Fixed Asset Tax and City Planning Tax are important taxes you pay while holding real estate in Japan. Fixed Asset Tax is calculated based on the assessed value (固定資産税評価額), with a standard rate of 1.4%. The assessed value is usually lower than market price, which is an important point in calculation. New homes and small residential properties may qualify for reductions/exemptions.
Fixed Asset Tax calculation example
| Item | Explanation | Example |
|---|---|---|
| Market price | Actual transaction price | JPY 50,000,000 |
| Assessed value | Typically ~70% of market price | JPY 35,000,000 |
| Standard tax rate | Fixed rate | 1.4% |
| Annual tax | Assessed value × rate | JPY 490,000 |
| New home reduction | 50% reduction for first 3 years | First 3 years: JPY 245,000/year |
City Planning Tax is also calculated based on the assessed value. The tax rate cap is 0.3% and it is levied by municipalities.
Payment schedule
| Installment | Due month | Share | Notes |
|---|---|---|---|
| 1st | June | 25% | Tax notice delivered Apr–May |
| 2nd | September | 25% | Bank transfer available |
| 3rd | December | 25% | Convenience store payment available |
| 4th | February (next year) | 25% | Late payment incurs penalties |
Tax notices are typically sent between April and May each year. Payments are commonly split into 4 installments due in June, September, December, and February of the following year. Payment can be made via bank transfer or at convenience stores. Tax optimization tips include understanding available deductions/reductions, making appropriate use of depreciation, and consulting tax professionals.