Real estate purchase process

Anyone can buy property in Japan. Yes, even foreigners outside of Japan. Here’s what you need to know.

Step-by-step overview

1. Find and Contact a Realtor: Local professionals provide market knowledge, legal expertise, cultural understanding, property selection, negotiation skills, administrative assistance, a network of contacts, and risk mitigation.
2. Consult with a Bank: Determine your budget, seek mortgage pre-approval, understand interest rates and loan options, gain negotiating power, and learn about any hidden costs.
3. View and Assess the Property: Consider Japanese property standards, which may differ significantly from Western expectations.
4. Express Your Interest: Send a Letter of Intent and the purchase application.
5. Negotiate with the Seller: Discuss the purchase price and terms, which may take 7 days to 4 weeks.
6. Close the Deal: Provide necessary documents and a 10% cash deposit.
7. Finalize the Settlement: Transfer ownership at the buyer's bank, managed by a judicial scrivener, by paying the remaining balance, receiving the keys, and completing the property title transfer.

Required documents for real estate

Those living in Japan should prepare these items when purchasing real estate in Japan.

• Certificate of residence (juminhyo): Proof of your residential relationship in your city or ward.
• Residence card (Zariryu Card): A card for foreign nationals living in Japan.
• Registered seal (Jitsuin): A signature on official documents in Japan. The seal must be registered with the municipal office of a city, ward, town, or village.
• Certificate of seal impression (Inkan Shomei): Your seal has a certificate called an Inkan Shomei, which is similar to a notarized signature in the West.
• Japanese bank account information: not required when paying in cash
• Identification: A valid ID such as a passport and driver’s license.

Non-Japanese residents will need an affidavit, a document proving their address and signature.

It must be notarized by a notary public or the consular section of their home country. This document is important to verify the ID and legal standing of non-residents buying property in Japan.

Property taxes

Here are key taxes related to property acquisition and ownership that you should be prepared for:

Tax Type	Description	Tax Amount
Real Estate Acquisition Tax (不動産取得税)	A one-time tax is imposed when purchasing property.	~3% of property value for residential land/buildings.
Registry License Tax (登録免許税)	Tax for transferring or changing property ownership.	~2% of assessed property value.
Stamp Duty (印紙税)	Tax on property transactions based on contract value.	Up to 10,000 JPY for a property valued between 10 million to 50 million JPY. Up to 60,000 JPY for a property valued between 100 million to 500 million JPY.
Consumption Tax (消費税)	Applied to newly built properties.	10% of the property’s sales price (excluding land).
Fixed Asset Tax (固定資産税)	Annual tax based on property value.	1.4% of property value.
City Planning Tax (都市計画税)	Annual tax for city planning.	0.2%-0.4% of property value.
Capital Gain Tax (資本利得税)	Tax on profit from property sales.	20%-39% based on the property holding period.
Inheritance/Gift Tax	Taxes on inherited or gifted property.	Variable; exemptions apply.
Withholding Tax	Applied to non-resident sellers.	~10% of total property price.
Income Tax	Tax on income generated from the property.	Progressive rates; vary for individuals and corporations.

Property owners in Japan must pay Fixed Asset Tax and City Planning Tax every year. For non-Japanese residents, you need to appoint a tax representative (納税管理人) to help pay these property-related taxes.

How to set up utilities

Before moving into your property, you must set up water, electricity, and gas. It’s best to apply at least two weeks in advance.

Your real estate agent or the property management company will have a list of utility providers for you to use. There may be only one option for electricity, gas, and water.

You can search for your providers by typing [location市 or 区] 電気・ガス・水道.

Electricity

1. Apply online or phone with major providers like TEPCO, KEPCO, or Chubu Electric. Or assign MailMate as your utility liaison and they’ll set it up for you.
2. Choose the amperage (standard is 30A).
3. Once approved, you can turn on your electricity breaker. A staff worker might visit to activate it for you.
4. Pay your bills to avoid late fees or service cuts.

Gas

Japan has two types of gas: City Gas (cheaper) and Liquid Propane.

1. Apply online or by phone with major providers like Tokyo Gas, Saibu Gas, Osaka Gas, etc. Or assign MailMate as your utility liaison and they’ll set it up for you.
2. Schedule a visit from the gas company worker for activation.
3. Be home for the gas activation test.

Water

Local municipalities manage water.

• Apply for running water online with your local water bureau. Or assign MailMate as your utility liaison and they’ll set it up for you.
• Ensure the contract is under your name
• Cancel when you move out

If you are planning to move out, you must cancel your contracts so that you will not be charged when a new tenant comes in.

Neighborhood associations

Neighborhood associations, also known as chounaikai (町内会) or jichikai (自治会), are voluntary organizations that aim to improve community life.

They comprise households, cover specific non-overlapping areas, and involve all households as members. They handle various local issues and represent the community to the government and other parties.

Here are key information about Japanese neighborhood associations:

• Membership and Fees: Monthly fee between 300-600 yen.
• Funding: comes from membership fees and fundraising activities.
• Activities:

• Crime prevention
• Disaster preparedness
• Community events such as festivals and social gatherings
• Maintenance tasks such as cleaning and traffic safety

Contact your city office to find your local associations.

How to take out your trash

The types of trash

Trash is separated into 4 different categories in Japan

• Burnable: Kitchen waste, paper scraps, small wood, rubber, and leather items.
• Non-burnable: Metal items, broken glass, ceramics, electronic devices, and hazardous items.
• Recyclables: Bottles, cans, plastics, newspapers, cardboard.
• Oversized: Large appliances, furniture (requires prior arrangement for pickup)

Various areas of Japan have different garbage disposal procedures, so for specific information, refer to your local municipal office or website.

Traditional Japanese house floor plan

Here is what a traditional floor plan in Japan looks like:

Additionally, traditional Japanese houses have their pros and cons:

• Advantages: Humidity control, soundproofing, durability, and fireproofing of materials.
• Disadvantages: High construction costs, limited city space, less insulation, and higher maintenance costs.