Japan Property Tax Explained (固定資産税 & 都市計画税)

1. The two taxes

• Fixed asset tax (固定資産税): 1.4% of assessed value, national standard.
• City planning tax (都市計画税): up to 0.3% of assessed value, applies in urban planning zones — which covers essentially all urban investment property.

Combined effective rate: 1.7% of assessed value per year.

2. Assessed value ≠ market value

Assessed value (固定資産税評価額) is set by the municipality every 3 years. It is typically:

• Land: ~70% of market value
• Building: ~50–60% of construction cost when new; drops with age

So on a ¥25M studio (land+building), assessed value might be ¥12M–¥16M. Tax bill: roughly ¥200,000–¥270,000/year.

3. Residential land discount

Small residential land gets a huge reduction:

• First 200㎡: fixed-asset tax on 1/6 of assessed value
• 200㎡+: on 1/3
• City planning tax gets 1/3 and 2/3 respectively

This is why demolishing an old house to hold vacant land triples the property tax bill — the discount only applies while a residential structure stands.

4. Timing & payment

• Assessed against the January 1 owner. Buy on January 2 = seller pays full year.
• Bill mailed in April–June for the current fiscal year.
• Payable in 4 installments (June, Sept, Dec, Feb) or lump sum.
• At closing, buyer and seller pro-rate the current year via credit on settlement statement.

5. Non-resident owners

The bill goes to your registered address in Japan — usually your tax representative or PM company. Miss a payment and you accrue 2.4–8.7% annual interest plus potential lien. Auto-pay via a Japanese bank account is the norm.