Fixed-Asset and City-Planning Tax for Japanese Property Owners

Separate the government tax from the closing adjustment

Fixed-asset tax and, where applicable, city-planning tax are annual local taxes based on assessed land and building values under current rules. The person recorded as owner on the statutory date is generally the taxpayer for that fiscal year's assessment. A buyer and seller often adjust an agreed portion at settlement, but that contractual proration does not change who the authority assesses.

Read the sale contract for the proration date and period. Then build the buyer's future annual tax from official assessed values and current local guidance, not the settlement adjustment alone.

Obtain the land and building assessment

Request the current tax notice or assessment certificate for every parcel, building, condominium unit and relevant share. Separate fixed-asset assessed value, city-planning base, taxable value after applicable measures, annual amount, and any relief. Do not confuse these with purchase price, lender value, official land price, or inheritance roadside value.

For a condominium, understand how the land share and building component are represented. For a house on several parcels, confirm that the notice covers all of them. A new building, demolition, extension, change of use, or subdivision can change future assessment.

Assessment cycles and relief can create step changes. Do not carry the seller's last bill forward mechanically across a new build, expired reduction, or altered property.

Reproduce the calculation

Tokyo publishes the fixed-asset and city-planning tax framework, including standard rate information and assessment orientation. Other municipalities or prefectures administer their own property. Use the authority for the location.

Create a worksheet with land and building assessed values, taxable bases, small-residential-land or other applicable measures, rates, new-building or other reductions, and effective period. Mark every relief expiry. Recalculate the annual total and compare with the notice.

An illustration: if verified taxable bases were JPY 30 million for fixed-asset tax at 1.4% and JPY 20 million for city-planning tax at 0.3%, the arithmetic would be JPY 420,000 plus JPY 60,000. It does not state the correct bases, cap, rate, or relief for a real property.

Budget the ownership and investment correctly

For a residence, include annual tax in housing cost alongside management, reserve, insurance, utilities, and repairs. For a rental property, include it in property-level operating expense before net income. If a new-building reduction ends during the hold, show the later tax rather than capitalising the initial lower bill.

For land considered for demolition or redevelopment, ask how loss of a residential building or change of use affects land treatment. The tax consequence can alter demolition timing and holding cost. Do not demolish based on a generic “vacant land tax” statement without current local advice.

For a second home or vacant property, confirm whether residence-related measures apply to the actual use. Ownership labels used in marketing do not determine tax treatment.

Handle notices from overseas

Set a reliable Japanese mailing address, tax representative where required, payment method, and calendar. Record annual issue and due dates and keep notices and receipts. If automatic payment is used, monitor the account and assessment changes.

Compare each new notice with the property file. A change may reflect reassessment, relief expiry, alteration, correction, or authority action. Query unexpected items promptly.

At sale, provide current tax evidence for the settlement adjustment and retain it for gain and transaction records.

Questions before contract

• Does the evidence cover every land and building asset?
• Which values are assessed, taxable, or after relief?
• Which reduction applies and when does it expire?
• How does the contract prorate the current year?
• Will new construction, demolition, extension, use change, or subdivision alter the next assessment?
• Who receives and pays the notice after closing?
• Which amount belongs in the base and downside ownership model?

Primary sources

• Tokyo Metropolitan Government — Fixed-asset and city-planning tax: https://www.tax.metro.tokyo.lg.jp/kazei/real_estate/kotei_tosi
• MLIT Housing Literacy Platform — Home purchase and ownership cost information: https://www.mlit.go.jp/sumai_literacy_pf/knowledge02/0005/
• Tokyo Metropolitan Government — Real-estate acquisition tax, a separate tax: https://www.tax.metro.tokyo.lg.jp/kazei/real_estate/fudosan

Reviewed against the linked sources on 23 August 2026. Use the current authority and assessed values for the property's location.