Quick Answer
When selling property in Japan, capital gains are taxed at 20.315% if you've owned it 5+ years (長期), or 39.63% if under 5 years (短期). The 3,000万円特別控除 can eliminate tax on up to ¥30M of gains if it was your primary residence. The 5-year threshold is measured from January 1 of the year you sell.
Capital gains tax on property sales — 不動産の譲渡所得税
When you sell real estate in Japan at a profit, the gain is classified as 譲渡所得 (transfer income) and taxed separately from your regular income. Unlike salary or business income, property capital gains are subject to fixed tax rates — not the progressive income tax brackets. The rate depends entirely on how long you've owned the property.
| Type | Ownership period | 所得税 (Income tax) | 住民税 (Resident tax) | 復興特別所得税 | Total |
|---|---|---|---|---|---|
| 短期譲渡 (Short-term) | 5 years or less | 30% | 9% | 0.63% | 39.63% |
| 長期譲渡 (Long-term) | Over 5 years | 15% | 5% | 0.315% | 20.315% |
The difference is dramatic: selling the same property just one year too early could nearly double your tax bill. On a ¥10M gain, short-term tax is about ¥3,963,000 vs long-term at ¥2,031,500 — a difference of nearly ¥2M. This is one of the most important timing considerations when selling property in Japan.
復興特別所得税 (Reconstruction surtax)
The 0.63% and 0.315% portions are the 復興特別所得税 — a 2.1% surtax on income tax created to fund reconstruction after the 2011 Great East Japan Earthquake. It applies to all income tax including capital gains and is currently scheduled through 2037.
Short-term vs long-term: how the 5-year rule works — 短期 vs 長期の判定
The 5-year threshold for 短期 vs 長期 is not measured from your purchase date. This is a common and costly misunderstanding. The ownership period is measured from the date of acquisition to January 1 of the year you sell.
In practice, this means you often need to own the property for more than 5 calendar years — effectively closer to 6 years in some cases — before the sale qualifies as 長期.
Example: You buy a property on March 15, 2021.
- If you sell in June 2026 — the ownership period is measured to Jan 1, 2026, which is only 4 years and 9 months from acquisition. This is 短期 (39.63%)
- If you sell any time in 2027 — the ownership period is measured to Jan 1, 2027, which is 5 years and 9 months. This qualifies as 長期 (20.315%)
Critical timing rule
To guarantee 長期 classification, wait until January 1 of the 6th calendar year after you acquired the property before selling. If you bought in 2021, you're safe to sell as 長期 from January 1, 2027 onward. Selling even one day before the threshold — December 31, 2026 in this example — would still be 短期 and cost you nearly twice the tax.
3,000万円特別控除: the primary residence deduction — 居住用財産の特別控除
The 3,000万円特別控除 (¥30 million special deduction) is the single most powerful tax benefit available when selling property in Japan. Under 租税特別措置法第35条 (and explained in 国税庁タックスアンサー No.3302), if the property you're selling was your primary residence (居住用財産), you can deduct up to ¥30,000,000 from your capital gain before calculating tax.
This means that if your profit from the sale is ¥30M or less, you pay zero capital gains tax. Given that most residential properties in Japan (outside of prime Tokyo) don't appreciate by ¥30M, many homeowners selling their primary residence pay no capital gains tax at all.
Eligibility requirements
To qualify for the 3,000万円特別控除, all of the following must be true:
- The property was your primary residence (マイホーム) — you actually lived there. Investment properties, rental properties, and vacation homes do not qualify
- You lived there until the sale, OR you moved out and sold within 3 years of the date you stopped living there (specifically: by December 31 of the 3rd year after moving out)
- You have not used this deduction in the previous 2 years (you can use it once every 3 years at most)
- The buyer is not a related party — you can't sell to your spouse, parents, children, or a company you control and claim this deduction
- You did not use the 住宅ローン控除 (mortgage tax deduction) in the year of sale or the previous 2 years (you must choose one or the other)
3,000万円特別控除 + 長期 = maximum benefit
The 3,000万円特別控除 applies before the tax rate. So if you have a ¥35M gain and qualify for the deduction, only ¥5M is taxable. If the sale also qualifies as 長期譲渡, the tax on that ¥5M is just ¥5M x 20.315% = ¥1,015,750. Without the deduction, the tax would be ¥35M x 20.315% = ¥7,110,250. The deduction saves you over ¥6M.
Calculation example — 計算例
Let's walk through a realistic example to show how capital gains tax is calculated on a property sale in Japan.
Scenario
- Purchased a マンション in 2019 for ¥40,000,000
- Paid ¥2,500,000 in acquisition costs (agent fee, registration, stamp duty)
- Selling in 2026 for ¥50,000,000
- Selling costs (agent fee): ¥1,700,000
- This was your primary residence (eligible for 3,000万円特別控除)
- Ownership: 2019 to 2026 — measured to Jan 1, 2026 = 長期 (over 5 years)
Step 1: Calculate the gain (譲渡所得)
Selling price: ¥50,000,000
- Acquisition cost: ¥40,000,000 + ¥2,500,000 = ¥42,500,000
- Selling expenses: ¥1,700,000
Capital gain: ¥5,800,000
Step 2: Apply the 3,000万円特別控除
Capital gain: ¥5,800,000
- Special deduction: ¥30,000,000 (max)
Taxable gain: ¥0
Since the gain (¥5.8M) is less than the ¥30M deduction, the taxable gain is zero. You pay no capital gains tax.
What if it wasn't your primary residence?
Without the 3,000万円特別控除 (e.g., it was an investment property), the calculation becomes:
Taxable gain: ¥5,800,000
x Long-term rate: 20.315%
Tax owed: ¥1,178,270
And if the ownership was short-term (under 5 years): ¥5,800,000 x 39.63% = ¥2,298,540. Same gain, but more than double the tax.
Don't forget acquisition costs
Your 取得費 (acquisition cost) includes not just the purchase price but also the agent commission, registration fees, stamp duty, and improvement costs (リフォーム) you made during ownership. Keep all receipts — every yen of documented cost reduces your taxable gain. If you can't prove your original acquisition cost, the tax office allows you to use 5% of the selling price as a deemed cost — but this is almost always much less favorable.
Selling property as a non-resident — 非居住者の不動産売却
If you've left Japan but still own property here, you can sell it — but the tax process is different. Japan taxes non-residents on Japan-sourced income, and real estate gains are definitely Japan-sourced.
Withholding at source (源泉徴収)
When the seller is a non-resident, the buyer is required to withhold 10.21% of the selling price and pay it to the tax office on your behalf. This is a significant amount — on a ¥50M sale, that's ¥5,105,000 withheld regardless of your actual gain. Note: this withholding applies to the total selling price, not just the profit.
If your actual tax is less than the withheld amount (which is often the case, especially with the 3,000万円特別控除), you can file a 確定申告 to get the excess refunded. However, as a non-resident, you need a 納税管理人 to handle the filing.
Exception to withholding
The buyer does not need to withhold the 10.21% if the buyer is an individual (not a corporation) and the property will be used as the buyer's own residence or a relative's residence, AND the selling price is ¥100M or less. This exception covers most residential sales between individuals.
納税管理人 (Tax representative)
Before leaving Japan (or after, if you forgot), you must appoint a 納税管理人 — a person or entity in Japan who handles your tax affairs. This person receives tax notices, files your 確定申告, and processes any refunds. They can be a friend, a family member, or a professional (税理士). You register them by filing 所得税・消費税の納税管理人の届出書 at your former local tax office.
Non-resident eligibility for 3,000万円特別控除
Non-residents can still claim the 3,000万円特別控除, provided the property was their primary residence and they sell within 3 years of moving out (by December 31 of the 3rd year). This is critical for foreigners who leave Japan but haven't sold their home yet — you have a limited window to sell and still qualify for this massive deduction.
Tax treaty considerations
Japan has tax treaties with many countries. For real estate gains, most treaties grant Japan the primary taxing right on property located in Japan. Your home country may provide a foreign tax credit to avoid double taxation. Check your specific country's tax treaty with Japan — see our Tax Treaties guide for details.
Depreciation recapture for investment property — 減価償却の取り扱い
If you owned investment or rental property and claimed 減価償却 (depreciation) as an expense to reduce your rental income tax, this depreciation comes back into play when you sell. It effectively reduces your acquisition cost, increasing your taxable gain.
Here's how it works: your 取得費 (acquisition cost) for the capital gains calculation is the original purchase price minus the total depreciation claimed during the period you owned the property. If you bought for ¥40M and claimed ¥8M in depreciation over the years, your acquisition cost for the sale calculation is only ¥32M — making your taxable gain ¥8M larger than it would otherwise be.
Example: Investment property with depreciation
- Purchased for ¥40,000,000 (building ¥25M + land ¥15M)
- Total depreciation claimed over 10 years: ¥8,000,000
- Adjusted acquisition cost: ¥40,000,000 - ¥8,000,000 = ¥32,000,000
- Sold for ¥45,000,000
- Capital gain: ¥45,000,000 - ¥32,000,000 = ¥13,000,000
- Long-term tax (20.315%): ¥2,640,950
Depreciation only applies to the building
In Japan, only the building portion (建物) depreciates — land (土地) does not. When calculating depreciation recapture, you only subtract the depreciation from the building's acquisition cost. The statutory useful life for depreciation is 22 years for wooden structures (木造), 34 years for steel-frame (鉄骨), and 47 years for reinforced concrete (RC/SRC). If your purchase contract does not break out building vs land, the tax office will allocate based on the 固定資産税評価額 ratio.
How to report the sale on 確定申告 — 確定申告での申告方法
You must file a 確定申告 (tax return) for the year in which you sell property — even if you owe no tax (for example, because the 3,000万円特別控除 eliminates your gain). The filing deadline is March 15 of the year following the sale.
Required documents
- 売買契約書 (copy) — both the original purchase contract and the sale contract
- 仲介手数料の領収書 — receipts for agent commissions (both purchase and sale)
- 登記簿謄本 — property registry certificate (available from 法務局)
- 取得費の証拠書類 — any documents proving your acquisition costs (registration fees, stamp duty, renovation receipts)
- 確定申告書 第三表 — the separate taxation schedule (分離課税用)
- 譲渡所得の内訳書 — the capital gains detail form (this is a specific attachment for property sales)
- If claiming 3,000万円特別控除: 住民票 (or 戸籍附票) showing you lived at the property
Filing process
You can file via e-Tax (online, requires マイナンバーカード), at the tax office in person, or through a 税理士. The e-Tax system has a guided flow for 譲渡所得 where you enter your acquisition details, selling details, and applicable deductions. For property sales involving significant amounts, hiring a 税理士 is recommended — they typically charge ¥50,000-150,000 for preparing and filing a property sale return.
Important: you must file even if tax is zero
If you're claiming the 3,000万円特別控除, you must file a 確定申告 to claim it — it is not applied automatically. If you don't file, the deduction is not granted, and you could be assessed the full tax plus penalties. The same applies to other special provisions like the 軽減税率の特例 (reduced rate for properties owned 10+ years). Always file.
Frequently Asked Questions — よくある質問
What if I sell at a loss?
If you sell your property for less than you paid (a capital loss), you generally cannot offset this loss against other income (like salary). Property capital losses are in a separate tax category. However, there is an exception: if you sell your primary residence (居住用財産) at a loss and you have an outstanding mortgage (住宅ローン), you may be eligible for the 居住用財産の譲渡損失の損益通算・繰越控除 (国税庁タックスアンサー No.3370), which allows you to offset the loss against your other income and carry forward unused losses for up to 3 years.
Can I use the 3,000万円特別控除 if I rented the property out?
It depends on when. If you lived in the property and then rented it out after moving, you can still claim the deduction — but you must sell by December 31 of the 3rd year after you stopped living there. For example, if you moved out in June 2023 and rented it out, you must sell by December 31, 2026. If the property was always a rental (you never lived there), you cannot use this deduction at all.
Is there a reduced rate for properties owned 10+ years?
Yes. If you owned your primary residence for more than 10 years (as measured by the Jan 1 rule), you qualify for the 軽減税率の特例 (国税庁タックスアンサー No.3305). After applying the 3,000万円特別控除, the first ¥60M of remaining gain is taxed at 14.21% (instead of 20.315%), and amounts above ¥60M at 20.315%. This can be combined with the 3,000万円特別控除 for maximum savings.
Do I need to pay 消費税 on the sale?
For individuals selling their own home: no. Residential property sales by individuals are not subject to 消費税 (consumption tax). The sale of land is always exempt from 消費税. The sale of a building is only subject to 消費税 if the seller is a taxable business (課税事業者) selling as part of their business activity — this would apply to a property investment company or a developer, not to an individual selling their home.
I lost my original purchase contract. What do I do?
Without proof of your original acquisition cost, the tax office applies a deemed acquisition cost of 5% of the selling price. On a ¥50M sale, that means your "cost" is only ¥2.5M, creating a taxable gain of ¥47.5M — even if you actually bought it for ¥40M. This is extremely disadvantageous. Try to recover the purchase contract from the real estate agent, the 司法書士 who handled the transaction, or the bank that processed the mortgage. A 登記簿謄本 showing the purchase date and the original mortgage amount can also help support your claim, though it's not a substitute for the contract.
Can I defer the tax by buying a replacement property?
Yes, in certain cases. The 特定居住用財産の買換え特例 (国税庁タックスアンサー No.3355) allows you to defer capital gains tax when you sell your primary residence and buy a replacement residence. You must have owned and lived in the property for 10+ years, the sale price must be ¥100M or less, and you must buy the new property within a specified period. Note: this is a deferral, not an exemption — the tax is postponed until you sell the replacement property. Also, you cannot combine this with the 3,000万円特別控除 — choose one or the other.
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Sources
- 所得税法第33条 (譲渡所得)
- 租税特別措置法第35条 (居住用財産の譲渡所得の特別控除)
- 国税庁タックスアンサー No.3302 マイホームを売ったときの特例
- 国税庁タックスアンサー No.3208 長期譲渡所得の税額の計算
- 国税庁タックスアンサー No.3211 短期譲渡所得の税額の計算
Related Guides
Buying Property in Japan
The complete guide to buying a house or apartment in Japan — from property search to key handover.
Tax Filing Guide
How to file 確定申告 — including reporting capital gains from property sales.
Leaving Japan Financial Checklist
Everything you need to handle financially before leaving Japan — taxes, pension, NISA, and more.