Tokyo property
50 Tokyo property FAQs
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50 cross-border Tokyo property FAQs
Browse by topic or search questions and answers. Numerical examples are illustrative, not terms for a specific transaction.
50 / 50 questions shown
FAQ 1 Can foreigners purchase real estate in Tokyo?+
Conclusion
Yes. Ordinary houses, condominiums, land and income properties are not universally prohibited to foreigners solely because of their nationality; even without permanent residency or a Japanese resident record you can obtain transfer of ownership registration if you meet the requirements.
Explanation
However, “being able to buy” is different from having identical procedures as a Japanese national. Practical issues include proof of an overseas address, signature authentication, identity verification, explanation of the source of funds, a domestic contact, and any reporting under the Foreign Exchange and Foreign Trade Act. Specific restrictions or notification requirements can apply to farmland, forests, areas important to national security, and large‑scale land transactions.
Illustrative example
For example, when an individual residing in China purchases a used condominium in Tokyo with personal funds, the buyer typically prepares a passport, official documents proving the overseas address, signature authentication or a sworn statement, a registration power of attorney, etc., and a judicial scrivener conducts identity verification before registration.
Pre-purchase checks
Confirm property type; acquisition name (individual or corporate); resident vs non‑resident classification; acceptable form of address proof; and whether a report under the Foreign Exchange and Foreign Trade Act is required before signing the contract.
FAQ 2 Can I purchase property even if I don't live in Japan?+
Conclusion
Yes. You can purchase even if you do not reside in Japan; some transactions can proceed from contract to closing without your physical presence in Japan.
Explanation
In practice, challenges include time zones, international mail, overseas remittances, identity verification, and notarization/authentication of documents. You must confirm with each party whether the sales contract can be electronic, which matters can be handled by power of attorney, and whether a judicial scrivener will accept online identity verification.
Illustrative example
For example, if an overseas resident purchases a property for ¥50,000,000 in cash, the yen funds should be credited to a designated Japanese account before closing. Because remittance screening may request documentation of the source of funds, prepare bank balance certificates, income proofs, or documents of sale proceeds in advance.
Pre-purchase checks
Domestic contact in Japan; tax representative; property manager and postal delivery address; and set the deadline by which closing funds must arrive in the designated account.
FAQ 3 Can I purchase property without permanent residency?+
Conclusion
Permanent residency (long-term resident status) is not required simply to purchase real estate.
Explanation
However, the presence or absence of permanent residency has a significant impact on mortgage underwriting. Do not confuse the legal ability to buy with loan eligibility. Cash purchases may be possible for overseas buyers without a residence status, but identity verification and funds verification will be strict.
Illustrative example
For example, an employee living in Japan on a work visa can enter a purchase contract for a home, but banks’ lending conditions vary: some may require permanent residency, a spouse guarantor, or a larger down payment.
Pre-purchase checks
Decide cash purchase vs. financing before house-hunting; if using financing, obtain a pre-approval/credit screening in advance.
FAQ 4 Does buying real estate grant a Japanese visa or permanent residency?+
Conclusion
Purchasing real estate alone does not automatically grant you a residence status, a business/management visa, or permanent residency.
Explanation
Property ownership and immigration residence status are governed by separate systems. Buying an expensive home by itself does not qualify you for long‑term stay in Japan. If you consider a business/management residence status, you must examine actual business operations, an office, funding, and management reality against the statutory requirements.
Illustrative example
For example, purchasing a ¥100,000,000 condominium as your home does not necessarily allow you to reside beyond short‑term stay limits. Conversely, holding a lawful residence status does not require you to purchase property.
Pre-purchase checks
Verify that sales materials do not assert or promise “buying guarantees a visa”; consult an administrative scrivener or a lawyer for immigration procedures.
FAQ 5 Which is better: individual ownership or corporate ownership?+
Conclusion
Do not decide solely on short‑term tax rates; choose individual vs corporate ownership after comparing intended use, holding period, financing, succession, sale, and accounting costs.
Explanation
For owner‑occupied property, individual ownership is often the natural choice. Corporate ownership becomes a candidate when investment scale is large, multiple properties are operated, or there is joint investment. Corporations incur setup, accounting and filing fixed costs, and corporate loans have different terms than personal mortgages.
Illustrative example
For example, for a single property with annual rent around ¥1,800,000, corporate maintenance costs may exceed tax savings. Conversely, if you acquire multiple buildings and employ staff or maintain an office, corporate ownership often becomes more rational.
Pre-purchase checks
Before purchase, compare three options (individual, Japanese corporation, overseas corporation): acquisition costs; annual tax burden; tax on sale; inheritance/succession implications; and account‑opening and ongoing administrative costs.
FAQ 6 Can ownership be shared with family members or a spouse?+
Conclusion
Yes. However, ownership shares should, as a rule, reflect the actual proportions of financial contribution.
Explanation
If one party provides all the funds but the title is registered 50/50, that may be treated as a gift to the non‑contributing party. When using a mortgage, confirm the differences between pair loans, joint and several liability, and guarantor arrangements.
Illustrative example
For example, if the husband contributes ¥40,000,000 and the wife ¥10,000,000 to buy a ¥50,000,000 property, the basic approach is to set shares at husband 4/5 and wife 1/5.
Pre-purchase checks
Bank transfer records; proof of down payment contributions; allocation of loan responsibility; ensure registered shares match actual contributions; for international marriages confirm the property regime under the spouse’s home country law.
FAQ 7 Can a foreign corporation purchase property?+
Conclusion
It may be possible, but purchasing in a corporate name abroad typically requires more documents and banking/registration checks than a personal purchase.
Explanation
You will be asked for the company’s registration in its home jurisdiction, certificate of existence, proof of representative authority, identification of the beneficial owner(s), signature authority, board/shareholder resolutions, etc. Foreign‑language documents require Japanese translations. Pay attention to Japanese taxation on sale/rental, permanent establishment risk, appointing a tax agent, and remittance requirements.
Illustrative example
For example, when a Hong Kong company acquires a commercial condominium unit in Tokyo, prepare the Certificate of Incorporation and additional documents proving the representative’s authority and the beneficial owner, and coordinate with a Japanese judicial scrivener and a tax accountant.
Pre-purchase checks
Existence of the company; proof of representative authority; stated purchase purpose; remittance source account name; establish in advance the tax filing and management framework before contracting.
FAQ 8 Is the ownership permanent? What is the difference from leasehold/land lease rights?+
Conclusion
A property held in ownership is not extinguished by an expiry date; however, there are ongoing burdens such as property tax and regulatory constraints.
Explanation
Leasehold means you do not own the land but acquire a right to use it. While leasehold prices can be lower, you must check ground rent, renewal provisions, consent for transfer, consent for rebuilding, and end‑of‑term treatment. For fixed‑term leaseholds, the handling at contract expiry is particularly important.
Illustrative example
If in the same area a freehold is priced at ¥60,000,000 and a leasehold at ¥48,000,000, compare not only the price difference but also monthly ground rent, remaining term, consent fees on sale, and which banks will lend on the property.
Pre-purchase checks
Title register; leasehold agreement; remaining term; landlord’s consent; ground rent revision clauses; whether security/pledge can be set.
FAQ 9 What documents are required at the time of purchase?+
Conclusion
Required documents vary depending on residency status and the name under which the property will be registered.
Explanation
For individuals resident in Japan, typical documents include a residence card, resident record, certificate of seal impression, passport, etc. For non‑resident individuals, passport, proof of address, signature certificates or sworn statements are central. Corporations must add registration details, proof of representative authority, beneficial owner information, and corporate resolutions. Pay attention to document validity periods and translator identification on translations.
Illustrative example
For a non‑resident individual, if the address proof does not match the name format on the passport, supplemental documents may be requested; harmonize romanization order, middle names and abbreviations in advance.
Pre-purchase checks
Separate lists of required documents for contract use, registration, and bank use; originals vs copies; need for notarization or apostille; whether translations are required and how translators must be identified.
FAQ 10 Can foreigners obtain a mortgage?+
Conclusion
Foreign nationals may be able to obtain a mortgage, but institutions differ greatly; obtain pre‑approval before proceeding with purchase decisions.
Explanation
Lenders look at permanent residency status, income earned in Japan, years of employment, length of stay, Japanese language ability, spouse situation, down payment, credit history, and the value of the property as collateral. Investment loans and owner‑occupier mortgages are distinct products.
Illustrative example
If you work in Japan, earn ¥9,000,000 annually, have 4 years’ service and ¥15,000,000 in own funds and are considering a ¥60,000,000 home, seeking a ¥45,000,000 loan you should submit pre‑approvals to multiple banks and compare not only rates but guarantee fees and prepayment conditions.
Pre-purchase checks
Include a loan contingency in the sale contract; set an approval deadline; specify desired loan amount; identify target banks for pre‑approval.
FAQ 11 If you don't have permanent residency, how much down payment is required?+
Conclusion
There is no single rule for down payments without permanent residency; required amounts vary by applicant and bank and can range from a small sum up to several tens of percent of the property price.
Explanation
You cannot rely on generic online examples to assume a fixed percentage like “always 20%.” Transaction costs may not be financed and should be covered in cash separately. Financing for investment properties is typically stricter than for owner-occupied homes.
Illustrative example
For a ¥50,000,000 property with 80% financing, the loan would be ¥40,000,000 and the down payment ¥10,000,000. If transaction costs are estimated at ¥4,000,000, total cash required would be about ¥14,000,000.
Pre-purchase checks
Confirm the required down payment; confirm the breakdown of transaction costs and whether they are financeable; confirm the amount and timing of any deposit (earnest money); allow margin for exchange-rate changes; separately budget maintenance costs for the first six months after purchase
FAQ 12 Can I get a loan based solely on overseas income?+
Conclusion
It is possible to obtain a loan based solely on overseas income, but the lenders that will accept this are limited; eligibility depends on the income country, currency, employer, tax documentation, remittance restrictions and the property’s intended use.
Explanation
Banks differ in how they convert foreign salaries to JPY, treat bonuses, require translations of foreign-language documents, check local credit records, and whether they require a domestic guarantor. You must confirm each bank’s specific requirements in advance.
Illustrative example
For a buyer paid in Shanghai buying a Japanese investment property, anticipate being asked to provide 2–3 years of employment contracts, pay slips, tax certificates and bank deposit records, and prepare those documents accordingly.
Pre-purchase checks
Before applying for a property, confirm which lenders accept overseas income; formally request the list of required documents and translation requirements; allow time to obtain tax certificates and remittance/deposit histories
FAQ 13 What exactly is checked during the loan assessment?+
Conclusion
Loan underwriting will verify both the applicant’s repayment capacity and the property’s collateral value.
Explanation
On the applicant side, lenders check age, annual income, length of employment, employment type, residency status, existing debts, repayment history, and the source of own funds. On the property side, they assess location, floor area, age, construction, management, any legal issues, rent level and market liquidity. Discrepancies between the application and submitted documents are a major problem.
Illustrative example
Even with an annual income of ¥10,000,000, a high credit-card loan balance, unclear source of down payment funds, or a property that cannot be rebuilt may prevent approval for the requested amount.
Pre-purchase checks
Accurately declare other borrowings; prepare bank statements demonstrating the source of your own funds; submit property documents (area, building age, management status, etc.) early
FAQ 14 What is the difference between a residential mortgage and an investment loan?+
Conclusion
Use a residential mortgage for a property you will occupy and an investment loan for properties intended to generate rental income.
Explanation
Residential mortgages generally offer lower interest rates but assume owner-occupation. Using a residential mortgage for an investment purpose can breach the loan agreement and risk acceleration of repayment. If you later rent the property due to relocation, consult the bank.
Illustrative example
If you plan from purchase to lease the property to a third party, do not follow advice to move your residence registration to obtain a residential mortgage; instead arrange formal financing for investment properties.
Pre-purchase checks
Clarify the property's intended use; confirm the planned move-in date; honestly disclose any rental plans to the bank and the sales agent
FAQ 15 For a used condominium priced at ¥50,000,000, how much total cash is needed?+
Conclusion
For an all-cash purchase, it is prudent to budget additional transaction costs roughly in the low single digits up to just under 10% of the purchase price.
Explanation
Typical costs include agent fees, registration taxes and judicial scrivener fees, acquisition tax, stamp tax, pro rata fixed-asset tax adjustments, fire insurance, and loan-related fees. Actual amounts vary with tax relief measures and assessed values.
Illustrative example
As an illustrative estimate: property ¥50,000,000; agent fee ≈ ¥1,716,000; registration and scrivener fees ¥500,000; taxes/settlements/insurance/loan fees ¥1,500,000 — total ≈ ¥53,720,000. Note that the real-estate acquisition tax may be billed later.
Pre-purchase checks
Do not rely on rough estimates; obtain a property-specific funding plan before applying; confirm the timing of each payment
FAQ 16 How much is the brokerage fee?+
Conclusion
When the sale price exceeds ¥4,000,000, a commonly used upper-limit formula for brokerage fees is “price × 3% + ¥60,000 + consumption tax.”
Explanation
This is a simple statutory upper-limit calculation; the actual fee is set in the brokerage agreement. The fee structure and who bears it can differ depending on the transaction (for example, seller-side transactions without an intermediary).
Illustrative example
For example, at a sale price of ¥50,000,000: ¥50,000,000 × 3% + ¥60,000 = ¥1,560,000; consumption tax ¥156,000; total ¥1,716,000 as an upper-limit calculation example.
Pre-purchase checks
Confirm the tax-inclusive amount in the brokerage agreement; confirm the payment timing; confirm the buyer’s payable amount regardless of single- or dual-agency
FAQ 17 How much earnest money/deposit is required?+
Conclusion
Practice often sees earnest money proposed at around 5–10% of the sale price, but this is not fixed by law.
Explanation
Earnest money is paid at contract signing and applied to the balance. Under a rescissible deposit (kaituke), the buyer may withdraw by forfeiting the deposit within a specified period, and the seller may rescind by returning double the deposit; applicability depends on commencement of performance and contract terms.
Illustrative example
For example, on a ¥50,000,000 price with a 5% deposit, the earnest money is ¥2,500,000. Because overseas remittances can be delayed, do not set an unduly small deposit; plan the remittance method so funds arrive by the contract date.
Pre-purchase checks
Confirm the nature of the deposit (whether it is rescissible); confirm the cancellation deadline; confirm agreed penalties for breach; confirm the relationship with any loan contingency
FAQ 18 What taxes apply at purchase and after purchase?+
Conclusion
At purchase you will face stamp tax, registration and license tax, and real estate acquisition tax; during ownership there are fixed asset tax and city planning tax; rental operations implicate income taxation.
Explanation
Some taxes are calculated on the fixed‑asset‑tax assessed value rather than the sale price, and home‑related reductions are conditional. Non‑resident buyers may have issues such as the need for a tax representative or withholding obligations.
Illustrative example
Even after settlement is completed, you may receive a real estate acquisition tax bill several months later. Ensure your cash plan includes reserves for taxes paid after closing.
Pre-purchase checks
Confirm which tax items apply; confirm timing of each tax; confirm the valuation base and whether reductions apply; check filing requirements or need for a tax representative with a tax advisor or the municipality.
FAQ 19 How much are the annual fixed asset tax and city planning tax?+
Conclusion
Annual fixed asset tax and city planning tax cannot be calculated accurately from the property price alone; they depend on the fixed-asset-tax assessed value, land share, residential land exceptions, new-construction reductions, and the municipality.
Explanation
The standard fixed asset tax rate is 1.4% and city planning tax has an upper limit of 0.3%, but reductions to the taxable base mean you must not simply multiply the sale price by those rates.
Illustrative example
A ¥50,000,000 sale price does not mean the tax will be ¥850,000. Practically, the most reliable method is to check the seller’s latest annual tax notice or the official public charge certificate to confirm the annual tax amount.
Pre-purchase checks
Obtain the latest year’s tax notice (annual tax amount); check factors that may change next year’s amount; confirm when any new-construction reduction ends; confirm proration and settlement allocation at closing
FAQ 20 What is the yield percentage for real estate investment in Tokyo?+
Conclusion
Investment yield in Tokyo varies by area, building age, use, and rental condition; a single “Tokyo average” is not a reliable judgment.
Explanation
Gross yield is annual rent divided by price; net yield subtracts management fees, reserve for repairs, property management fees, fixed asset tax, vacancy and repair allowances. Properties with higher capital value in central areas tend to show lower gross yields.
Illustrative example
For example, at a price of ¥40,000,000 with monthly rent ¥140,000, gross yield is 4.2%. Subtracting annual expenses of ¥450,000 yields a simple net yield of about 3.1%.
Pre-purchase checks
Confirm current rent and market rent; confirm annual expenses (management fee, repair reserve, taxes, etc.); confirm assumed vacancy rate; recalculate using total investment including acquisition costs
FAQ 21 What is the difference between gross yield and net (actual) yield?+
Conclusion
Gross (surface) yield is a simple indicator; net (actual) yield reflects operating costs.
Explanation
High yields shown in listings often omit costs such as management fees, repair reserves, property tax, restoration costs, leasing fees and vacancies. Net yield (actual cash flow) deducts these operating costs, so relying only on gross yield can make a property look attractive even if the real cash flow is negative.
Illustrative example
If annual rent is ¥1,800,000 and the price is ¥36,000,000, the gross yield is 5%. If annual expenses are ¥600,000 and acquisition costs are ¥2,500,000, the net result is (¥1,800,000 − ¥600,000) = ¥1,200,000; dividing by (¥36,000,000 + ¥2,500,000 = ¥38,500,000) gives about 3.12%.
Pre-purchase checks
Check the rent roll; review lease contracts; obtain breakdown of management fees and other expenses; confirm tax amounts; check repair/maintenance history
FAQ 22 Which is recommended: new construction or resale (used) property?+
Conclusion
Whether new or used is better depends on whether the purchase is for owner-occupation or investment, and whether you prioritize warranty/amenities or price.
Explanation
New properties offer equipment, warranties and fewer initial repairs but include a new-building premium and will be compared with the resale market immediately after handover. Used properties make it easier to verify price and rent track records, but require careful inspection of repairs and management condition.
Illustrative example
If a new unit is ¥55,000,000 with expected rent ¥180,000/month and a used unit is ¥45,000,000 with current rent ¥170,000/month, you should compare not only the ¥10,000/month rent gap but also the ¥10,000,000 price difference, management fees, repair reserve contributions and likely resale prices.
Pre-purchase checks
Compare prices and rents using comparable transactions at the same station, same area/size and same age band.
FAQ 23 Are tower condominiums suitable for investment?+
Conclusion
Tower condominiums offer strengths in convenience, views, shared facilities and name recognition, but not all towers will appreciate in value.
Explanation
You should check total unit count, management fees, long-term repair plans, elevator capacity, disaster response, the risk of future construction blocking views, and rental competition. Price differences between high and low floors and by orientation can be large, so don’t judge by building name alone.
Illustrative example
Within the same building, a unit whose view may be blocked in the future can have a different exit price from a unit with a permanent view. If monthly management plus repair reserve totals ¥60,000, that cost continues even while the unit is vacant.
Pre-purchase checks
Check the long-term repair plan; verify reserve fund balance; check planned increases to management or reserve fees; confirm disaster-response equipment; review surrounding building plans
FAQ 24 Is investing in studio apartments safe?+
Conclusion
One-room investments are easy to start with small capital, but concentrated risk means one vacancy reduces rental income to zero.
Explanation
Key factors are distance to station, unit area, rent band, management condition and sublease (guaranteed rent) terms. There are cases where buyers purchase new one-room units based on sales pitches and later find they paid above market or accepted unfavorable sublease terms.
Illustrative example
If rent is ¥100,000, loan repayment ¥90,000 and management/other fees ¥20,000, you have a ¥10,000 monthly deficit even while occupied. Vacancy and restoration costs can worsen cash flow, so evaluate cumulative cash flow, not just tax benefits.
Pre-purchase checks
Compare the purchase price to the secondhand market; confirm prevailing rent levels; check whether and how a sublease can be terminated; ensure funds to cover about 6 months of vacancy.
FAQ 25 Is it okay to buy a condominium over 20 years old?+
Conclusion
A condominium over 20 years old is not automatically unsuitable; location, seismic resistance, plumbing, repair history and the management association’s finances are key.
Explanation
Older buildings can be viable if major repairs have been properly carried out and reserves are sufficient; conversely, a newer building can be risky if reserves are inadequate or there are construction defects. In addition to the 1981 seismic code change, check building permits/inspection certificates and seismic assessment reports.
Illustrative example
A 25-year-old building three minutes’ walk from the station with good repair history can be easier to rent or sell than an 8-year-old building 15 minutes from the station that has a reserve-fund shortfall.
Pre-purchase checks
Check the long-term repair plan; review general meeting minutes; verify the repair reserve balance; check for arrears; confirm whether plumbing has been renewed.
FAQ 26 What are management fees and reserve repair funds used for?+
Conclusion
The management fee covers day‑to‑day management, while the reserve fund is money set aside for future major repairs.
Explanation
Management fees pay for cleaning, building staff, common electricity, equipment inspections and similar ongoing costs; the repair reserve is accumulated for major works such as exterior walls, waterproofing, piping and elevators. An excessively low reserve can lead to future fee increases or one‑off special assessments.
Illustrative example
If the monthly management fee is ¥12,000 and the monthly reserve is ¥8,000, the monthly total is ¥20,000 (¥240,000 per year). If the reserve is planned to rise to ¥16,000 in five years (an increase of ¥8,000/month), the annual burden would increase by about ¥96,000.
Pre-purchase checks
Confirm not only current amounts but also any staged increase plans; check for one‑off special assessments and whether they were approved by general meeting resolution; verify delinquency levels and the condominium’s financial status
FAQ 27 Should properties with high repair reserve funds be avoided?+
Conclusion
A high repair reserve is not automatically bad; you must assess whether it is reasonable for the needed repairs.
Explanation
High reserves may be justified by many large assets or by efforts to correct past underfunding. Low reserves are not necessarily safe either. What matters is the reserve balance relative to projected future works and the realism of the long‑term repair and funding plan.
Illustrative example
A monthly reserve of ¥20,000 with a healthy balance and no planned increases may be preferable to a monthly reserve of ¥5,000 that is scheduled to triple in a few years — the latter can lead to a heavy future burden.
Pre-purchase checks
Compare the long‑term repair plan with the funding plan; check for past shortfall corrections or special levies; have a professional inspect the building condition.
FAQ 28 How do you choose an earthquake-resistant property?+
Conclusion
Choose properties by checking seismic standards, structural system, ground conditions, construction quality, maintenance and disaster countermeasures together.
Explanation
The post‑June‑1981 seismic standard is an important guideline, but judgement should be based on documents such as the building confirmation date. Verify whether the building is base‑isolated, has tuned‑mass dampers, or conventional seismic design; check ground conditions (liquefaction, flood risk), and assess resilience of systems during outages; also review maintenance and disaster preparedness.
Illustrative example
For tower condominiums, beyond structural safety you should examine elevator operation during blackouts, water supply, emergency power, stockpiles and in‑place evacuation plans, since these affect continuity of daily life.
Pre-purchase checks
Confirm building confirmation and inspection certificates and any seismic diagnosis; review ground reports and hazard maps (liquefaction, inundation); check the management association’s disaster plan and records of equipment maintenance.
FAQ 29 How many minutes from the station is preferable for a property?+
Conclusion
Closer to the station is generally better for rental and resale, but balance that against price, noise and the strength of the line.
Explanation
Advertised walking times are calculated as 1 minute per 80 m of road distance, so they may not account for traffic lights, slopes or the time to reach the ticket gate. Access to multiple lines and direct services to major stations also matters for demand.
Illustrative example
A listing that says '7 minutes on foot' may in fact take 12 minutes to the ticket gate and include a steep slope, which affects demand. Conversely, a 10‑minute walk near a shopping street or with good bus links may be viewed favorably.
Pre-purchase checks
Measure actual walking time by day and night; confirm time to the ticket gate and presence of slopes; check noise, flood risk and available alternative transport when lines are suspended
FAQ 30 Can I manage rental properties while living overseas?+
Conclusion
You can manage rental property in Japan while living overseas, but you need a Japan‑based system for management, tax, remittances and emergency response.
Explanation
It is common to entrust a property manager with marketing, leasing, rent collection, complaint handling, repairs and move‑out settlements. Rent payments to non‑residents may trigger withholding obligations depending on the tenant’s use and other factors. You must sort out tax treatment and how emergencies will be handled locally.
Illustrative example
Even if rent is ¥150,000, with a management commission of 5%, additional management costs of ¥20,000, plus tax, insurance and repairs, the amount you can remit is not simply ¥150,000.
Pre-purchase checks
Specify the scope and fees of management delegation; confirm withholding tax treatment and tax obligations; account for remittance fees and FX risk and set an emergency repair spending limit; stipulate monthly reporting and the manager’s duties in the contract
FAQ 31 What services does a management company provide?+
Conclusion
Depending on the contract, a management company will handle tenant sourcing, rent collection, inquiries, renewals, repairs, move‑outs and similar tasks on your behalf.
Explanation
Building (common‑area) management and rental management are separate: the former handles common areas, the latter handles private units and leasing. A low stated fee can still result in a higher total cost if marketing strength, reporting language, night‑time response or work‑order fees are charged separately.
Illustrative example
With a monthly rent of ¥150,000 and a 5% management fee, the fee is ¥7,500/month, but confirm whether renewal administrative fees, advertising, move‑out inspections/repairs and overseas remittance charges are billed separately.
Pre-purchase checks
Confirm contract termination terms; confirm existence and scope of delinquency/guarantee coverage; confirm approval limits and who bears work‑order costs; confirm reporting frequency and multilingual support; compare remittance frequency and overseas transfer fees.
FAQ 32 What costs arise if a property becomes vacant?+
Conclusion
Even when rent is not received, ongoing costs such as management fees, reserve funds for repairs, fixed asset tax and loan repayments still occur.
Explanation
Re‑letting can incur costs for restoring the unit to its original condition, cleaning, lock replacement, advertising and brokerage fees. It can be more rational to adjust rent downward early rather than keeping it above market and prolonging vacancy.
Illustrative example
If a unit with monthly rent of ¥150,000 is vacant for 3 months, and restoration costs ¥200,000 plus recruitment costs ¥150,000, the total impact including opportunity cost is on the order of about ¥800,000.
Pre-purchase checks
In the annual cash‑flow, assume 1–2 months of vacancy per year and include a repair/reserve fund.
FAQ 33 How do you deal with rent arrears?+
Conclusion
You should use a management company and a guarantor company, and define in the contract the scope for collection, advance payment and legal procedures.
Explanation
Guarantor coverage varies: it may cover only unpaid rent or also include restoration costs, litigation costs and eviction. Overseas owners, who may have difficulty deciding quickly, can give the management company authority up to a set amount.
Illustrative example
Even if a guarantor company advances rent, there can be exclusions such as waiting/exemption periods, missed renewals or exclusions for short‑term termination penalties.
Pre-purchase checks
Confirm guarantor coverage; confirm when advance payments start; confirm advance payment limits; confirm litigation and eviction handling; confirm procedures for tenants of foreign nationality.
FAQ 34 Can it be operated as a short-term rental (minpaku/Airbnb)?+
Conclusion
Operating as a short‑term rental (minpaku) is only possible if the property and locale comply with regulations, the building’s rules and any required permits or notifications.
Explanation
If condominium management rules prohibit minpaku, you cannot operate even if national law would allow it. Different regimes (private lodging law, hotel law, special‑zone minpaku) have different requirements on operating days, facilities, on‑site manager and neighbor measures.
Illustrative example
Buying a property intended for conventional long‑term rental because you believe it can be converted into a ‘high‑yield minpaku’ can fail if the management rules later prove to prohibit such use, undermining the business plan.
Pre-purchase checks
Before purchase, check zoning/land‑use, municipal ordinances, condominium management rules, fire‑safety requirements, manager arrangements and the income/expense plan.
FAQ 35 If there is rental income, is a tax return required?+
Conclusion
Rental income from real estate located in Japan is subject to Japanese taxation and, in principle, should be declared.
Explanation
You calculate taxable real‑estate income by deducting allowable expenses from rent. Management fees, repairs, taxes, insurance, depreciation and loan interest may be deductible depending on conditions; loan principal repayments are not deductible expenses.
Illustrative example
If annual rent is ¥1,800,000 and allowable expenses are ¥1,000,000, the simple taxable income is ¥800,000. Depreciation and allocation between land and building require specialist calculations.
Pre-purchase checks
Keep records of the rental start date, lease contracts, remittance statements, receipts and fixed‑asset tax documents, and consult a tax accountant.
FAQ 36 What is a tax payment manager (納税管理人)?+
Conclusion
A tax representative is a person or entity in Japan who, on behalf of a non‑resident, receives documents from Japanese tax offices and local authorities and serves as the contact point for filing and tax matters.
Explanation
The notification recipients may differ between national and local taxes. Appointing a tax representative does not change who is legally liable for the tax. You can appoint a family member or acquaintance in some cases, but consider the practical burden (document receipt, deadline management, etc.).
Illustrative example
Because a foreign address makes receiving payment notices and managing deadlines difficult, you might appoint a tax accountant or management service as tax representative and set up the filing system before rental starts.
Pre-purchase checks
Confirm the notification recipient and scope of services for national taxes; confirm the notification recipient and scope for fixed asset tax; confirm the notification recipient and scope for real estate acquisition tax.
FAQ 37 What taxes and costs apply when selling a property?+
Conclusion
On sale you will incur broker fees, registration-related costs, loan repayment costs, capital gains tax, etc.; profit is calculated as sale price minus acquisition costs and selling expenses, not simply the sale price itself.
Explanation
If the seller is a non-resident, the buyer may withhold 10.21% of the sale price as a withholding tax. This is not the final tax—any balance is settled in the income tax return. There are exceptions for certain owner-/relative-occupied properties and amount-based requirements.
Illustrative example
If sale price is ¥60,000,000, acquisition cost ¥55,000,000, and selling costs ¥2,500,000, the rough gain is ¥2,500,000. Lacking acquisition documentation can lead to an unfavorable calculation.
Pre-purchase checks
Keep purchase contract, broker fee receipts, improvement cost records, registration fee receipts, etc. until sale; confirm before closing whether withholding is required
FAQ 38 After holding for how many years does the tax on sale become lower?+
Conclusion
For individuals, capital gains on land/buildings are classified as long-term or short-term based on whether the ownership period exceeded five years as of January 1 of the year of sale.
Explanation
The holding-period test is not simply the fifth anniversary of the purchase date. Because tax rates differ substantially, moving the sale date by a few months can change the classification. Corporations are not subject to the same long-/short-term division.
Illustrative example
A property acquired in July 2022, sold in December 2027, is still within five years as of January 1, 2027; selling anytime in 2028 would be treated as long-term.
Pre-purchase checks
Confirm with a tax advisor whether the sale timing is recognized by contract date or by handover/transfer date
FAQ 39 Can the property be sold after 5 years or 10 years?+
Conclusion
You can legally sell, but there is no guarantee you will be able to sell quickly at your desired price.
Explanation
Liquidity depends on station distance, price band, floor area, property rights, management, seismic safety, whether it is tenanted or vacant, remaining loan balance, and market conditions. Thinking about the likely buyer at purchase is part of an exit strategy.
Illustrative example
If you buy at ¥40,000,000 and five years later the loan balance is ¥37,000,000 and selling costs are ¥1,500,000, you need to sell for more than ¥38,500,000 to avoid bringing cash to closing.
Pre-purchase checks
Annually update appraisal value, loan balance, selling costs, and after-tax net proceeds
FAQ 40 Which area in Tokyo should I choose?+
Conclusion
In Tokyo, choose areas not only by "famous wards" but by your budget, intended use, target tenant profile, and likely exit buyer profile.
Explanation
Central wards are pricier but offer transport, employment and brand advantages. East, north, south and west Tokyo each offer different yield and livability trade-offs; within the same ward valuation can change by station, block or even a single street.
Illustrative example
With a ¥50,000,000 budget, buying a tiny 1K in central Tokyo versus a 1LDK in a surrounding ward yields different outcomes depending on whether you target single-person rentals or owner-occupation.
Pre-purchase checks
Compare by station rather than ward: transaction prices, rents, hazard risk, redevelopment plans and expected future supply
FAQ 41 Are Minato, Chuo, and Chiyoda wards always safe?+
Conclusion
No — even popular wards can incur losses if price, management, disaster risk, or rental competition are mishandled.
Explanation
A prestigious location helps liquidity, but there are risks: overpaying, low yields, high management fees, and changes to views. Evaluate not just the ward name but each unit’s fair price, rights, seismic status, and management condition.
Illustrative example
Even in Minato Ward, a property 15 minutes on foot from the station that is pre-1981 seismic standard, on leasehold, and poorly managed may take longer to sell than a freehold property in another area at the same price level.
Pre-purchase checks
Check nearby comparable sale prices; check prevailing rents; confirm property rights (freehold vs leasehold); review management condition and management fees; check planned nearby construction or potential view changes
FAQ 42 If you buy in a redevelopment area, will it definitely appreciate in value?+
Conclusion
Not necessarily. redevelopment expectations may already be priced in.
Explanation
Check opening date, project sponsor, plan certainty, station-access improvements, and housing supply. Construction delays or large new supply can increase rental competition, so you should not pay a premium based only on expectation.
Illustrative example
If you pay 20% above market simply because a new station is planned, once the event occurs and expectations are exhausted the price may not rise further.
Pre-purchase checks
Confirm stage of urban planning decision and project approvals; confirm expected completion date; confirm number of housing units to be supplied; confirm whether current price already incorporates redevelopment expectations
FAQ 43 Which is better: Tokyo, or Osaka/Fukuoka?+
Conclusion
It depends on your objective. Compare rents, liquidity, management, and future demand attainable with the same budget, not the city name alone.
Explanation
Tokyo offers larger market size and liquidity but tends to have higher prices and lower yields. Osaka and Fukuoka may offer lower entry prices for the same budget, but site selection and local management are critical.
Illustrative example
With ¥50 million, concentrating on one Tokyo unit versus splitting into two units in other cities should be evaluated for vacancy diversification, management costs, and resale speed.
Pre-purchase checks
Compare net yields under the same conditions; compare vacancy rates; check population and employment trends; compare transaction volumes/liquidity; confirm presence of local management base
FAQ 44 Is a weak yen a good time to buy?+
Conclusion
Properties may look cheap in foreign-currency terms, but you should not decide to buy based on exchange rates alone.
Explanation
If the yen strengthens after purchase, the asset’s value in foreign-currency terms may fall; rents and sale proceeds are in yen. If you have yen income, that serves as a natural hedge. You can also stagger remittances to split timing risk.
Illustrative example
At $1 = ¥150, ¥75,000,000 equals $500,000; if later the rate is $1 = ¥120 and you sell for the same yen amount, that equals $625,000. The opposite move would produce a currency-conversion loss. This is a pre-tax simple example.
Pre-purchase checks
Separate property-price changes from exchange-rate effects in your analysis; run profit/loss scenarios in foreign currency at multiple exchange-rate assumptions
FAQ 45 Please explain the process from purchase to handover.+
Conclusion
Typical sequence: financial planning, property due diligence, offer, important information briefing, sales contract, financing, settlement and registration, then handover.
Explanation
A deposit is paid at contract signing and the balance and fees at settlement. With a loan, expect pre-approval, final approval, and execution of the loan agreement. Overseas buyers should allow extra time for notarization, international mail, and remittances.
Illustrative example
In a cash purchase, the period from contract to settlement can be a few weeks, but paperwork or remittance checks can extend that timeline. Deadlines and schedules are set individually in the contract.
Pre-purchase checks
Confirm contract cancellation/contingency terms; confirm presence and scope of loan conditions; confirm arrival of required documents; confirm remittance funds have cleared; schedule meeting with the judicial scrivener; include key handover in the project timeline
FAQ 46 Can I purchase solely online without visiting Japan?+
Conclusion
Transactions can be possible solely online if parties can arrange lawful identity verification, signatures, and registration documents.
Explanation
Online viewings are possible, but noise, odors, daylight, common areas and the surrounding environment are hard to assess remotely, so a local agent or third‑party check is recommended; some sellers or lenders do not accept electronic contracts.
Illustrative example
In practice, after an online viewing a third party will visit the site to check water pressure, mobile signal, nighttime noise, garbage areas and noticeboards, and report with photos and videos.
Pre-purchase checks
Original document signatures; notarisation; identity verification; attendance at settlement; confirm method of key handover.
FAQ 47 Which property documents must be checked before purchase?+
Conclusion
You should check the registration, important‑matters investigation report, management rules, long‑term repair plan, general‑meeting minutes, repair history, lease contracts, tax documents, and similar records.
Explanation
Verify not only the private unit but also the management association’s borrowings, reserve arrears, major repair plans, rebuilding discussions, litigation, bans on short‑term rentals, pet and office use rules. For investment properties, confirm that the current rent is not above market.
Illustrative example
Even with a 5% gross yield, if market rent after vacancy is 20% lower the cash flow collapses. Check the current lease’s start date, security deposit, renewal terms and any special clauses.
Pre-purchase checks
At least two years of general‑meeting materials; latest management important‑matters report; verify original lease contract
FAQ 48 What are typical mistakes that foreign buyers often make?+
Conclusion
Typical failures include choosing solely for high yield, buying above market, failing to prepare for taxes and management, and not planning an exit.
Explanation
Other common issues are confusing visa status with purchase, misusing mortgage purposes, mistaking sub‑leasing for guaranteed rent, insufficient repair reserves, misunderstanding leasehold rights, overseas remittances not arriving in time for settlement, and losing purchase documents.
Illustrative example
Even if marketed as “10‑year rent guarantee”, if the contract contains rent‑adjustment and termination clauses the same amount may not be guaranteed; translate and verify the contract text.
Pre-purchase checks
Prioritise contract and official documents and third‑party appraisal over sales materials
FAQ 49 How do you choose a trustworthy real estate company?+
Conclusion
Judge a trustworthy real‑estate company by licence, clarity of explanations, experience with foreign buyers, systems for management and resale, and disclosure of conflicts of interest.
Explanation
A good firm explains not only benefits but also price rationale, risks, alternatives, fees, what happens if a loan is denied, and costs on sale. Be wary of firms that assert phrases like “only now”, “guaranteed to rise”, or “tax savings are certainly profitable”.
Illustrative example
Obtain valuations and cash‑flow sheets from two firms for the same property and compare assumptions on rent, vacancy, repairs and selling costs to spot overly optimistic proposals.
Pre-purchase checks
Real‑estate licence; brokerage agreement; agent qualifications; management track record; complaints contact; confirm translation responsibility
FAQ 50 What is the most important point for foreigners to succeed in purchasing Tokyo real estate?+
Conclusion
The single most important point is to define the purchase purpose and design price, financial buffer, management, tax and exit together before buying.
Explanation
Don’t assume “Tokyo is safe” or “it’s easy because foreigners can buy.” For owner‑occupiers focus on convenience and future resale; for investors focus on after‑tax cash flow and liquidity. Only after specifying post‑purchase contacts, tax, management and repairs does operation become viable.
Illustrative example
For a ¥50,000,000 property you should stress‑test including fees, vacancy, repairs, taxes and FX, and confirm you can hold it even if rent falls 10%, interest rates rise, and sale price falls 10%.
Pre-purchase checks
Purpose; maximum budget; minimum cash reserve; holding period; sale conditions — summarise into one investment policy sheet
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