Reporting Rental Income in Japan: The Kakutei Shinkoku

The kakutei shinkoku in brief: who, when, how much

The kakutei shinkoku (kakutei shinkoku, annual income-tax return) is the procedure by which you report last calendar year's income to the Japanese tax authority and compute the tax due. The moment you collect rent from a property located in Japan, that income is Japan-sourced: it is taxed in Japan first, whether you live in Tokyo or overseas.

Three things to fix before the detail:

Question	Answer
Who files?	Any owner earning real-estate income (fudōsan shotoku, 不動産所得) from a Japanese property — resident or non-resident.
When?	Normally February 16 to March 15, for the previous calendar year (tax year = calendar year).
On what?	The net figure: rent received minus deductible expenses and depreciation.
At what rate?	Progressive 5 to 45 percent, plus a 2.1 percent reconstruction surtax (fukkō tokubetsu shotokuzei, fukkō tokubetsu shotoku-zei).

The good news: done well, the return often shows very little tax — or even a refund if withholding was applied. This guide complements our piece on rental taxation for non-residents, which covers rates and the tax treaty; here we focus on the procedure.

Who must file — residents, non-residents, thresholds

Two very different profiles share the same duty under distinct rules.

The Japan resident

If you live in Japan, rent adds to your other income (salary, etc.) under aggregate taxation, sōgō kazei (総合課税). A salaried employee whose side income (including real estate) exceeds 200,000 yen (~1,300 euros) must file a kakutei shinkoku. Residents also pay local inhabitant tax, jūminzei (jūminzei, roughly 10 percent).

The non-resident (foreign owner living abroad)

A non-resident earning Japanese rent must file: this Japan-sourced income never leaves the tax office's view. Two key differences from a resident:

• no jūminzei (it is based on residence on January 1);
• you must appoint a nōzei kanrinin (nōzei kanrinin, tax agent / fiscal representative) in Japan, since you have no local address for correspondence.

Worth knowing: the basic deduction kiso kōjo (kiso kōjo, 480,000 yen, ~3,200 euros) applies to residents and non-residents alike under the progressive scale, often wiping out most of a small rental profit. Buying still grants no visa (see our article on buying in Japan without a visa): this tax duty exists precisely because you can own without living there.

The calendar: key dates, payment and auto-debit

Japan's tax rhythm is simple but strict. Missing a date is expensive (see the mistakes section).

Step	Window	Detail
Blue-return application	By March 15	File the aoiro shinkoku shōnin shinseisho (青色申告承認申請書) before March 15 of the relevant year, or within 2 months of starting to rent.
Filing the kakutei shinkoku	February 16 – March 15	For the previous calendar year's rent. If March 15 is a weekend, the deadline moves to the next business day.
Paying the tax	By March 15	Same deadline as filing, unless you elect auto-debit.
Automatic debit	Mid-April	With furikae nōzei (振替nōzei, direct debit), the charge is pushed back about a month.

Japan's tax year runs January 1 to December 31. Expert tip: enable furikae nōzei from your first filing. You gain a month of cash flow with no penalty and avoid forgetting the payment — the most common slip for remote owners. To manage a rental from afar, also read our guide to remote property management in Japan.

Blue (aoiro) or white (shiroiro) return: which to choose

This is the single choice that weighs most on your bill. There are two filing regimes.

The white return (shiroiro)

The shiroiro shinkoku (白色申告, white return) is the default: no prior application, light bookkeeping — but no tax benefit. You attach a simple income-and-expense statement (shūshi naiyaku-sho, 収支内訳書).

The blue return (aoiro)

The aoiro shinkoku (青色申告, blue return) requires a prior application and stricter bookkeeping, but unlocks a special deduction that directly cuts taxable income. The amount depends on two things: how good your books are, and the scale of your operation.

Blue deduction	Conditions
650,000 yen (~4,300 euros)	Business-scale operation jigyōteki kibo (jigyō的規模) + double-entry bookkeeping + e-Tax filing (or electronic ledgers).
550,000 yen (~3,700 euros)	Same conditions but paper filing.
100,000 yen (~670 euros)	Below business scale, or simplified bookkeeping.

The trap 90 percent of articles miss: the 550,000/650,000 yen deduction is reserved for landlords at business scale, set by the so-called go-mune jusshitsu (5棟10室) rule — at least 5 detached houses OR 10 units rented out. Below that (one or two apartments), you only get the 100,000 yen deduction, even on a blue return. Business scale also unlocks full loss relief and a salary for a working spouse. An investor eyeing an income-producing building rather than a single studio crosses this threshold and enters a different tax bracket entirely.

Computing net rental income: deductible expenses and depreciation

You are taxed only on the net. Every yen of legitimate expense lowers your base. The main deductible costs (hitsuyō keihi, 必要経-hi):

• Fixed-asset and city-planning tax (koteishisanzei; see our article on property tax in Japan);
• Building-management fees and the repair reserve (kanrihi and shūzen tsumitate-kin) — detailed in our guide to condo management fees (kanrihi);
• Property-management and tenant-finding fees;
• Repairs and maintenance (shūzenhi) — take care to separate a repair from a capitalized improvement;
• Insurance, including earthquake cover;
• Loan interest (Japanese mortgages remain limited to salaried Japan residents; otherwise, cash purchase);
• Depreciation genka shōkyaku (genka shōkyaku) of the building;
• Fees for your accountant or tax agent.

Depreciation, your best lever

Depreciation deducts a slice of the building's value each year (never the land). Statutory useful life is 22 years for a wooden house, 47 years for reinforced concrete. For an older property a simplified method speeds up the deduction, sometimes enough to create a paper loss that erases the tax. This is the heart of the strategy — we devote a whole article to real-estate depreciation in Japan. Finally, residential rent is exempt from consumption tax shōhizei (shōhi-zei): a standard residential landlord files no consumption-tax return, unlike an operator of licensed short-term minpaku rentals.

Worked example: a Tokyo studio rented at 150,000 yen a month

Take an apartment (mansion) in Tokyo owned by a non-resident, rented at 150,000 yen a month, i.e. 1,800,000 yen a year (~12,000 euros). Here is the return, filed blue (a single unit, so the 100,000 yen deduction).

Item	Amount (yen)	≈ euros
Rent received (gross)	1,800,000	12,000
– Condo fees + repair reserve	-300,000	-2,000
– Fixed-asset and city-planning tax	-120,000	-800
– Property management (5%)	-90,000	-600
– Insurance	-15,000	-100
– Building depreciation	-350,000	-2,330
– Tax-agent fee	-100,000	-670
= Net rental income	825,000	5,500
– Blue-return deduction	-100,000	-670
– Basic deduction (kiso kōjo)	-480,000	-3,200
= Taxable income	245,000	1,630
Tax (5%) + 2.1% surtax	≈ 12,500	≈ 83

Result: on 12,000 euros of rent, Japanese tax is about 83 euros — an effective rate under 1 percent. That is why a well-kept return is worth its weight in gold.

Variant: corporate tenant and withholding

If the tenant is a company, it withheld 20.42 percent at source — 367,560 yen (~2,450 euros) over the year. Since your final tax is only 12,500 yen, the kakutei shinkoku triggers a refund of about 355,000 yen (~2,370 euros). Not filing would mean handing that sum to the Japanese treasury. Test your own figures with our yield simulator.

Non-residents: tax agent, 20.42% withholding and e-Tax

The foreign owner living abroad has three specific duties to master.

1. Appoint a tax agent (nōzei kanrinin)

Before your first filing, submit a nōzei kanrinin todokede-sho (nōzei kanrinintodokedesho) to the tax office zeimusho (zeimusho) covering the property. The agent — a licensed accountant zeirishi (zeirishi), a management company or a resident relative — receives official mail, files the return, and pays the tax in your name. Without one, you cannot file cleanly from abroad.

2. Understand withholding (gensen chōshū)

The 20.42 percent withholding gensen chōshū (gensen chōshū, withholding at source) applies when the tenant is a legal entity, or an individual renting for business. It does not apply when an individual rents for their own or a relative's home. This withholding is not a final tax: it is credited against the final tax computed at the kakutei shinkoku, hence the frequent refunds.

3. File via e-Tax or on paper

The e-Tax online service is the modern route (and mandatory for the 650,000 yen blue deduction). In practice, a non-resident without a My Number card almost always files through their tax agent. Build a clean file each year: leases, rent statements, expense invoices, property-tax notices, depreciation schedule. A tidy file means fair tax and a calm audit. For end-to-end support, see our tailored assistance.

Common mistakes to avoid

These slips cost foreign owners dearly every year. All are avoidable.

• Not filing "because the property earns little." Japan-sourced rental income requires a return, however small — especially when withholding gives a refund.
• Forgetting the blue-return application before March 15. The request is prior: too late and you stay on the white return all year and lose the deduction.
• Depreciating the land. Only the building depreciates. Split the purchase price correctly between land and building at acquisition (see buying costs in Japan).
• Confusing repair with improvement. A repair is deductible at once; an improvement must be capitalized and depreciated. Getting this wrong is an audit classic.
• Neglecting the tax agent. Without a nōzei kanrinin, mail goes astray and penalties land.
• Missing the deadline. The failure-to-file penalty mushinkoku kasanzei (無申告加算税) runs from 5 percent (voluntary late filing) to 15-20 percent, and late-payment interest entaizei (延滞税) is around 2.4 percent then 8.7 percent a year. Two years late can also revoke your blue status.
• Ignoring tax at home. Your home-country treaty with Japan relieves double taxation, but you still must report this income at home; revisit our article on rental taxes for non-residents.

Conclusion: an annual formality that protects your yield

The kakutei shinkoku is not a chore but a lever: done well, it usually brings tax on your Japanese rent below 1 percent of gross, and triggers a refund whenever withholding was applied. The three winning reflexes: elect the blue return before March 15, appoint a reliable tax agent, and document every expense and the depreciation. Keep to the calendar, run clean books, and your Japanese rental stays one of the best-treated investments in the world. Ready to invest seriously? Explore our hand-picked akiyas and gems, refine your plan on the Projects page, or start with our complete guide to buying in Japan.

Frequently asked questions

When do I file a rental-income tax return in Japan?

Normally between February 16 and March 15, for the previous calendar year's rent. If March 15 falls on a weekend or holiday, the deadline shifts to the next business day. Payment shares that deadline, unless you elect auto-debit (furikae nōzei), which pushes it to mid-April.

Does a non-resident really have to file a kakutei shinkoku?

Yes. Rent from a property in Japan is Japan-sourced income, taxed in Japan regardless of where you live. A non-resident must also appoint a tax agent (nōzei kanrinin) in Japan to file the return and pay the tax on their behalf.

What is the difference between a blue and a white return?

The white return (shiroiro) is the default, with no tax benefit. The blue return (aoiro), on prior application and with stricter bookkeeping, unlocks a deduction of 100,000, 550,000 or 650,000 yen depending on the quality of your books and the scale of your operation.

How much tax will I pay on my Japanese rent?

You are taxed on net income (rent minus expenses and depreciation) at progressive rates of 5 to 45 percent, plus a 2.1 percent reconstruction surtax. With depreciation and deductions, effective tax on a small property often falls below 1 to 5 percent of gross rent.

What is the 20.42% withholding tax?

It is a withholding (gensen chōshū) the tenant applies when they are a legal entity or an individual renting for business. It does not apply to individuals renting a home. It is not a final tax: it is credited against your final liability, often producing a refund at the kakutei shinkoku.

Can I depreciate my property to cut the tax?

Yes, but only the building, never the land. Useful life is 22 years for wood and 47 for reinforced concrete; an older property depreciates faster via a simplified method, which can wipe out much of the tax. See our dedicated article on real-estate depreciation.

What happens if I file late?

A failure-to-file penalty (mushinkoku kasanzei) applies, from 5 percent for voluntary late filing to 15-20 percent otherwise, plus late-payment interest (entaizei) of about 2.4 percent then 8.7 percent a year. Repeated lateness can also cost you blue-return status.

Do I also report this rent in my home country?

Yes. Tax treaties with Japan prevent double taxation, but you must still report this Japanese income at home, where it is factored into your effective rate. Professional tax advice on both sides remains recommended.