Things to be aware of when a non-resident sells real estate owned in Japan

In a previous article, I introduced things to be aware of when non-residents are renting out real estate they own in Japan.

This time, I will focus on what happens when a non-resident sells real estate in Japan.

When selling, there are cases where a certain amount of withholding tax is deducted from the sales amount, and cases where it is not.

When tax is withheld

When a non-resident sells real estate such as land or buildings located in Japan,

in principle, a withholding tax of 10.21% of the sales amount is deducted.

The withholding tax is paid to the tax office by the purchaser of the real estate.

When tax is not withheld

If both of the following two requirements are met, no withholding tax will be applied.

• The sale price is 100 million yen or less
  (If the property is jointly owned, the sale price multiplied by the share of the property)
• The buyer purchased the property for himself or herself or their relative to live in

Is it necessary to file a tax return?

In principle, they are required to file a tax return regardless of whether or not tax is withheld.

If 10.21% withholding tax is withheld, they can deduct it from the tax payment.

In addition, if the property they are selling is a property they actually lived in, there is a system in place that allows them to be exempt from tax on up to 30 million yen of their income if they meet certain requirements.
(Filing a tax return is a requirement)

For non-residents, the only deductions that can be deducted from their income are:

・Disaster or theft or embezzlement loss deduction
　(limited to losses on domestic assets)

・Donation deduction

・Basic deduction (up to 480,000 yen depending on their income)

Conclusion

In this article, I have written about things to be aware of when a non-resident sells real estate in Japan.

Only residents can file tax returns from overseas.

When you become a non-resident, I recommend that you ask a tax accountant or other person in Japan to act as your tax representative in advance.

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都築太郎税理士事務所/Tsuzuki Taro Tax Accountant Office

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