Selling Japan Property as a Non-Resident: 10.21% Withholding, Tax Rates and Refunds

By MISAWA Masaki, Certified Tax Accountant (Zeirishi, Reg. No. 157367) — formerly of Japan’s tax authorities · Published July 13, 2026 · Reviewed July 17, 2026

This article explains how Japanese income tax applies when a non-resident sells a Japanese condominium or other property that has been let out.

Long-term vs short-term capital gains rates

Japanese income tax distinguishes aggregate taxation, under which the various categories of income are combined and taxed at progressive rates, from separate taxation, under which particular income is taxed apart at its own rate. Gains on real estate are taxed separately.

Gains divide into long-term and short-term by holding period. If, as of 1 January of the year of sale, you have held the property for more than five years, the gain is long-term (rate 15.315%); if five years or less, short-term (30.63%) — in each case including the special reconstruction surtax, and with no resident (local) tax charged to non-residents. The rates differ, but the computation of the gain is the same for both:

Capital gain ＝ Sale price −（Acquisition cost ＋ Selling expenses）

How the capital gain is computed

Sale price means the amount you receive from the buyer as the purchase price (any pro-rated fixed asset tax settlement you receive is included).

Acquisition cost means the purchase price of the property plus incidental costs such as the agent’s fee at purchase. Land and building differ here. Land does not lose value with time, so its purchase price carries through unchanged. A building loses value with use and time, so its cost is the purchase price less the depreciation attributable to the ownership period. For the years the property was let, you deduct the accumulated depreciation claimed as an expense in computing the rental income.

Selling expenses are costs incurred directly for the sale — the agent’s fee on the sale, stamp tax on the contract, survey fees and the like.

Various special deductions exist for real estate gains, but for a non-resident selling a condominium held for letting, essentially none is available.

Income deductions available to non-residents

The tax computation runs as follows. From the gain, subtract the applicable deductions from income — for non-residents these are limited to the deduction for casualty losses, the deduction for donations, and the basic exemption — and multiply the taxable gain by the rate above to obtain the income tax. Adding the special reconstruction surtax of 2.1% of that amount gives the total tax due. From this, subtract any tax the buyer withheld and pay the balance — and if the withholding exceeds the tax, the difference is refunded.

The buyer’s 10.21% withholding and its exception

The buyer’s withholding is the mechanism by which a buyer paying sale proceeds to a non-resident withholds 10.21% of the price and pays it to the tax office. There is an exception: no withholding is required where the price is ¥100 million or less and the buyer is an individual purchasing the property as a residence for themselves or their relatives. Some examples:

Example 1: a Japanese company buys for ¥80,000,000 → withholding applies (the buyer is a company).
Example 2: an individual buys for ¥80,000,000 as their own home → no withholding (¥100 million or less, individual, residential use).
Example 3: an individual buys for ¥80,000,000 as a rental investment → withholding applies (not residential use, whatever the amount).
Example 4: an individual buys for ¥120,000,000 as their own home → withholding applies (over ¥100 million).

From sale price to tax payable

Finally, the flow from sale price to tax payable, in one line:

Sale price −（acquisition cost ＋ selling expenses）→ capital gain − deductions from income → taxable gain × rate（long-term 15.315% / short-term 30.63%）→ income tax and surtax − withholding（10.21% of the price）→ tax payable（refunded if negative）

New to Japanese property tax as a whole? Start with our two-part guide — Part 1: Buying and Owning and Part 2: Selling and Compliance. And if you are unsure whether Japan treats you as a non-resident in the first place, see Are You a Tax Resident of Japan?

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This article is general information, based on the laws and administrative guidance in force at the time of writing (as at the review date shown), and may not reflect later amendments. It is not legal or tax advice on any specific matter, and reading it does not create an adviser–client relationship. Worked examples are simplified illustrations based on the stated assumptions and may not correspond to your circumstances. While every care has been taken in preparing this material, we accept no liability for any loss arising from reliance on it. Before acting, please obtain advice on your specific situation from a qualified tax professional or the tax office.

© MISAWA Masaki Tax Accountant Office. All rights reserved. This article may not be reproduced or republished without prior written permission. Brief quotation with attribution and a link to the original is welcome.