You bought a condo in Tokyo. Or you are about to. The price tag was clear. The taxes after closing are not. This article maps the recurring tax burden you face every year as a foreign owner of a Japanese condo (マンション), whether you live in it, rent it out, or leave it empty.
We focus on the numbers you will actually see on paper. We skip the edge cases. At the end, you will have a reference estimate of your annual outflow and a checklist of what to verify before signing.
The two recurring property taxes you cannot avoid
Every condo owner in Japan pays two local taxes every year, regardless of nationality or residency status:
- Fixed Asset Tax (固定資産税) — 1.4% of the assessed value
- City Planning Tax (都市計画税) — up to 0.3% of the assessed value (Tokyo 23 wards: 0.3%)
The base is not the price you paid. It is the assessed value (固定資産税評価額) set by the municipality and reviewed every three years. For a typical Tokyo condo, the assessed value of the building portion tends to be 50–70% of market price, and the land portion (your share of the underlying lot) tends to be 60–70% of the official land price (路線価 basis).
A reference estimate
You buy a 70 m² condo in central Tokyo for ¥120 million.
- Assessed value (combined land + building): roughly ¥40–55 million is a common range for newer mid-rise units. Tower condos and older buildings deviate.
- Annual Fixed Asset Tax + City Planning Tax: roughly ¥150,000 to ¥300,000.
This is an analysis result based on typical assessment ratios, not a quote. The actual notice (納税通知書) arrives every spring from the ward or city office.
Reductions you should check
- Residential land reduction (住宅用地の特例): the land portion of the Fixed Asset Tax base is cut to 1/6 for the first 200 m² per dwelling, and 1/3 above that. This applies whether you live there or rent it out, as long as it is residential.
- New-build building reduction: newly built condos get a 50% cut on the building portion of Fixed Asset Tax for the first 5 years (long-life quality housing: 7 years). Verify the remaining period with the seller.
If you buy a 3-year-old condo, you inherit 2 more years of the new-build reduction. That changes your year-one tax bill meaningfully.
Income tax if you rent it out
If you rent the unit, the rental income is Japan-source income. Japan taxes it regardless of where you live.
Non-resident owners
If you are a non-resident for Japanese tax purposes (you live outside Japan), the tenant — or more commonly, the property management company — must withhold 20.42% of the gross rent and remit it to the National Tax Agency (国税庁). One exception: if the tenant is an individual using the unit as their own or a relative's residence, withholding does not apply.
You then file a Japanese tax return (確定申告) the following spring to:
- Deduct expenses (management fees, repair reserve, depreciation, loan interest, property taxes, insurance, agent fees)
- Reconcile the 20.42% already withheld
- Often recover part of it as a refund
You need a tax representative (納税管理人) in Japan to file on your behalf. RE : public can point you to bilingual options.
Resident owners
If you are a tax resident of Japan, rental income is added to your other income and taxed at progressive rates (national 5–45% + local 10% + reconstruction surtax). The deduction logic is the same. No 20.42% withholding.
Depreciation: the lever that matters
Depreciation (減価償却) is the largest non-cash deduction. For reinforced-concrete (RC) condos, the statutory useful life is 47 years. The remaining depreciable life is calculated from the build year. A 25-year-old RC condo still has meaningful depreciation left on the building portion (not the land).
This is where the analysis result for two identical-looking buildings can diverge sharply. Get the building/land split right before you model cash flow.
Consumption tax (消費税) — usually not your problem, sometimes it is
Consumption tax in Japan is currently 10%.
- Land is not subject to consumption tax. Ever.
- Residential rent from a tenant using the unit as a home is exempt.
- Building portion of the purchase price: taxable if the seller is a corporation. If the seller is an individual (typical resale), no consumption tax on the building either.
- Short-term rental (民泊) or furnished corporate housing: the rent can become taxable. If your annual taxable sales exceed ¥10 million, you become a consumption tax filer.
Most foreign buyers holding one residential condo will not deal with consumption tax annually. If you run Airbnb-style operations, you will. Plan for it.
Building-level costs that feel like taxes (but aren't)
These are not taxes. You will pay them every month anyway. Budget them together with tax.
- Management fee (管理費): ¥15,000–¥40,000/month for typical Tokyo condos
- Repair reserve fund (修繕積立金): ¥10,000–¥30,000/month, rising over time
- Parking, bike, storage: optional, ¥0–¥50,000/month depending on the building
The repair reserve is the one foreign buyers underestimate. It steps up on a published schedule. Ask for the long-term repair plan (長期修繕計画) and the current balance of the reserve fund. A building with a thin reserve has a higher risk of special assessments.
Withholding when a non-resident sells — relevant for your annual planning
You are not selling every year. But you should know the exit rule before you buy.
When a non-resident sells a Japanese property, the buyer must withhold 10.21% of the gross sale price and remit it to the tax authority. You then file to reconcile actual capital gains tax. Capital gains tax rates:
- Held 5 years or less (short-term): roughly 39.63% (national + local + surtax)
- Held more than 5 years (long-term): roughly 20.315%
The 5-year clock starts on January 1 of the year after acquisition, not the purchase date. A common pitfall.
A sample annual tax stack
Let's combine the recurring items for a clear picture.
Scenario: Non-resident foreign owner. ¥120M condo in Minato-ku (港区). Rented out at ¥450,000/month gross. Management company handles withholding.
Annual outflow and tax events:
- Fixed Asset Tax + City Planning Tax: ~¥220,000
- Management fee: ¥25,000 × 12 = ¥300,000
- Repair reserve: ¥18,000 × 12 = ¥216,000
- Building insurance (fire + earthquake): ~¥30,000–¥60,000 (annualized)
- Property management fee to rental agent: 5% of rent ≈ ¥270,000
- Withholding tax on rent (20.42%): ¥1,102,680, reconciled at filing
- Income tax payable after deductions: depends on depreciation; often lower than the withheld amount in early years
Gross rent: ¥5,400,000. Cash expenses before tax: roughly ¥1,000,000–¥1,100,000. Net taxable income after depreciation: often well below cash profit in the first 5–10 years, sometimes negative on paper.
This is a reference estimate. Your numbers depend on the building's age, the assessed value, and how aggressively depreciation is modeled.
Tax treaty considerations
Japan has tax treaties with the US, UK, Germany, France, Singapore, Australia, and most relevant jurisdictions. Treaties affect:
- Whether you can claim foreign tax credit at home for Japanese tax paid
- How rental income is reported on your home-country return
- Estate / inheritance exposure (a separate, larger topic)
The general tendency: Japan taxes Japan-sourced rental income first; your home country gives a credit. But the mechanics differ. US persons in particular face FBAR / Form 8938 reporting on Japanese accounts and PFIC issues if held through funds. Get a cross-border accountant before year one closes.
What foreign buyers most often miss
A short checklist based on cases we see:
- Assessed value drift: the next 3-year reassessment can move your tax bill 5–15%. Build a buffer.
- Repair reserve step-ups: scheduled increases are documented. Read the plan.
- Tax representative requirement: non-residents must appoint one. Without it, the spring tax notice goes nowhere useful.
- My Number / property registration: registration (登記) is in your name as a foreign individual. The Legal Affairs Bureau (法務局) accepts a sworn affidavit from your home country instead of a Japanese residence certificate, but the format matters.
- Depreciation strategy: choose the building/land split carefully and document the reasoning. The tax office can challenge aggressive splits.
- Currency risk on tax payments: Fixed Asset Tax is yen-denominated. If you fund from USD or EUR, FX moves your real cost.
A clean way to think about the burden
Group your annual costs into three buckets:
- Fixed taxes (Fixed Asset + City Planning): predictable, reassessed every 3 years
- Building costs (management + reserve + insurance): predictable, rising slowly
- Income-related taxes (only if you rent): variable, depends on depreciation and treaty
For a typical ¥100M–¥150M Tokyo condo held by a foreign owner, the fixed taxes plus building costs tend to land in the ¥800,000–¥1,400,000 per year range. Rental scenarios layer income tax on top, partly offset by depreciation.
Use this as a baseline. Then build your own model with the actual assessed value from the seller's most recent tax notice. Ask for it. A seller who refuses to share the 固定資産税納税通知書 is a risk signal.
Final notes
Japanese condo taxation is rule-based and predictable. The friction for foreign buyers is administrative — appointing a tax representative, handling withholding, filing in Japanese, reconciling with home-country taxes. None of it is unsolvable. All of it benefits from a second opinion before you sign.
This is not investment advice. The final decision is yours.
Get a second opinion before you buy: https://republic-of-real-estate.com/