Selling Property in Japan as a Foreigner: The Complete Guide

Can a foreigner sell property in Japan?

Yes. Japan places no restriction on foreign ownership of land or buildings, and none on resale either. The rules that apply to a Japanese seller apply to you, with a few practical differences that depend on where you live, not on your passport.

Three situations are worth telling apart: the resident foreigner (registered address in Japan, taxed like any resident), the non-resident (living abroad, taxed in Japan only on Japanese-source income, so on this sale), and the owner who leaves Japan before selling. That last case is the one that catches people out: once you have left, you become a non-resident seller, with the withholding and the tax representative that go with it. If a sale is planned, closing before departure is often simpler.

How does a property sale work in Japan?

A sale follows a fixed sequence that the agency and the registration specialist run for you. The full timeline, from the first valuation to the funds arriving, is typically 3 to 6 months.

1. Valuation (satei, 査定): one or more agencies estimate the price from comparable transactions. Ask two or three; a free valuation commits you to nothing.
2. Choosing an agency and signing a brokerage agreement (baikai keiyaku, 媒介keiyaku). Three forms exist, from exclusive (sen'zoku sen'nin, 専属専任) to open (ippan, ippan). The exclusive forms oblige the agent to list the property on REINS, the shared professional database, and to report to you regularly.
3. Marketing: portals, REINS, viewings organised by the agency.
4. Offer: the buyer submits a written purchase offer (kaitsuke shōmeisho, kaitsuke証明書), often below asking. Negotiation follows on price, timing and conditions.
5. Sales contract (baibai keiyaku, baibai keiyaku): signed after the buyer has received the legal disclosure (jūyō jikō setsumei, jūyō jikō setsumei). The buyer pays a deposit (tetsukekin, 手付金), usually 5 to 10% of the price.
6. Preparing the documents for the transfer: title, seal certificate or its equivalent, identity documents, mortgage release paperwork.
7. Closing (kessai, kessai): the buyer pays the balance, the seller hands over the keys, and the registration specialist files the transfer of ownership the same day, together with the release of any mortgage.
8. After the sale: proration of property tax, tax return the following year, and for non-residents, settlement of the withholding.

Who does what

The step-by-step mechanics of a resale, including the choice between brokerage and a direct buyout by a dealer, are detailed in our guide to reselling property in Japan.

What does it cost to sell?

Real estate agency commission

The commission is capped by law (Real Estate Brokerage Act, takuchi tatemono torihiki gyō-hō, 宅地building取引業法). For a price above ¥4,000,000, the legal scale is 5% on the first ¥2,000,000, 4% on the next ¥2,000,000 and 3% above that. The shortcut everyone uses gives exactly the same result:

Price × 3% + ¥60,000, plus 10% consumption tax

Two details matter. First, this is a ceiling, not a fixed rate: an agency may charge less, and some do for high-value properties. Second, since 1 July 2024, for low-value properties (price up to ¥8,000,000, typically an akiya, akiya, vacant house), the MLIT allows a higher commission of up to ¥300,000 plus tax from each party, to make small sales worth an agent's time. If you are selling a cheap country house, expect that figure rather than 3%.

Administrative and legal costs

Before buying, most people budget the acquisition side carefully (see property purchase costs in Japan); the selling side deserves the same care, because every one of these invoices reduces the taxable gain later.

How is the capital gain calculated?

Tax is due on the taxable gain (jōto shotoku, jōto shotoku), never on the whole sale price. The formula is:

Taxable gain = sale price − tax acquisition cost − selling expenses

What goes into the acquisition cost

• the purchase price of land and building;
• the purchase costs: agency commission, stamp duty, registration tax, shihō shoshi fee, acquisition tax;
• capital improvements (extension, structural renovation), not routine repairs;
• if you cannot prove the original price (lost documents, very old inheritance), the tax office allows a flat 5% of the sale price as acquisition cost, which is almost always unfavourable.

What counts as a selling expense

• the agency commission on the sale;
• stamp duty on the sales contract;
• demolition or survey costs incurred to sell;
• compensation paid to a tenant to vacate.

Not deductible: the mortgage release costs, property tax, and maintenance during ownership.

The building is depreciated, and that raises your gain

Here is the part that surprises most foreign owners. Land does not lose value for tax purposes, but the building does. Even for a home you never rented out, the tax office deducts a notional depreciation (genka shōkyaku-hi sōtō-gaku, genka shōkyaku-hi相当額) from the building's acquisition cost, using a straight-line rate based on 1.5 times the building's statutory useful life:

Building cost × 0.9 × rate × years held, with a rate of 0.031 for a wooden house, 0.015 for reinforced concrete and 0.036 for light steel (capped at 95% of the building cost).

A wooden house whose building part cost ¥15,000,000, held 8 years, has already "consumed" 15,000,000 × 0.9 × 0.031 × 8 = ¥3,348,000 of its cost. Your tax acquisition cost is therefore ¥3,348,000 lower than what you paid, and your taxable gain that much higher, even if you sold at exactly your purchase price. The mechanics of this building depreciation in Japan are the reason a "break-even" sale can still produce a tax bill.

Short-term or long-term: what difference does holding period make?

The rate depends only on how long you have held the property, with a cut-off at five years. The two regimes are tanki jōto shotoku (tankijōto shotoku, short-term gain) and chōki jōto shotoku (chōkijōto shotoku, long-term gain). Rates below are from the National Tax Agency and include the 2.1% reconstruction surtax applied to national income tax until 2037.

* A non-resident who had no address in Japan on 1 January of the year following the sale is not liable to inhabitant tax (jūminzei, jūminzei), which is a local tax assessed on residents. Check your own case with a zeirishi: the date you left Japan decides it.

How the five years are really counted

The holding period is not measured from purchase date to sale date. It is measured from the acquisition date to 1 January of the year in which you sell. In practice you need to hold the property until the sixth calendar year after purchase to reach the long-term rate.

On a ¥10,000,000 gain, waiting from March 2026 to January 2027 saves roughly ¥1,930,000 (≈ $12,400). If your sale date is anywhere near the threshold, run the calendar before you sign a brokerage agreement. The detail of the rates and the ¥30,000,000 primary-residence deduction is in our article on capital gains tax on property in Japan.

What tax applies to a non-resident seller?

A non-resident is taxed in Japan on the gain from Japanese real estate, at the rates in the previous table (without inhabitant tax). The difference is how the tax is collected: through a withholding at closing, then a return.

The 10.21% withholding at source

When the seller is a non-resident, the buyer must withhold 10.21% of the sale price (10% income tax plus the 2.1% surtax on it) and pay it to the tax office by the 10th of the following month. This is a withholding (gensen chōshū, gensen chōshū), not the seller's final tax.

Two things must be clear:

• 10.21% withheld does not mean 10.21% tax. The actual tax is computed later on the gain, at 15.315% or 30.63%.
• The withholding is calculated on the gross price, not on the gain. On a ¥50,000,000 sale, the buyer keeps back 50,000,000 × 10.21% = ¥5,105,000 (≈ $32,700) and pays you ¥44,895,000 before any other cost.

Why does it exist? Because a seller living abroad is hard for the Japanese tax office to reach after the money has left the country. The buyer is made responsible for collecting an advance. In practice the agency and the shihō shoshi handle the mechanics: they ask for proof of your residence status, the buyer's bank splits the payment, and you receive a withholding certificate that you will attach to your return.

How to recover an overpayment

Between 16 February and 15 March of the year after the sale, you (or your tax representative) file a return (kakutei shinkoku, kakutei shinkoku) that computes the real gain and the real tax. The ¥5,105,000 already withheld is credited against it. If the withholding exceeds the tax due, the difference is refunded to a Japanese bank account, usually within one to two months of filing.

Simplified example on the same ¥50,000,000 sale, held more than five years:

The tax was assessed on ¥8,000,000, while the withholding was taken on ¥50,000,000: that gap is the refund. Note that filing is what triggers it; with no return, the tax office keeps the 10.21% and you have paid four times the tax actually due.

The tax representative

A non-resident cannot file from abroad without appointing a nōzei kanrinin (nōzei kanrinin, tax representative) in Japan, typically a zeirishi. The appointment is a one-page form filed with the tax office; the representative files the return, receives the correspondence and, importantly, the refund. Our article on the tax representative in Japan explains how to appoint one and what it costs.

Are there exceptions to the 10.21% withholding?

Yes, one, and it is common for house sales. Under the National Tax Agency's guidance (No.2879), the buyer does not have to withhold when all three conditions are met:

1. the buyer is an individual (not a company);
2. the buyer acquires the property to use it as a home for themselves or their relatives;
3. the price is ¥100,000,000 or less.

So a non-resident selling a ¥30,000,000 house to a Japanese family who will live in it receives the full price at closing. The same house sold to a property company, or to an investor who will rent it out, triggers the withholding. The buyer's intention is what counts, so ask the agency to confirm it in writing before closing: it changes the cash you receive by 10.21%.

Whether or not the withholding applies, the tax return remains mandatory if there is a gain. The exemption spares the advance, not the tax.

Can you sell from abroad?

Yes. A seller who is not in Japan at the time of the transaction can be represented for every step, including signing the contract and closing. What the registration specialist needs is proof that you are who you say you are and that you really agreed to the sale.

Power of attorney

A power of attorney (ininjō, ininjō) in favour of a trusted person in Japan (a relative, a lawyer, sometimes the agency's staff or a shihō shoshi) lets that person sign and attend closing for you. The shihō shoshi drafts it to cover exactly the acts required: contract, receipt of funds, registration.

Identity and signature certificate

A Japanese seller proves consent with a registered seal and its certificate (inkan shōmeisho, 印鑑証明書). A non-resident usually has neither. The accepted substitute is a signature certificate (shomei shōmeisho, shomei shōmei書): you sign the power of attorney in front of an official who certifies the signature. Where that official sits depends on your country:

• a Japanese national abroad obtains it from the Japanese consulate;
• a foreign national obtains a notarised signature from a notary public in their own country, generally with an apostille (Hague Convention) or consular legalisation, then a Japanese translation.

Also expect a certificate of address (residence certificate, or an affidavit for countries that issue none), because the address on the title must be reconciled with your current one. Exact requirements vary by country and by shihō shoshi: confirm the list with the one handling the registration before booking a notary appointment, because a document in the wrong form means a second round trip.

Funds and presence

The balance is paid at closing by bank transfer. If you still hold a Japanese account, the funds land there and you wire them abroad afterwards; if not, the buyer's bank can transfer to a foreign account, with the fees and the exchange spread that go with it. Your physical presence is not required at any step, but plan for the time zone, the postal delays of original documents and, for the tax refund, a Japanese account or a representative able to receive it. This remote closing is one of the tasks covered by our support package.

How do you sell a property with a mortgage still running?

A registered mortgage (teitōken, 抵当権) does not prevent a sale, but the buyer will only take the property free of it. Three things happen on closing day, in this order and in the same room:

1. the buyer pays the balance;
2. part of that money repays the outstanding loan to the bank, which hands over the release documents it has prepared in advance;
3. the shihō shoshi files the mortgage release (teitōken masshō tōki, 抵当権抹消tōki) and the ownership transfer together.

Your job is to notify the bank 4 to 6 weeks before closing, ask for the payoff statement (including any early repayment fee) and confirm that the bank will send someone or the documents on the day. If the sale price is lower than the outstanding loan, the bank must agree to the sale and you must cover the shortfall from your own funds before closing. Since a loan in Japan is in practice reserved for people who live and work there (see mortgages in Japan for foreigners), this mainly concerns resident foreigners, and those who financed the property while resident and have since moved abroad.

Selling an Airbnb, minpaku or hotel property

For an investor, the property is only part of what is being sold. The value the buyer sees depends on the turnover, the licence, the furniture, the future bookings and the management contract, and none of these transfers automatically with the deed.

The licence does not follow the building

Japan has several regimes for short-term lodging, and each has its own transfer rules:

A building that passed its inspections once will usually pass again, but the procedure takes weeks and the buyer bears the risk of a refusal (a changed fire code, a new local rule). This is why licensed properties are often sold with a condition precedent: the sale completes only once the buyer's licence is granted. Check the status of each authorisation separately with the public health office (hokenjo, hokenjo) of the municipality, and read our guides to the 180-night minpaku licence and the year-round ryokan licence before listing.

What to price and document

• Turnover and occupancy: two or three years of statements from the booking platforms; a buyer will value the business on them.
• Furniture and equipment: listed and valued separately in the contract (this part is not real estate and may be treated differently for tax).
• Future bookings: decide who honours them, who receives the money, and how the platform accounts are handed over.
• Management contract: is it assignable to the buyer, and on what notice?
• Tax: a property used in a lodging business has been depreciated at the business rate, which is faster; the tax acquisition cost is lower and the gain higher. Have the figures prepared before you set a price.

Which documents should you prepare?

Indicative checklist; the shihō shoshi and the agency will give you the exact list for your case.

The last line is the one people neglect. Purchase documents are not needed to close the sale, but without them your acquisition cost falls to the 5% flat rate and the tax bill can multiply. Scan them the day you buy.

Selling through a Japanese or foreign company

Everything above concerns an individual seller. If the property is held by a Japanese company (a kabushiki kaisha or gōdō kaisha), the gain is not taxed under the capital gains regime but as ordinary corporate profit, at the corporate tax rates, with no five-year distinction, and the withholding on non-residents does not apply to a Japanese company. If the owner is a foreign company, the gain is Japanese-source income of a non-resident corporation, generally subject to the 10.21% withholding and to a Japanese corporate return, and the interaction with the tax treaty of the company's country needs to be checked. In both cases the formalities (company registry extracts, board resolution, representative's authority) are heavier than for an individual. We do not detail the figures here because they depend on the structure: a specific analysis by a zeirishi is required before listing. Our article on setting up a company in Japan to invest covers why an investor might hold through a company in the first place.

Two complete examples

Example 1: a resident foreigner

Purchase in 2018 of a wooden house at ¥35,000,000 (≈ $224,400), of which ¥15,000,000 for the building, plus ¥1,200,000 of purchase costs. Sale in 2026 at ¥50,000,000 (≈ $320,500), with ¥2,000,000 of selling expenses (commission ¥1,716,000, stamp duty ¥10,000, survey and miscellaneous).

No withholding at closing: the seller receives ¥50,000,000 less the commission and pays the tax with the return the following spring. Had the same house been sold in 2023 (short-term), the tax would have been about ¥6,003,000.

Example 2: a non-resident foreigner

Same sale at ¥50,000,000 to a property company (so the withholding applies), by an owner living abroad, held more than five years, with the simplified taxable gain of ¥8,000,000 used earlier.

The lesson of the two tables: the seller does not "lose" 10.21%. They lend it to the tax office for about a year. What they actually pay is the tax on the gain, which is the same as a resident's minus the local tax. Note also that if the buyer had been a family buying a home, no withholding would have applied at all, and the whole ¥50M less costs would have arrived at closing.

Common mistakes to avoid

• Selling in year five instead of year six: nearly double the tax rate.
• Leaving Japan before closing without planning the tax representative and the refund account.
• Losing the purchase invoices, then discovering the 5% flat acquisition cost.
• Assuming the minpaku licence is sold with the house.
• Not telling the bank early enough about the mortgage release, which can push closing back by weeks.
• Forgetting that the 10.21% refund requires a return filed by 15 March, not an automatic credit.

Conclusion

A foreigner sells in Japan exactly like a Japanese owner: through an agency, at a legally capped commission, with a shihō shoshi to register the transfer. What differs is timing and tax. Hold beyond the 1 January five-year line, keep every invoice to prove your acquisition cost, and if you live abroad, appoint a tax representative before closing so that the 10.21% withholding comes back to you the following spring. Run your own figures in our simulator, look at what comparable properties are listed for in the catalogue of houses for sale in Japan and on our Japanese real estate overview, and if you want the sale coordinated from listing to the wire abroad, the support package does that.

The information in this article is general and does not constitute tax or legal advice. Rules may vary with the seller's situation. For an actual transaction, consult a real estate agent, a shihō shoshi and/or a zeirishi in Japan.

Frequently asked questions

Can a foreigner sell a house in Japan?

Yes, without any restriction on nationality, visa or residence. A foreign owner sells through the same process as a Japanese owner: agency, brokerage agreement, sales contract, closing with a judicial scrivener who registers the transfer.

Do I have to be in Japan to sell?

No. A power of attorney to a person in Japan, with a signature certificate from a notary or consulate (apostilled where required), lets you sign and close from abroad. Confirm the exact document list with the shihō shoshi handling the registration.

How much does a real estate agency cost in Japan?

The commission is capped at price × 3% + ¥60,000, plus 10% consumption tax, for prices above ¥4,000,000: about ¥1,716,000 on a ¥50,000,000 sale. For properties of ¥8,000,000 or less, the cap has been ¥300,000 plus tax since July 2024.

What tax do I pay on the capital gain?

About 39.63% if the property was held 5 years or less on 1 January of the year of sale, about 20.315% beyond that (national tax, reconstruction surtax and local inhabitant tax). A non-resident does not owe the local part: 30.63% or 15.315%.

What is the 10.21% withholding?

When the seller is a non-resident, the buyer withholds 10.21% of the gross sale price and pays it to the Japanese tax office. It is an advance on the seller's tax, not the tax itself, and it is settled in the following year's tax return.

Can the 10.21% be recovered?

Yes, if the withholding exceeds the tax actually due on the gain, which is usually the case. The seller files a return between 16 February and 15 March of the following year, through a tax representative, and the excess is refunded to a Japanese bank account.

How do I calculate my tax acquisition cost?

Purchase price of land and building, plus purchase costs and capital improvements, minus the notional depreciation of the building (cost × 0.9 × rate × years, rate 0.031 for wood). Without proof of the purchase price, only 5% of the sale price is allowed.

Can I sell a property that is still financed by a bank?

Yes. The loan is repaid at closing out of the buyer's payment, and the shihō shoshi files the mortgage release together with the ownership transfer. Notify the bank 4 to 6 weeks ahead and check that the price covers the outstanding balance.

Can an Airbnb or minpaku be sold with its licence?

Not automatically. A minpaku notification and a special-zone certification are personal to the operator and the buyer must file anew; a ryokan-law licence can be transferred on approval since 2023 or reapplied for. Check each authorisation with the local public health office.

Do I have to file a tax return in Japan after the sale?

Yes if there is a taxable gain, whether you are resident or not, and in any case to recover a withholding. The return is filed between 16 February and 15 March of the year after the sale; a non-resident files through a tax representative.