1. Acquisition taxes & transaction costs
A standard residential acquisition in Japan combines several tax components: stamp duty on the contract, registration and license tax when title is transferred, acquisition tax charged by the prefecture, and judicial scrivener fees to handle legal registration. Together, these typically represent around 4–6% of the purchase price, depending on property type and age.
2. Annual ownership taxes
Once you own the property, two annual taxes apply in most urban areas: property tax and city planning tax. They are calculated on the assessed value rather than full market value, which means the effective rate is usually lower than headline percentages suggest.
3. Financing options for foreign investors
Financing availability depends on residency status, income structure and banking relationships. Broadly, investors fall into three groups: residents with stable domestic income, non‑residents with Japan‑linked income and non‑residents with only foreign income. Each group has access to different loan‑to‑value ratios and interest ranges.
4. Legal environment and ownership rules
Japan allows freehold ownership by foreigners with no special restrictions or additional taxes. The legal process is standardised and handled by licensed professionals. This predictability is one of the reasons sophisticated capital is comfortable allocating to the country.
5. Putting costs into an investment model
In practice, investors should treat taxes, fees and financing costs as part of the all‑in acquisition price and annual carry. A well‑structured underwriting model includes realistic entry costs, recurring taxes and interest, and compares them to station‑level rent and GRM. Deals that still look attractive after this adjustment are rare — and worth serious attention.