Selling Your Home Abroad After Moving to Japan

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

Once you become a resident of Japan (other than a non-permanent resident — broadly, a “permanent resident” for tax purposes), Japanese income tax reaches the gain on selling the home you left behind in your home country (worldwide taxation). (See also our note: The Overseas Assets Report.)

The yen-conversion trap

In computing that gain, the yen-conversion rules need attention. The sale price is converted at the exchange rate at the time of sale, and the acquisition cost at the rate at the time of purchase (TTB for the sale price, TTS for the cost). As a result, even if the property has not gained value in foreign-currency terms, a weaker yen since purchase can produce a large gain in yen terms.

Worked example: dollar gain, yen gain

Worked example (assumptions: purchased in 2016 for US$700,000 at an assumed rate of ¥110 to the dollar; sold in 2026 for US$720,000 at an assumed ¥150; depreciation and expenses ignored): the dollar-based profit is $20,000, but in yen the computation is sale price ¥108,000,000 − acquisition cost ¥77,000,000 = a gain of ¥31,000,000. The yen’s depreciation over the holding period feeds directly into the taxable gain.

The ¥30 million special deduction: conditions and procedure

The first relief for this burden is the special deduction of up to ¥30 million on the sale of a principal residence. In Japan it is widely used as a major relief from tax on the sale of one’s own home. The main points:

• Outline: where you sell a house you lived in, together with its land, up to ¥30,000,000 can be deducted from the gain. The length of ownership does not matter.
• Main conditions:
  (i) the house must have been your own residence (holiday homes and second homes are excluded, as is a temporary move-in solely to obtain the relief);
  (ii) the sale must take place by 31 December of the third year after the year you ceased to live there;
  (iii) the buyer must not be a spouse, relative or other specially related person; and
  (iv) you must not have used this or certain related reliefs in the preceding two years.
• Application to a property abroad: the statute does not confine the house to Japan, so if the conditions are met the deduction can extend to the sale of a home located overseas.
• Procedure: the deduction requires a final return (a return is required even where the deduction reduces the tax payable to nil).

In the example above, ¥30,000,000 of the ¥31,000,000 gain is deducted, so if the conditions are met the amount subject to tax falls to ¥1,000,000.

The foreign tax credit

In addition, if the gain is also taxed in your home country, the foreign tax credit (see the separate article) adjusts the double taxation.

In short, the tax cost of selling the home in your home country can differ greatly depending on whether you sell before or after moving to Japan.