Selling Japanese Property as a Non-Resident: Capital Gains Tax Guide

Selling property in Japan is a significant financial event — and for non-residents, it comes with tax obligations that are easy to overlook. Unlike residents, non-resident sellers face withholding at source, strict filing deadlines, and limited access to exemptions that Japanese residents take for granted. This guide explains what to expect and how to stay compliant.

What Is Capital Gains Tax on Real Estate in Japan?

When you sell Japanese property, the profit you make — known as 譲渡所得 (joto shotoku), or capital gains — is subject to income tax. The rate depends on how long you owned the property before selling:

Ownership Period	Classification	Tax Rate
5 years or less (as of January 1 of the sale year)	Short-term (短期)	30.63%
More than 5 years	Long-term (長期)	15.315%

Note: Non-residents are not subject to Japan's residents tax (住民税), so these rates are lower than those applied to Japanese residents, who pay an additional 5% or 2%.

The tax is calculated on your net gain, not the gross sale price. You can deduct the original purchase price, acquisition costs (agent fees, registration taxes, legal fees), and capital improvement costs from the sale proceeds.

Withholding Tax at Source

For non-resident sellers, Japan imposes a withholding tax (源泉徴収) obligation on the buyer if the sale price exceeds ¥100 million. In those cases, the buyer must withhold 10.21% of the purchase price and pay it to the tax authorities on your behalf.

If the sale price is ¥100 million or less, no withholding is required — but you are still required to file a tax return and pay any tax owed.

The withheld amount is a prepayment, not a final tax. If your actual gain-based tax is lower than 10.21% of the purchase price, you can claim a refund through your final tax return.

Filing Requirements

Non-residents who sell Japanese property must file a Japanese income tax return (確定申告) for the year in which the sale occurred. The filing deadline is March 15 of the following year.

As a non-resident, you are required to have a tax representative (納税管理人) in Japan to handle your filing and any correspondence with the tax authority. Without one, you cannot legally complete the process from abroad.

Required documents typically include:

• Purchase contract (売買契約書) from when you originally bought the property
• Sale contract (売買契約書) for the current transaction
• Receipts for acquisition costs and capital improvements
• Certificate of registered matters (登記事項証明書)
• Copy of your passport or identification

Tax Treaties: Can They Reduce Your Liability?

Japan has tax treaties with many countries — including the United States, United Kingdom, Australia, Canada, Germany, and Singapore — that may affect how your gain is taxed. Some treaties assign taxing rights on real estate gains exclusively to the country where the property is located (Japan), while others allow credits or exemptions in your home country.

The key questions to ask your home country's tax advisor are:

• Does Japan's capital gains tax on this sale get credited against my home country tax?
• Does the treaty exempt me from Japanese tax on this type of gain?
• Do I need to file in both countries?

Treaty benefits must be actively claimed — they are not applied automatically. A tax professional familiar with both Japanese tax law and your home country's rules is essential for cross-border sales.

Common Exemptions That Do Not Apply to Non-Residents

Japanese residents enjoy several valuable exemptions when selling their primary residence, including a ¥30 million special deduction (3,000万円特別控除) and reduced long-term rates of 10% on the first ¥60 million of gain. These exemptions are generally not available to non-residents, as they require the property to have been your primary residence in Japan.

If you lived in the property as a resident at some point, you may qualify for a partial exemption. This requires detailed analysis of your residency history and the specific rules in effect during the relevant periods.

FEFTA Reporting Obligations

In addition to income tax, selling Japanese real estate as a non-resident may trigger a reporting obligation under the Foreign Exchange and Foreign Trade Act (外為法 / FEFTA). If the buyer is a Japanese resident purchasing from you (a non-resident), the buyer has a 20-day reporting obligation — but you may be asked to provide documentation to support their filing.

How Japan YES Can Help

Japan YES Property Management can serve as your tax representative throughout the sale process — receiving all correspondence, coordinating with your accountant, and ensuring your final tax return is filed on time. We also handle the mail and document management that inevitably accompanies a property sale.

Contact us to discuss your situation, or view our plans to see how we support overseas owners throughout the ownership lifecycle — including at exit.