Taxes When Gaining Rent Profit From Real Properties in Japan I wrote a blog on taxes last time when purchasing real properties in Japan. So, I will explain taxes for keeping real properties this time.  

1. Income Tax

First, you must calculate profit by subtracting costs and expenses from rent revenue. Purchasing costs are costed by depreciation over around 15 years to 40 years apart from land, which can not be costed. Then, if a corporation runs a business, you must pay income taxes with a profit of around 30%, including local taxes. If you run a business as a sole proprietor, you must pay national income taxes of 5% to 45%, depending on profits. Plus, 10% of local taxes and 5% of business taxes.

2. Consumption Tax

Be careful because consumption tax related to real properties is very complicated in Japan. Consumption taxes are basically calculated by deducting paid taxes from received taxes. First, rent fees are taxed at 10%, aside from land and residential buildings. Then, regarding payments, if your property is a residential building, you can not deduct paid consumption taxes when purchsing, which means you can not get refund paid taxes, while you can deduct them from received taxes if you lend office. It is because you will not receive consumption taxes from your residential tenants. Therefore, the government does not allow you to deduct or offset paid taxes. So, you should pay attention to this matter when you estimate the profit from investing.  

3. Real Property Tax

A owner having real property must pay real property tax to city govornment. Tax is calculated by multiplying around 1.4% to assesed value of property, which said around 70% of current value.