How the tax credit works
The difference from income deductions, and why the tax-saving effect is so large.
BasicsLoan limits by housing type
Borrowing limits for new and used homes occupied from 2026, and how they differ from 2025 and earlier.
ImportantTax-saving simulation
Annual credit and the 13-year maximum by loan balance.
ComparisonFirst year: how to file a tax return
The documents and filing flow required in Feb–Mar of the year after you move in.
ProcedureSecond year onward: year-end adjustment
For employees it is completed via year-end adjustment. How to use the certificate.
Year-end adjustmentHow the "tax credit" works
The mortgage tax credit is a tax credit. Unlike "income deductions" such as iDeCo or the life insurance premium deduction, it is subtracted directly from the calculated tax amount itself, so its tax-saving effect is certain and large.
The lower your tax rate, the smaller the effect
The same amount regardless of tax rate
Eligible: people who moved in between January 1, 2022 and December 31, 2030 (Reiwa 12) (extended by five years in the FY2026 reform)
Credit period: 13 years for newly built and buy-and-resell homes. Used homes get 10 years, but energy-efficient used homes occupied from 2026 now get 13 years
Any amount not used against income tax is deducted from the following year's residence tax (5% of taxable total income, etc., up to ¥97,500 per year)
Income requirement: total income of ¥20 million or less[NTA No.1211-1]
The former 1% rate exceeded mortgage interest rates in the ultra-low-rate era, creating a "negative spread" where borrowing more actually paid off. The 2022 reform lowered the rate to 0.7% while extending the credit period from 10 to 13 years (for newly built homes).
Borrowing limits by housing type
The limit depends on the type of home, its energy performance, the year you moved in, and your household. The FY2026 tax reform changed four points[MLIT].
1. The move-in deadline was extended by five years to December 31, 2030.
2. For energy-efficient used homes, borrowing limits were raised and the credit period became 13 years. The add-on for child-rearing and young-couple households now also applies to used homes.
3. The floor-area requirement was eased to 40 m² or more for both new and used homes (50 m² or more for people with total income over ¥10 million and for those using the child-rearing add-on).
4. For newly built homes meeting only the energy-efficiency standard, the limit falls to ¥20 million for move-ins in 2026–2027, and those receiving building confirmation in 2028 or later are excluded.
Newly built homes (moved in 2026–2030, credit period 13 years)
A "child-rearing household" means someone with a dependent relative under 19, or a married couple where either spouse is under 40 (the NTA calls this a "special eligible individual"; judged as of December 31 of the move-in year).
Certified low-carbon home
energy-efficient home
standard-compliant home
(ordinary homes)
Newly built: comparison with move-ins through 2025
| Type of home | Moved in 2024–2025 | Moved in 2026–2030 |
|---|---|---|
| Certified long-life quality / certified low-carbon home | ¥45M (child-rearing ¥50M) | ¥45M (child-rearing ¥50M) |
| ZEH-level energy-efficient home | ¥35M (child-rearing ¥45M) | ¥35M (child-rearing ¥45M) |
| Energy-efficiency standard-compliant home | ¥30M (child-rearing ¥40M) | 2026–2027: ¥20M (child-rearing ¥30M) 2028 onward: generally ¥0 |
| Other homes | Generally ¥0 | Generally ¥0 |
* Even for standard-compliant homes occupied in 2028 or later, those that received building confirmation by December 31, 2027 or were built by June 30, 2028 get a ¥20 million limit and a 10-year credit.
* Other homes that received building confirmation by December 31, 2023 or were built by June 30, 2024 also get a ¥20 million limit and a 10-year credit[NTA No.1211-1].
* For buy-and-resell homes (used homes renovated and sold by a real estate company), limits for certified and ZEH-level homes are the same as for new homes. Standard-compliant homes occupied in 2026–2030 get ¥20M (child-rearing ¥30M) for 13 years, and other homes get ¥20M for 10 years[NTA No.1211-2].
Used homes (existing homes)
| Type of home | Moved in through 2025 (10 years) | Moved in 2026–2030 | Credit period (from 2026) |
|---|---|---|---|
| Certified long-life quality / certified low-carbon home | ¥30M | ¥35M (child-rearing ¥45M) | 13 years |
| ZEH-level energy-efficient home | ¥30M | ¥35M (child-rearing ¥45M) | 13 years |
| Energy-efficiency standard-compliant home | ¥30M | ¥20M (child-rearing ¥30M) | 13 years |
| Other homes (ordinary homes) | ¥20M | ¥20M | 10 years |
* The annual credit cap is "borrowing limit × 0.7%": ¥245,000 (child-rearing ¥315,000) for certified and ZEH-level used homes, ¥140,000 (child-rearing ¥210,000) for standard-compliant homes, and ¥140,000 for other homes[NTA No.1211-3].
* If you move into a home of 40 m² to under 50 m² in 2026 or later, the child-rearing add-on cannot be used.
For move-ins from January 2024, newly built "other homes" (not meeting the energy-efficiency standard) have a borrowing limit of ¥0 and cannot receive the credit. From 2028, standard-compliant homes that received building confirmation in 2028 or later are also excluded. New homes in "disaster red zones" such as sediment-disaster special warning areas occupied in 2028 or later are excluded too (rebuilds, used homes, and renovations remain eligible). When buying or building a new home, always check the energy-performance certificate and the location[MLIT].
Tax-saving simulation
0.7% of the loan balance is subtracted from your tax each year. Because the balance falls every year, the credit is largest in the first year.
Guide to the annual credit by year-end balance
| Year-end loan balance | Annual credit (×0.7%) | 13-year maximum | Homes with this limit (moved in from 2026) |
|---|---|---|---|
| ¥20 million | ¥140,000 | ¥1.82 million | New standard-compliant home (2026–2027), used standard-compliant home |
| ¥30 million | ¥210,000 | ¥2.73 million | Child-rearing households in the two cases above |
| ¥35 million | ¥245,000 | ¥3.185 million | New ZEH-level home, used certified / ZEH-level home |
| ¥45 million | ¥315,000 | ¥4.095 million | New certified home; child-rearing households with a new ZEH-level home or a used certified / ZEH-level home |
| ¥50 million (maximum) | ¥350,000 | ¥4.55 million | Child-rearing households with a new certified home |
* Because the balance falls with repayment each year, the actual credit is smaller than the maximum from the year the balance drops below the limit. The figures above are simplified estimates.
If your income tax is small, part is also deducted from residence tax
If the annual credit exceeds your income tax, the unused portion is deducted from the following year's residence tax. The cap is 5% of taxable total income, etc. for income tax, up to ¥97,500 per year (for move-ins from 2022). If you complete the income tax procedure, no separate filing with your municipality is needed[MIC].
First year: how to file a tax return
In the first year after acquiring a home only, a tax return is required even for employees. File at a tax office or via e-Tax between February 16 and March 15 of the year after you move in (a return only to claim a refund can be filed from January 1 of that year).
・Year-end loan balance certificate (from the lender) * Not needed if your lender uses the report system; instead, submit the "application for the mortgage tax credit" to the lender
・Certificate of registered matters (to confirm floor area and acquisition date)
・Copy of the sales contract or construction contract
・Energy-performance certificate or certification notice (certified homes, etc. only)
・If you received a subsidy, a document showing the amount
Second year onward: how to do the year-end adjustment (employees)
From the second year, you can claim the mortgage tax credit through your company's year-end adjustment. Simply submitting the documents to your company completes the procedure.
Annual procedure (from the second year)
| Document | Where to get it | When |
|---|---|---|
| Certificate for the special credit for housing loans, etc. for year-end adjustment (also the application) | Sent by the tax office (use the one for that year) | The one you keep on hand |
| Year-end loan balance certificate | Mailed by the lender. Not needed if your lender uses the report system | Arrives around late November |
Transfer the year-end balance shown on the balance certificate or the credit certificate. In years when no balance is printed, check it on your repayment schedule.
* If you borrow from multiple lenders, add up all balances.
How to fill it in under the report system, and how to check the balance in years when it is not printed, are covered step by step in the mortgage tax credit in the second year's year-end adjustment.
If you lose the credit certificate sent by the tax office, you can have it reissued by submitting the "application for issuance of documents related to the special credit for housing loans, etc. (specified renovation, etc.) for year-end adjustment" to your tax office (e-Tax also works). It takes time, so apply well before the year-end adjustment deadline.
Self-employed and employees who must file a tax return need to file every year
Sole proprietors and freelancers claim the mortgage tax credit through a tax return every year, including the second year onward. Employees with side income or those filing a return for Furusato Nozei can also claim it together in a tax return instead of the year-end adjustment (so the procedure is done once).
Points to note
FAQ
What changed in the FY2026 reform?
The move-in deadline was extended by five years to December 31, 2030. Energy-efficient used homes got higher borrowing limits, a 13-year credit period, and the child-rearing add-on. The floor-area requirement was eased to 40 m² or more for both new and used homes (if total income is ¥10 million or less).
What are the credit rate and period?
The credit is the year-end loan balance (up to the borrowing limit) × 0.7%. The period is 13 years for new homes, etc., 10 years for used homes, and 13 years for energy-efficient used homes occupied from 2026. Any amount not used against income tax is deducted from the following year's residence tax, up to 5% of taxable total income, etc. and ¥97,500. Total income of ¥20 million or less is required.
Are there preferences for child-rearing households?
Households with a dependent under 19, or where either spouse is under 40, get a higher borrowing limit. For move-ins from 2026: new certified homes ¥50M, ZEH-level ¥45M, standard-compliant ¥30M; used certified and ZEH-level homes ¥45M, standard-compliant ¥30M. The add-on cannot be used for homes of 40 m² to under 50 m².
Is the procedure different for the first year versus the second year onward?
A tax return is required in the first year. From the second year, employees complete it via year-end adjustment by submitting the credit certificate (also the application) sent by the tax office to their employer. If your lender uses the report system, you do not need to attach the year-end balance certificate.
Can it be combined with Furusato Nozei?
Yes. The Furusato Nozei ceiling ("20% of the residence tax income levy") is calculated on the income levy before the mortgage tax credit, so the ceiling does not drop. However, in years you file a tax return, such as the first year, the one-stop special exception cannot be used, so include the donation deduction in your return (see our calculation).
Sources and official information
This article is based on the following official information. Systems may be revised. Please check the latest information on each official site.
- Ministry of Land, Infrastructure, Transport and Tourism, Mortgage tax reduction (FY2026 tax reform, updated June 2026) (in Japanese)
- National Tax Agency, Tax Answer No.1211-1 New homes occupied from 2022 (law as of April 1, 2026) (in Japanese)
- National Tax Agency, Tax Answer No.1211-2 Buy-and-resell homes occupied from 2022 (in Japanese)
- National Tax Agency, Tax Answer No.1211-3 Used homes occupied from 2022 (in Japanese)
- National Tax Agency, Q&A on procedures for the mortgage tax credit (report system) (in Japanese)
- Ministry of Internal Affairs and Communications, Individual residence tax credit for housing loans, etc. (in Japanese)
- Ministry of Finance, Outline of the FY2026 tax reform (in Japanese)
- National Tax Agency, Tax Return Preparation Corner (in Japanese)
* The content of this article is for informational purposes and is not tax or legal advice. Borrowing limits, the child-rearing add-on, and the like depend on the year you move in. For individual judgments, please consult a tax office or a tax accountant.
