Tax on Selling Property in Japan: 39.63% or 20.315%

The short answer: the rate is 39.63% or 20.315%, and your own home is deductible up to 30 million yen

The rate is set by how long you have owned the property. Five years or less as of 1 January is short-term; more than five years is long-term.

Under the reduced rate, the portion above 60 million yen is taxed at 20.315%. The special reconstruction income tax is 2.1% of the income tax amount and continues through the 2047 tax year. The 4% residents' tax under the reduced rate is not stated on the NTA page; it rests on the supplementary provisions of the Local Tax Act.

This order is the one the NTA sets out[NTA No.3202]. The tax is decided not by how high the sale price is but by how much more it is than what you paid. Sell for less than you bought it for and there is no tax.

Counted from 1 January of the year you sell, not from five full years

This is what moves your take-home the most. The ownership period is counted not from the day of sale but from 1 January of the year you sell[NTA No.3202]. Selling at the end of the year or early in the next one can almost double the rate.

For a property bought in March 2021. Our own calculation using the rates in NTA No.3208 and No.3211.

For real estate received by inheritance or gift, the count starts from the day the deceased or the donor bought it[NTA No.3202]. If your parent bought the house thirty years ago, a sale the month after the inheritance is still long-term.

Eleven reliefs and special rules that cut the tax

The effect and the deadline differ from one relief to the next. Look for the row that fits you.

If you sold at a loss, the requirements are set out in the carry-forward of a loss on selling your own home; for a vacant home, see the 30 million yen special deduction for a vacant home.

The 30 million yen deduction and the reduced rate are the only pair that can be combined

Reliefs do not stack. The only case where the NTA writes that they "can be received together" is the 30 million yen deduction and the reduced rate for ownership of more than ten years[NTA No.3305]. Everywhere else it is one or the other.

Special deductions have one more ceiling. Across all of the year's capital gains, the limit is 50 million yen in total[NTA No.3223]. The 30 million yen deduction is also unavailable if you took the same relief in the previous year or the year before that[NTA No.3302]. If you are selling two houses one after another, you need to decide whether to split them across two years.

The taxes on the buying side are collected in the four taxes on buying a house.

A worked example: the tax on a home sold for 45 million yen is either nothing or ¥2,742,525

Whether the 30 million yen deduction applies changes the result entirely. Take a house bought for 30 million yen and lived in for fifteen years, then sold for 45 million yen (transfer expenses of 1.5 million yen).

The breakdown is income tax ¥2,025,000 plus reconstruction tax ¥42,525 plus residents' tax ¥675,000. Our own calculation using the rates in NTA No.3208.

Where the sale price is large, the reduced rate is what does the work. Sell the same house for 80 million yen and the taxable gain is 18.5 million yen: the tax is ¥2,628,850 at the reduced rate, against ¥3,758,275 at the ordinary long-term rate. The difference is ¥1,129,425.

The building is depreciated before it is deducted; for wood-frame construction the formula is acquisition price × 0.9 × 0.031 × years elapsed[NTA No.3261]. Without records, the acquisition cost is only 5% of the sale price[NTA No.3258]. How to hunt for the evidence is explained in the 5% acquisition cost on an inherited family home.

Clearing the site and renting it as a car park kills the 30 million yen deduction

This is the most common accident in practice. If you demolish the house and then sell the land, three conditions attach to the 30 million yen deduction[NTA No.3320].

1. Sign the contract to sell the land within one year of the day of the demolition.
2. Sell by 31 December of the year containing the day three years after you stopped living there.
3. From the demolition until the day of the contract, do not let it or put it to any other use.

The third is the trap. Renting it out as a monthly car park while you wait for a buyer wipes out the deduction on its own.

If you use a relief, a tax return is compulsory, and next year's bills deserve a look

Every relief above requires a tax return. That holds even when the tax comes out at nil: stay quiet and the deduction is not applied.

1. File the return between 16 February and 15 March of the year after the sale.
2. Attach the statement of capital gains (for land and buildings) and a copy of the sale contract.
3. For the reduced rate, add the certificate of registered matters; for a vacant home, add the confirmation certificate from the municipality.

The year after is easy to forget. A capital gain also counts as taxable income for residents' tax, so next year's residents' tax goes up. National Health Insurance and long-term care premiums can rise too. Whether the calculation uses the figure after the deduction depends on the municipality, so check at the counter.

Where a company is the seller, the gain is not taxed separately but is ordinary profit. It is added to other income, and there is no short-versus-long distinction and no relief for a residence. "Wait five years and then sell" does nothing for a company.

There is one thing to do first. Check the date of acquisition on the certificate of registered matters, and count the ownership period as of 1 January.

Summary

• If you owned the property 5 years or less as of January 1 of the year you sold it, the rate is 39.63%; over 5 years, it is 20.315%. The count is based on January 1, not the sale date.
• For a home you lived in yourself, there is a ¥30 million special deduction, and for most people the tax ends up at zero.
• For a home owned over 10 years, a reduced rate of 14.21% applies. Only the ¥30 million deduction and the reduced rate can be combined.
• Turning the property into vacant land for a rental parking lot eliminates the ¥30 million deduction. Using any special exemption requires filing a tax return.
• First, check the acquisition date on the certificate of registered matters, and count the ownership period as of January 1.

Reference links (sources)

• NTA No.3202, How to calculate capital gains — the short/long division
• No.3208, Calculating the tax on a long-term capital gain — 15% plus 5% residents' tax
• No.3211, Calculating the tax on a short-term capital gain — 30% plus 9% residents' tax
• No.3302, Reliefs on selling your own home — the 30 million yen deduction
• No.3305, The reduced rate on selling your own home — whether reliefs can be combined
• No.3306, Reliefs on selling the home of a deceased person — vacant homes and the 100 million yen line
• No.3320, Selling the land after demolition — the contract within one year
• No.3223, Types of special deduction against capital gains — the 50 million yen annual limit
• No.3258, When the acquisition cost is unknown — 5% of the sale price
• No.3261, Calculating a building's acquisition cost — depreciation rates and the 95% limit
• No.3267, The acquisition cost relief when inherited property is sold — about three years and ten months
• No.3355, The replacement relief for a specified home — to the end of 2027
• No.3370, A loss on a sale where a replacement is bought — the three-year carry-forward
• No.3226, The 1 million yen deduction for low-use land — to the end of 2028
• No.3552, Reliefs where land or a building is sold under expropriation — the 50 million yen deduction

Note: the NTA pages reflect the law as of 1 April 2026. The worked examples are this site's own application of the published rates and formulas, not NTA calculation examples. For an individual decision, check with a tax accountant or your tax office.