A Tax Guide to Japanese Real Estate for Overseas Investors

By MISAWA Masaki, Certified Tax Accountant (Zeirishi, Reg. No. 157367) — formerly of Japan’s tax authorities · Published July 11, 2026 · Reviewed July 17, 2026

Part 1 covered buying and owning Japanese property. Part 2 covers the sale — including a withholding rule that often surprises overseas sellers — and the tax representative a non-resident is required to appoint.

Withholding at sale

When a non-resident sells Japanese property, a withholding mechanism applies to the sale proceeds. Japan uses it to make sure tax is collected before an overseas owner takes the proceeds home, so the obligation is placed on the buyer.

As a rule, 10.21% of the sale price is withheld at settlement: the buyer pays that 10.21% to the Japanese tax office rather than to you, and pays you the remaining 89.79%.

Working out the actual tax

The 10.21% withheld is only a prepayment. To settle the real liability you file a Japanese capital gains return by 15 March of the year after the sale.

Capital gains tax is charged on the profit, not the sale price:

For a non-resident, only national tax applies — income tax plus the special reconstruction surtax; resident (local) tax is not charged. The rate depends on how long you owned the property, measured as of 1 January of the year of sale:

• Short-term (held 5 years or less): 30.63%
  A higher rate applies to quick resales.
• Long-term (held more than 5 years): 15.315%
  Longer-held investments are taxed more favourably.

After filing, the prepaid 10.21% is reconciled against the tax actually due. If the tax is less than the amount withheld, the difference is refunded; if it is more, you pay the balance.

A worked example

The figures below are illustrative, on these assumptions: a non-resident individual sells a Japanese property held for more than five years (so the long-term rate applies); the acquisition cost shown is already net of depreciation on the building; and no special deductions apply.

This is the common pattern: withholding is taken on the gross sale price, while the tax itself falls on the gain alone — so a long-term sale with a moderate gain often produces a refund once the return is filed.

This guide keeps to the outline. The full treatment of a non-resident sale — including the exception where no withholding is required, and worked examples of each case — is in our dedicated article: Selling Japan Property as a Non-Resident.

The tax agent (nōzei kanrinin)

As the above shows, owning and selling Japanese property means filing returns, receiving documents from the tax office, and collecting refunds — all hard to manage from abroad. Japanese law therefore requires a non-resident who needs to carry out these procedures to appoint, in advance, a tax agent (nōzei kanrinin) to handle them on their behalf (Article 117, paragraph (1) of the Act on General Rules for National Taxes).

In form, the tax agent can be any individual or corporation based in Japan. In practice, a certified tax accountant (zeirishi) is the natural choice: a tax agent who is not a zeirishi can only receive documents and handle payments, while preparing the returns and dealing with the tax office is work the law reserves to zeirishi. Appointing a zeirishi as your tax agent puts the documents, the filings, the payments and the refunds in one pair of hands.