapter 10. The short version is that if you are not resident in Japan, you should plan on paying cash.

Next: Chapter 8 — The buying process, and how long it actually takes.