Tax Withholding When Selling Real Estate in Japan as a Non-Resident: What You Must Know | 渋谷の不動産売却なら株式会社Assetters | ブログ

When a non-resident individual or foreign corporation sells real estate in Japan, Japanese tax law (Article 212 of the Income Tax Act) requires the buyer to withhold 10.21% of the total purchase price at settlement and pay it directly to the Japanese Tax Office (Kokuzeitcho). This rule exists to ensure that capital gains tax is collected from overseas entities who do not reside in Japan. However, it often surprises foreign sellers who expect to receive 100% of the agreed transaction amount at settlement.

Withholding tax of 10.21% does NOT apply if all of the following conditions are met: (1) The buyer is an individual purchasing the property as a primary residence for themselves or their immediate family, and (2) The transaction price is 100 million JPY or less. If the buyer is an investor, a corporation, or purchasing a second home/rental property, withholding tax is strictly mandatory regardless of price.

The 10.21% withheld is not necessarily your final tax bill—it is a pre-payment. Early the following year, your appointed Tax Agent (Nozei Kanrinin) will file an official Japanese tax return on your behalf. If your actual capital gains tax (calculated after deducting acquisition costs, agent fees, and legal expenses) is lower than the amount withheld, the Japanese Tax Office will refund the difference directly to your account.