Real estate holding taxes, such as property tax and city planning tax, are levied on individuals and companies that own real estate on 1 January each year. The municipality calculates the amount of tax and notifies the taxpayer of the amount due, who then pays the tax. The property tax and city planning tax are calculated on the basis of the assessed value of the property (the value set for taxation purposes, which is adjusted to be 70% of the official value of residential land). The assessed value of a property is reviewed every three years.
Normally, the rate of Fixed Asset Tax is 1.4% and the rate of City Planning Tax is 0.3%.
（1）Special provisions for residential land of 200m2 or less
In the case of land used exclusively for residential purposes, or land used in combination with a house where at least 1/4 of the building is used for residential purposes, the following reduction measures are available by special exception.
The following is a translation of a part of the website of the Tokyo Metropolitan Government’s Taxation Bureau, but is considered to be the same in other municipalities.
As for the city planning tax, it may differ from municipality to municipality.
Land for residential use is defined as any of the following：
(a) Land used as a site for a private dwelling (a house used exclusively for human habitation) up to 10 times the total floor area of the houses on it.
(b) Land used for the site of a house used in combination (a house used partly for human habitation where the ratio of the habitation part to the floor area of the house is one fourth or more), the area of which is obtained by multiplying the area of the house by the rate in the table below (if the area of the land used for the house is more than ten times the floor area of the house on which the house is built, the area of the land used for the house shall be equal to or less than ten times the floor area). If the area of the residential land is more than 10 times the floor area of the house on the land, the area obtained by multiplying the area by the rate in the table below).
|Type of house||Floor area of the living area / Gross floor area of the house||Rate|
|Houses of fire-resistant construction with five or more storeys above ground||1/4 (25%) or more and less than 1/2 (50%)||0.5|
|1/2 (50%) or more and less than 3/4 (75%)||0.75|
|3/4 (75%) or more||1.0|
|Houses of other types than above||1/4 (25%) or more and less than 1/2 (50%)||0.5|
|1/2 (50%) or more||1.0|
■Examples of residential land■
The site of a residential house (private house, flat, etc.), a garden or a private car park integrated with the site of a residential house.
■Examples of land not for residential use (non-residential land) ■
Land for business use (shops, offices, factories, warehouses, inns, etc.), car parks, material storage areas, vacant land (including land planned for residential construction), and land where a house is under construction.
Special measures for residential land
The tax burden on residential land is reduced by special measures for the tax base. The amount of taxable base after applying the special measures for residential land (main taxable base) is calculated according to the classification of residential land, fixed asset tax and city planning tax as shown in the table below.
|fixed asset tax||city planning tax|
|Land for residential use up to 200m2 per dwelling||The assessed value ×1/6||The assessed value ×1/3|
|Land for residential use exceeding 200m2 per dwelling||The assessed value ×1/3||The assessed value ×2/3|
（2） Special provisions for newly built houses
In addition, if the floor area of a newly built house meets the following requirements, one-half of the fixed asset tax on the house (up to 120m2 per dwelling) will be reduced for three years (five years for fireproof and semi-fireproof buildings with three or more floors) from the year of new taxation.
In addition, for certified long-term quality housing, if the following floor area requirements are met, the amount of fixed asset tax (up to the equivalent of 120m2 per dwelling unit in the living area) on that housing will be reduced by half for five years (seven years for fireproof/quasi-fireproof buildings with three or more floors) from the year of new taxation.
Floor area requirements:
In the case of a detached house, the floor area must be between 50m2 and 280m2.
In the case of a house with a shop, the floor area of the living area must be between 50m2 and 280m2.
In the case of an apartment building, the floor area of each independently divided residential area plus the area of common areas, such as corridors and stairs, is 50 m2 or more, but not more than 280 m2 (in the case of a rental house, the floor area is 40 m2 or more, but not more than 280 m2).
There is also a separate reduction for certified long-term quality housing.
（3）What should I do if I want to know the amount of property tax for a certain land or building?
We are sometimes asked what to do if you want to know the amount of property tax on a certain piece of land or building.
In each municipality, you may be able to check the assessed value of your property by viewing the property tax ledger that lists the land and buildings you own. For example, the Tokyo Metropolitan Government has the following information on its website.
”During the inspection period (from Thursday, April 1 to Wednesday, June 30 for the fiscal year 2021 in 23 wards, excluding Saturdays, Sundays and holidays), taxpayers can see the books containing the prices of land and houses. Please bring your driving licence or some other form of identification to the inspection.”
However, if you have not yet bought the land, you are not be able to learn about the property tax assessment value of other people’s land. Therefore, if you are at a stage where you are talking about buying to some extent, you will need to contact the seller.
The Tokyo Metropolitan Government, for example, publishes information on its website about the road value of property tax. (Japanese only).
From such information you can make a rough estimate of how much you can expect to pay.