Taxes When Running a Property Lending Business in Japan

Hello, my name is Taisei Koshida, and I am a certified public accountant and tax accountant.

I aim to assist non-Japanese business owners who need help with reading or writing in Japanese. If you find the Japanese tax return system challenging, I can help you with your tax filings.

Lately, many foreign people and companies have been trying to start property lending businesses in Japan because the Yen has been weak, among other reasons, such as Minpaku ( a private lodge business).

So, I, a certified public accountant and tax accountant, will explain about taxes when running a property lending business.

1. Income Taxes

Profits, calculated by subducting costs from rents, are taxed by around 30 %. Costs include depreciation, calculated by dividing purchasing costs by depreciation durations ruled by tax laws, such as for example, 15 years to 30.
It’s important to note that companies are subject to an almost flat tax rate of 30% on profits, while individuals face a more varied tax structure. Individual tax rates range from 15% to 65%, with the exact rate determined by income level. All rates include local tax.

2. Consumption Tax

If you lend for residential use, rents are not taxed because of political considerations. Besides, land rents are not taxed because they do not fit this tax nature. Only for business use, such as in offices and shops, lents are taxed by 10%.

I will explain taxes related to property businesses in the following blogs.

What Taxes Happen in Purchasing Real Properties in Japan

Taxes When Businesses Sell Real Properties in Japan

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