All the Little Details of Property Ownership in Japan

Subtitled: Everyone Loves Property Taxes

I wrote an article recently that was published on the FinTechNews.sg website. The title of that piece was Real Estate Professionals Every International Investor Needs to Know. As I wrote the piece, various clients were emailing me asking questions that coincided perfectly with the roles I was describing in the article. Another case of writing imitating life.

Having watched hundreds of clients try to support their real estate deals, I wrote that piece to provide an overview of the common roles in a real estate transaction, showing how all the pieces fit together. To make the post more specific, I used short examples based on the two most common types of buyers in international real estate, and used property transactions in Niseko to put those examples in context. It made sense to run the article on a website located in Singapore, because Asian buyers, including Singaporeans in particular, are on the buying-side of a lot of international property transactions in Japan right now.

It’s a decent piece of writing, and I’m proud of it. The use of the two different types of buyers as examples helped to breathe a little more life into the concepts.

I am genuinely excited about real estate, but even I can admit that writing on these topics can sometimes be a little dry. Providing nuance about all the little details can make a piece of writing informative, but not necessarily “interesting.” Occasionally, however, I write something that I think has a bit more “energy” to it as it sits on the page.

It is a fact that it can be easier to buy property in Japan than to pay the local [property] taxes each year.
— From my article about the most important roles in a real estate transaction

That line was in the opening paragraph in a section of the article about how foreigners deal with the various payments needed to support real estate transactions. The proofreading process is exhausting, but there was something fresh to the line that caught my interest in each re-read.

It’s true, you know, in a way it is easier to spend 100,000,000 JPY buying property in Japan than it is to pay a simple property tax bill.

Did you know that foreigners can send the purchase funds for a property in Japan to their agent (and they often do) in advance of the sale? And that their agent holds those funds, and submits them on the clients behalf in the meeting that typically takes place on the day the property closes? It’s true. Escrow services are rare in Japan. And it is one of the many little details in Japanese real estate that the local bank accounts of real estate agents in Japan enable international purchases.

As I explain in that piece:

A local real estate agent will help you purchase property, but the ongoing needs of the property will usually be handled by a different professional.

At my company, we talk with foreigners every day that are trying to manage their real property here in Japan. Buying, is not usually a problem. But the methods and responsibilities after the purchase can be more opaque.

Assuming you have the money, real estate agents in Japan have all the talent and enthusiasm required to help you complete an international property transaction. But after the sale, with the big sales commissions out of the way, all the little details become the responsibility of the owner.

The thrust of that article for Fintech News Singapore is that property owners sometimes need a team to help them through the lifecycle of owning property. That is especially true for investors from foreign countries.

In our business we have had several clients come to us recently with questions that route around to property management. In my own investments in the US and Japan, I have had a chance to see the role (and value) of property managers holding together little day-to-day challenges that come with owning property.

Paying property taxes in Japan turns out to be a good test of a foreigners’ ability to manage their property in Japan.

After the experience writing the article on Fintech News, I wrote something a little more thorough about paying property taxes in Japan as a foreigner:

There are at least three challenges that foreigners that own property in Japan face regarding property taxes for Japan-based property:

1.) Knowing how and when to receive the property tax statements from the local government
2.) Reading and understanding property taxes printed in Japanese, and
3.) Paying those bills remotely or without a Japanese bank account.

— From our guide for paying property taxes in Japan

Turns out the topic of property taxes (sexy as it is), has a lot of little details to it.

We keep digging into those details, because of all the recent client requests. For example: we had a client that owns property in Hakodate that contacted us for help paying property taxes. We made some local introductions for her, and the experience of taking care of her gave us more time to study some of the little details.

As a part of that transaction, we did some first-hand research on property taxes in Japan. We spoke with the local Hakodate government, and we asked a lot of questions. That led to additional research as we worked on the challenges foreigners have when they own property in Japan. It’s the little details. Our first questions were about getting local Japanese property tax statements mailed to a foreign address. But one detail just led to another…

Did you know that while foreigners that owe income tax in Japan can pay via credit card or international wire transfer, property taxes cannot be paid by either of those methods? Now you do.

If you don’t live in Japan year-round, and you can’t pay Japanese property taxes via credit card or wire transfer from your home country… how are those taxes supposed to get paid? And how do you get your local Japanese property tax bill if you don’t live in Japan? Where is it mailed to? Will you even be able to read it when it arrives?

See? You can own property in Japan as a foreigner, but you can’t actually pay the taxes on it from abroad. Not only that, but when you bought the property - you had a lot more people standing by to offer you help. After the sale, maybe you have friends in Japan that can manage this for you? If not, foreign owners have to find agents to help them get these issues sorted.

It is possible to learn about all the little details as you buy the property, but for most buyers - property tax payments are (surprisingly? unsurprisingly??!) not on their mind as they pull the trigger on a big capital outlay for property. It probably seems like a minor detail at the time. In a way, it is a minor detail to the purchase - but not at all minor in terms of the ongoing responsibility of a property owner in Japan.

If you are buying property internationally for the first (or the second, or the third) time, the process involves at least a little stress, and probably a lot of mystery. There is usually a day or two where your real estate agent sits you down, and has you sign document after document. Sign, next. Sign, next. Sign, next. What is routine to the real estate agent is a blur of details to the buyer. Do you understand? Sure, sure. For many buyers, at least at the time, the sentiment is: I don’t really care.

When it comes to all the little details, buyers will commonly wonder, “Do I really need to know what that means?” Let me be the next person to tell you, yes, you are ultimately responsible (for everything) as the buyer. But, assuming you are working with responsible partners, practically speaking (and off the record, of course): no, you probably don’t really need to know what “that” means. At least not on that day. Or on the next day, when the agent, or your lender, makes you sit down and sign 1000 routine forms. You just want to get through the deal. I hope it’s clear I am not giving legal advice here, I’m just pointing to the actual experience of most real estate buyers in Japan.

Okay, the deal is complete. The property is yours. Now you can enjoy it.

That is true. And yet; you suddenly (or perhaps slowly) have responsibilities and deadlines. And your agent’s job is complete, and they are off to help some other client.

Property taxes turn out to be illustrative, because they sneak up to test your competency as a foreign owner of Japanese property. Property taxes are a bit sneaky, because depending on the time of year, and the actions of the previous owner, you might or might not have property taxes due that year (they might have been paid by the previous owner). Especially if your taxes are paid for the year, the next year the obligation may creep up on you:

“What is this bill for?” “What does it mean?” “Do I have to pay this?” “How do I pay it?”

They definitely don’t take checks in Japan.

This is why I wrote that guide for foreigners paying property tax in Japan. I have been that foreigner. And I have helped many other non-residents in Japan to deal with all the little details of property ownership. I tried to be thorough; that guide is long, and even so, I still skim over some of the little details of the property tax requirements in Japan.

That article is live on the Find Hokkaido Agents site, but to be honest, I still have a lot of questions. We’re still doing research. The topic of property tax in Japan is “so” sexy, we will end up adding even more to that guide.

Did you know that it is part of Japanese law that property owners in Japan must have the option to pay their taxes in something like quarterly installments across the calendar year? And did you know that the timing of those four payments for property tax in Japan are different from city to city? For property taxes in Osaka, you can pay all at once, or by quarterly installments in April, July, December, and February. But in Sapporo, the property tax deadlines are toward the end of April, July, September, and December (nearly two months earlier). In Niseko, property taxes aren’t even issued until May. Details.

Fascinating, isn’t it?! Well, a little? Amiright? I mean who knew the subject of Japanese property taxes involved so many dramatic twists and turns?

Did you know that, in some instances, a foreigner that owns property in Japan can have the statement for the property tax for their property in Japan mailed to their home country (wherever that might be)? Yes, surprisingly, you can. At least sometimes. Details.

And…

Did you know that if you have a local bank account in Japan, you can have your property taxes automatically deducted from your bank account by the local government? Well, that is true at least part of the time. In Sapporo, the property tax statements have a “range” for the due date for each quarterly payment. Like: “April 17 – May 01.” What is that first date for? I was curious, so I asked; a local tax pro tells me that is the earliest (assuming you have set up the auto-payment services) that the Sapporo government might withdraw that money from the property owner’s account. Everyone else can just ignore “April 17” in the range, “May 1” is the real deadline. I see. So many little details.

The property tax statements that the local government issues are, of course, in Japanese. If you are a semi-literate foreigner (like me), they are a hot-mess of kanji and terms that almost certainly are not a part of your everyday vocabulary. Even spotting the due date on the forms is a bit of challenge.

While property tax is the kind of joy that comes to visit you year after year, the truth is there is a good chance you will have to navigate the real estate acquisition tax issue long before the property tax hurdles come along to test your competence. What is the real estate acquisition tax in Japan? Just another little detail in the wonderful world of the real estate markets in Japan.

I hope you can see, that as a real estate consultant here in Japan, I have tried to “do my homework” on these topics. I have. My team and I are talking to various departments in the Japanese government. We are still kicking tires and asking questions, trying to track down all the little details.

The “TLDR” (can you even put a TLDR at the end of an article?) is that a lot of foreign property owners in Japan hire the services of a property management companies. Some of those providers never even see the property, but they can receive bills like property tax, and pay them locally. Sometimes service providers that support payment of bills in Japan are called Japanese tax administrators (which are not necessarily related to real estate, but often used by those kinds of clients).

Because of the 2024 laws about local contact for real estate in Japan for foreigners, foreign owners of real estate have another detail to consider, and again, property managers and tax representatives are a good resource for that kind of service. That is if that law is actual required. Is it required? Well, it turns our the domestic contact for real estate law has it’s own set of particular little details..

This is how we work back around to this idea that for many real estate owners in Japan, it takes a team to get all the details right. A good local Japanese real estate agent will almost certainly play a role on your real estate team. And many owners from foreign countries will need at least some help after the transaction; paying bills and taxes, property maintenance, and other little details that are “to be discovered.” And that is especially true for owners that hold real estate in Japan while they live overseas; you’ll probably need some help. You’ll probably need a team.

You’ll have questions about the details. Absolutely fascinating little details about property taxes (and other issues) will come along and force you to find some help.