Due to the recent weakening of the yen, there has been an increase in cases of people living overseas or of foreign nationality purchasing real estate in Japan.

People have various purposes for purchasing property, such as for investment or personal use, but some people may have questions or concerns, such as “I don’t know how to purchase property” or “Are there any complicated procedures?”

Therefore, this time we have compiled a detailed summary of the procedures, costs, and points to note for people living overseas or with foreign nationality to purchase real estate in Japan. Please check it out in advance and clear up any doubts or concerns before proceeding with the procedures.

Can people living overseas or foreign nationals purchase real estate in Japan?

There are no legal restrictions on purchasing real estate in Japan.

Furthermore, there are no restrictions on land ownership, so people living overseas or of foreign nationality can also purchase real estate in Japan.

You can also freely buy and sell the real estate you purchase, or inherit or gift it.

However, please be aware that when you purchase real estate in Japan, you will be subject to taxes such as “acquisition tax” and “fixed property tax.”

7 things you should know about buying property in Japan

When people living overseas or foreign nationals purchase real estate in Japan, the procedures and costs are different from when Japanese people purchase real estate. Here are seven points you should pay particular attention to.

1. About Japanese real estate transactions and real estate information

When buying and selling real estate in Japan, a real estate company acts as an intermediary to prevent any problems in the transaction.

You can search for property information online, but be careful as most of the information is displayed in Japanese.

Some websites are even able to display information in English or Chinese for people overseas, so if you are not confident in your Japanese, it may be a good idea to use these tools to gather information.

In addition, foreigners living overseas need different documents and remittance methods to purchase real estate in Japan than Japanese people, so it is a good idea to find a real estate company with plenty of experience in real estate transactions with foreigners.

2.Procedure for purchasing real estate

The process for people living overseas or with foreign nationality to purchase real estate in Japan is as follows:

Find
a property that suits your needs.

② Inspect the property and submit a “Purchase Certificate”
If you find a property you like, inspect it as much as possible and check the details.
Once you have decided to purchase, submit a “Purchase Certificate.”

③ Confirm payment method
Discuss and decide on the payment method. If you are using a mortgage, proceed to the loan application process.

④ Receive an explanation of important matters
You will be given an explanation of the “Important Matters Explanation Document” which contains information about the property, the rights and interests, and the terms and conditions in case of cancellation of the sales contract.

⑤ Conclude the “Sales Contract”.
If there are no problems with the contents of the “Important Information Explanation Document”, you can conclude the contract. At this time, it is common to pay a deposit of about 10 to 20% of the property purchase price.

⑥ Complete payment and registration.
Complete the payment for the property purchase and complete the registration (recording in government documents that ownership of the property has been transferred to you).

⑦ Report to the Minister of Finance (for foreign nationals)
Report the purchase of real estate to the Ministry of Finance within 20 days of acquiring the property.

3. Costs incurred when purchasing real estate

If you are a resident overseas or have foreign nationality and wish to purchase real estate in Japan, you will be required to pay the following costs.

4. Documents to prepare when purchasing real estate

The documents required when purchasing real estate in Japan are as follows:

・Sign certificate
・Photo ID
・Certified copy of company registration (if a corporation)

The documents required may vary depending on the property you wish to purchase and your nationality, so please check with the management company of the property you wish to purchase for details.

5. About housing loans

When purchasing real estate, it is common to take out a housing loan, but if you do not have permanent residency in Japan, it will be difficult to obtain a loan from a Japanese financial institution. You will need to consider using a financial institution in your home country that has a branch in Japan or a foreign non-bank.

However, it appears that some domestic banks will provide housing loans to foreigners without permanent residency if certain conditions are met.

6. Receiving the “Real Estate Title Deed”

When you acquire real estate, a “real estate title deed” will be issued in about a week. For a
smoother process, it is a good idea to decide in advance whether you would like to have this document mailed to your country of residence or have a real estate management company manage it for you.

7. Appoint a tax agent

After purchasing real estate, you will receive a tax invoice from the tax office for taxes such as “real estate acquisition tax” and “fixed property tax,” and you will need to pay the taxes listed on the invoice. In addition, if you purchase real estate for investment purposes, you will need to file a “tax return” every year.

Since it is difficult to carry out such procedures from overseas, it is important to appoint a “tax agent” who will handle the tax procedures on your behalf in Japan. If you do not have someone in Japan you can ask, it is a good idea to consult with the property management company that manages the property.

The number of overseas residents establishing “asset management companies” in Japan is rapidly increasing!

If you are a resident of a foreign country or have foreign nationality and are purchasing real estate in Japan, it is advisable to establish an “asset management company.” Incorporation offers great tax benefits, and this has become a popular real estate management method in recent years.

What is an asset management company?

An asset management company is a corporation whose business purpose is asset management. Since you set up the company for yourself and manage it yourself, it is also called a “private company.”

In many cases, asset management companies are established by people who already have assets in order to save on taxes, but in recent years there has been an increase in cases of people establishing new asset management companies for the purpose of investing in real estate.

Benefits of establishing an asset management company

The main benefits of establishing an asset management company are as follows:

[Benefit 1] A wide range of expenses can be claimed

If you set up an asset management company to operate a real estate rental business, the big attraction is that you can expense all expenses used to generate revenue. You can expense a much wider range of expenses than if you were managing the property yourself. For example, you can also expense non-direct expenses such as mobile phone charges in the name of the corporation, vehicle maintenance costs, company housing subsidies, meal expenses for meetings, life insurance premiums for directors, and daily allowances for business trips (travel expenses regulations required).

In addition, because the company can process the director’s compensation and retirement benefits it pays to itself as expenses, the company’s profits will decrease, leading to a reduction in corporate tax. In addition, because director’s compensation and retirement benefits are subject to the salary income deduction and retirement income deduction, the amount of income tax can also be reduced.

[Benefit 2] Possibility to join social insurance

One of the benefits of establishing an asset management company and managing real estate as a “corporation” is that you can join the government’s social insurance (health insurance and employee pension insurance). If you are planning to move to Japan in the future, it is a good idea to be aware of such attractive points.

[Benefit 3] You can gift assets during your lifetime

If you manage real estate as an individual, the income you receive from the assets becomes your own property. On the other hand, if you manage real estate as a corporation and receive income from it, you can use that income to pay salaries to your spouse, children, and grandchildren, which will have the effect of a living gift.

[Benefit 4] Inheritance procedures can be carried out more smoothly

Another major benefit of establishing an asset management company to manage real estate is that it allows for smoother inheritance procedures. Rather than inheriting real estate as a shared ownership interest, it is better to sell the property to a corporation and convert it into financial assets such as cash or corporate stock before you die, which will allow for smoother division and inheritance.

Benefits of using a “virtual office” when establishing an asset management company

For those living overseas or foreign nationals setting up an asset management company, it is convenient to use a “virtual office.” A virtual office is a “fictitious office that does not have a physical space,” and it can reduce costs significantly compared to renting a property for an office.

Since the available functions differ depending on the operating company, it is a good idea to carefully compare and consider multiple services before making your selection. Some services also provide support for company establishment, allowing you to proceed with the procedures more smoothly and with peace of mind than if you were to do it yourself.