Fixed Asset Tax Japan: What Property Owners Should Know & Do

Yes, Japan has property taxes. The main one is fixed asset tax, and every property owner pays it.

If you're buying property in Japan, or you already own one, you'll hear about fixed asset tax japan quickly. It's the core recurring tax on real estate.

This guide covers Japan's fixed asset tax and related property taxes. You'll learn what counts as a fixed asset, how the tax rate works, and how to pay your bill.

A brief overview of fixed property taxes in Japan

In Japanese, fixed asset tax is called koteishisanzei (固定資産税, こていしさんぜい). The government established this tax in 1950. It requires all property owners to pay taxes on their fixed assets.

The tax reform behind this law linked two things together. It connected the benefits property owners receive to the administrative services their municipality provides.

According to Japan's Ministry of Internal Affairs and Communications (MIAC), municipalities use fixed asset tax revenue to fund public facilities and welfare services.

How this compares internationally: Japan's fixed asset tax rate is 1.4% of assessed value. That's lower than many property taxes abroad — New York State averages around 1.65%, and London runs closer to 1.96%. Japan's tax base is also narrower, since it's calculated on assessed value, not market value or sales price.

What qualifies as a fixed asset in Japan?

Land, buildings, and depreciable assets all qualify as fixed assets in Japan. All three are subject to fixed asset tax.

Land assets include residential land, agricultural land, and non-cultivated land like forests. Building assets include residential buildings, factories, warehouses, and stores.

This means that any property in Japan is subject to fixed asset tax, payable to your governing municipality.

The following is a chart from MIAC outlining the fundamentals of the fixed asset tax rate in Japan.

Who must pay fixed asset tax?

All owners of property in Japan must pay fixed asset tax. This applies regardless of nationality.

You must pay fixed asset tax if:

• Your name is on the property's official registry

• This is true as of January 1st of the tax year

This applies even if you're not a tax resident, and even without a visa. Japan doesn't require a visa to purchase property, but property owners still owe taxes on it.

In short: if your name is on a property deed on January 1st of any tax year, you owe fixed asset tax on that property. Non residents and foreign investors owe the same tax as Japanese residents.

Note: For property owners not living in Japan, MailMate provides a tax representative service allowing you to take care of your fixed asset tax without needing to be physically present at your property in Japan.

A notable exemption: The Imperial Palace and other imperial residences don't pay fixed asset tax. Japan's Local Tax Act exempts government-owned property used for public purposes.

The Imperial Household Economy Act classifies these buildings as state property. They aren't the Emperor's personal property, so the exemption applies.

Fixed asset tax Japan: Key facts

Fixed asset tax vs. city planning tax vs. acquisition tax (comparison table)

Note: All three taxes use your property's assessed value as the tax base. None of them use your sales price or market value directly.

How is Japan's fixed asset tax calculated?

Fixed asset tax calculation uses two numbers. It's (a) your local council's assessed value of your property, times (b) the fixed asset tax rate.

Taxable Amount = (Assessed Value of Land + Assessed Value of Building) × Tax Rate

Let's break down each component.

a. Assessed value of your property (land and buildings)

Municipalities calculate assessed value using national assessment standards. These standards get reviewed every three years.

The assessed value of land runs about 70% of the official land price. The government announces this land price once a year.

Note: Your local tax office calculates the fixed asset tax on land. You don't need to calculate it yourself.

For buildings, the assessed value comes from two numbers. It's the construction cost to build an identical house in the same location, minus depreciation for the years since the house was built.

b. Fixed asset tax rate

The fixed asset tax rate is generally 1.4%. Your tax rate may vary from city to city, though.

If you're about to purchase property in Japan, check your likely real estate taxes ahead of time. Use MailMate's property tax calculator to estimate your upcoming tax obligations.

c. Reductions and exemptions

There are exemptions and reductions to Japan's fixed asset tax that are available to property owners. Here's a brief list of possible exemptions and reductions that may apply, depending on your circumstances and your governing municipality:

• For newly constructed homes, a reduction of 1/2 to 2/3 of the tax is available for 2-3 years.

• Reduction or exemption for properties owned by seniors or disabled individuals, implemented at municipal government discretion.

• Deductions to promote earthquake-resistant renovation.

• Special tax rates for agricultural lands being converted for other uses.

• Partial or full tax exemptions for properties damaged by natural disasters, as well as the duration and extent of the exemption, depend on damage severity, as outlined in local government disaster relief tax provisions.

• Full or partial tax exemptions for properties designated as cultural heritage sites, managed under the Cultural Properties Preservation Law.

Full example calculation

Scenario:

You own a home in Saitama purchased in 2024.

• Assessed land value: ¥12,000,000

• Assessed building value (after depreciation): ¥6,000,000

• Total assessed value: ¥18,000,000

Formula: 18,000,000 × 1.4% = ¥252,000 per year

If exemptions apply (such as new-home reductions), the tax amount decreases—but only after applying municipal rules.

How to pay your fixed asset tax bill

The city or town where your land or house is located generally sends property tax notices in April or May each year. Payment methods and due-by dates vary by city, so please refer to the payment instructions included with the bill.

The fixed asset tax bill will be sent to your registered property. You can pay it at your local city office, a convenience store transfer, or the post office.

The bill can be paid in four installments (four payment slips are enclosed) but can also be paid all together at once (as a lump sum).

If you prefer to pay the bill in four installments, then you'll want to check each bill's payment-due date.

If you pay all four bills at once, make sure that you're paying before the first bill is due.

If you live abroad, the bill cannot be forwarded internationally unless you designate a domestic representative.

Penalties for non-payment of fixed asset taxes

Non-payment of fixed asset taxes is subject to late fees (an additional 8.7% of your tax bill per year after one month has passed), so if you're a non-resident property owner, it's wise to have a plan for managing property taxes.

Frequently asked questions

Does Japan have property tax?

Yes. Japan's main recurring property tax is fixed asset tax, levied at a standard 1.4% rate. Most properties also pay city planning tax on top of this.

How does Japan's fixed asset tax compare to other countries?

Japan's 1.4% rate runs lower than many property taxes abroad. New York State averages around 1.65%, and London runs closer to 1.96%.

Is the Imperial Palace subject to fixed asset tax?

No. Japan's Local Tax Act exempts government-owned property used for public purposes. The Imperial Palace counts as state property, not the Emperor's personal property.

What is fixed asset tax?

Fixed asset tax is levied on anyone registered as a property owner on January 1st of the given year. The tax is paid at the municipal level, and the tax revenue funds municipal services.

How is fixed asset tax different from city planning tax?

Fixed asset tax applies to all land and properties, regardless of location. City planning tax, however, only applies to areas inside a "city planning" zone.

What is registration and license tax? Is it the same as fixed asset tax?

Registration and license tax is a one-time tax paid during the real estate purchase process. Fixed asset tax, on the other hand, is an annual, recurring tax on all property owners.

In closing

Fixed asset tax is a core financial obligation of owning land or a house in Japan. Every property owner pays it, regardless of nationality or residency.

Knowing when your bill is due, and how to pay it, gives you peace of mind. You'll stay compliant with Japanese tax law without surprises.

For any non-resident property owners, consider using a tax representative service like MailMate, which can serve as a liaison between you and the local tax authorities.

MailMate's fluently bilingual tax representative service helps property owners stay up to date on their real estate tax bills by liaising between clients and the local government.

The service includes the following features:

• Tax representative for annual real estate tax payments

• Domestic point of contact for authorities (required by law)

• Bill pay support for property tax payments

• Tax notifications with English summaries

• A virtual mailbox to receive the mail that arrives at your Japanese property

• Manage important property documents and notifications in one place

Other services MailMate offers include utility and Internet setup of your Japanese property! 

Founded in 2019, MailMate has simplified property ownership for foreigners living abroad and is an increasingly popular option recommended by users and well-known industry figures.

Additionally, if you use MailMate's tax representative service for property owners, MailMate will take care of filing the tax representative form with the relevant tax office on your behalf.

Navigate Japan's tax system with an experienced tax representative service tailored for foreign property owners!