Costs and Required Documents for Buying Property in Japan

A Practical Guide to Acquisition Costs, Taxes, and Required Documentation for Property Purchases in Japan

Japanese Article

Introduction

Foreign buyers can purchase and own property in Japan under conditions that are largely the same as those applicable to Japanese people.

However, in addition to the property price, buyers should be aware of various acquisition costs, including taxes, registration fees, brokerage commissions, insurance premiums, and other related expenses.

For overseas buyers and first-time buyers in Japan, it is important to understand what costs will arise and when they will be payable throughout the transaction process.

This guide explains the major costs associated with purchasing property in Japan, following the process from signing the contract through closing and post-purchase tax obligations.

1. Costs Required at the time of Signing the Contract

Once the buyer and seller have agreed on the purchase terms, a contract is executed.

At this stage, the following costs are typically required:

Item	Description
Revenue Stamp Tax	Stamp tax affixed to the Contract
Deposit	Generally around 10% of the property price

About the Deposit

A deposit is a payment made by the buyer to the seller at the same time as the contract is signed.

In most cases, the deposit is credited toward the final purchase price at closing.

If the buyer cancels the contract after signing, the deposit is generally forfeited and will not be refunded.

On the other hand, if the seller cancels the contract, the seller must return the deposit already received and pay an additional amount equal to the deposit.

2. Costs Required When Applying for a Mortgage

In many cases, obtaining a mortgage in Japan can be difficult for foreign buyers, and therefore cash purchases (cash transactions) are common.

However, buyers who hold Japanese nationality or Permanent Resident status may be eligible to obtain a mortgage from a Japanese financial institution.

When using a mortgage, the following tax will be required:

Item	Description
Revenue Stamp Tax	Stamp tax affixed to the Loan Agreement (Mortgage Agreement) with the financial institution

3. Costs Required at Closing

On the closing date, the buyer pays the remaining purchase price together with various acquisition costs listed below.

(1) Remainig Purchase Price

Item	Description
Remaining Purchase Price	Purchase price minus the deposit already paid

Example

• Property Price: JPY 50,000,000

• Deposit: JPY 5,000,000

• Remaining Purchase Price: JPY 45,000,000

(2) Proratd Settlement Charges

Certain expenses associated with a property arise throughout the year.

At closing, these expenses are prorated and settled between the buyer and seller based on the closing date.

Item	Description
Fixed Asset Tax and City Planning Tax	Prorated settlement of annual taxes
Management Fees and Repair Reserve Fund Contributions	Applicable to condominium units
Neighborhood Association Fees, etc.	May apply depending on the location

(3) Brokerage Fee

This fee is paid to the real estate brokerage company.

The actual amount varies depending on the property price.

Item	Description
Brokerage Fee	Generally calculated as: (Property Price × 3%) + JPY 60,000 + Consumption Tax

(4) Registration Costs

These costs are required when transferring ownership of the property or establishing a mortgage.

Item	Description
Registration and License Tax	Applicable to ownership transfer registration, mortgage registration, and other registration procedures
Judicial Scrivener Fees	Professional fees paid to a judicial scrivener who handles the registration process

About Judicial Scriveners

In Japan, property registration procedures are generally handled by licensed legal professionals known as judicial scriveners.

For transactions involving foreign buyers, judicial scriveners also assist with identity verification and the review of required documentation.

Dana Estate can also introduce English-speaking judicial scriveners, allowing overseas buyers to complete the required legal procedures smoothly and with confidence.

(5) Costs Associated with Using a Mortage

If a mortgage is used, the following additional costs may apply.

Item	Description
Mortgage Administration Fee	Fee payable to the financial institution
Loan Guarantee Fee	Fee payable to the guarantee company

About the Loan Guarantee Fee

Depending on the lender, a guarantee fee may not be required.

In such cases, the cost may instead be incorporated into the mortgage interest rate.

(6) Fire Insurance Premium

Japan is prone to natural disasters and therefore obtaining fire insurance is generally recommended when purchasing property.

In particular, many financial institutions require borrowers to obtain fire insurance as a condition of mortgage approval.

Item	Description
Fire Insurance Premium	Insurance premium that provides compensation for damage to the property caused by fire and other covered events

※The premium varies depending on factors such as the age of the building, construction type, coverage selected, and policy term.

4. Cost Illustration: Cash Purchase vs. Mortgage Purchase

Understanding how much funding will be required and at what stage of the transaction is an important part of preparing for a property purchase. The following examples illustrate a typical purchase of a property priced at JPY 50 million.

(1) Cash Purchase Simulation

Property Price: JPY 50,000,000

Item	Amount	Description / Notes	Timing
Deposit	JPY 5,000,000	Approx. 10% of the property price	At Contract Signing
Remaining Purchase Price	JPY 45,000,000	Property Price less Deposit	At Closing
Acquisition Costs	Approx. JPY 2,000,000–3,500,000	• Approx. 4–7% of the property price • Registration costs, taxes, brokerage fees, etc. *Varies depending on property type and individual circumstances	At Closing

 【Notes】

• Since the deposit of JPY 5,000,000 has already been paid at the time of signing the contract, the buyer's cash payment required at closing will generally be: Remaining Purchase Price (JPY 45,000,000) + Acquisition Costs (approx. JPY 2,000,000–3,500,000) = approx. JPY 47,000,000–48,500,000.

• The revenue stamp tax payable on the real estate purchase contract at the time of signing is not included in the above figures.

• The above acquisition costs do not include the Real Estate Acquisition Tax (see Section 5), which is billed separately by the prefectural government several months after closing.

(2) Mortgage Purchase Simulation

Property Price: JPY 50,000,000(Example: 20% Down Payment of JPY 10,000,000; Loan Amount: JPY 40,000,000)

Item	Amount	Description / Notes	Timing
Deposit	JPY 5,000,000 (*1)	Approx. 10% of the property price (paid at contract signing, credited toward purchase price at closing)	At Contract Signing
Remaining Down Payment(Payable at Closing)	JPY 5,000,000 (*2)	Total down payment (JPY 10,000,000) minus the deposit already paid (JPY 5,000,000)	At Closing
Mortgage Loan	JPY 40,000,000	• Borrowed from financial institution (Property Price less Total Down Payment)	At Closing
Acquisition Costs	Approx. JPY 3,000,000–4,500,000	• Approx. 6–9% of the property price • Registration costs, brokerage fees, loan administrative/guarantee fees, fire insurance, etc.	At Closing

【Notes】

• Of the total JPY 10,000,000 down payment, JPY 5,000,000 (*1) is paid at contract signing as a deposit. Therefore, the remaining down payment due at closing is: JPY 10,000,000 − JPY 5,000,000 (*1) = JPY 5,000,000 (*2).

• The buyer's cash payment required at closing will generally be: Remaining Down Payment JPY 5,000,000 (*2) + Acquisition Costs approx. JPY 3,000,000–4,500,000 = approx. JPY 8,000,000–9,500,000.

• The revenue stamp tax payable on the real estate purchase contract and the loan agreement (金銭消費貸借契約) is not included in the above figures (*stamp tax is exempt if using an electronic contract).

• The above acquisition costs do not include the Real Estate Acquisition Tax (see Section 5), which is billed separately by the prefectural government several months after closing.

※The figures shown in the simulation above are illustrative examples. Actual amounts will vary depending on the specific property, loan terms, and transaction conditions.

5. Taxes Payable After Purchasing Property

Real Estate Acquisition Tax

A one-time Real Estate Acquisition Tax is imposed when property is acquired.

Item	Description
Real Estate Acquisition Tax	A tax for which a payment notice is generally issued by the prefectural government approximately six months to one year after acquisition

In most cases, the tax notice is not issued immediately after purchase but is sent some time after the property has been transferred to the buyer.

6. Important Considerations for Foreign Buyers

Required Documents

For Foreign Residents of Japan

Foreign buyers residing in Japan generally need the following documents:

• Certificate of Residence (issued within the past three months)

• Certificate of Registered Seal (issued within the past three months) – required when using a mortgage

• Residence Card

• Passport

• Registered Seal and Personal Seal (a personal seal alone may be sufficient if no mortgage is used)

• Cash card, bankbook, and registered bank seal for the account used to pay the remaining purchase price

• Bank account information and registered bank seal for management fee withdrawals (for condominium purchases)

  
  

For Foreign Buyers Residing Overseas

Foreign buyers who do not reside in Japan may be required to provide:

• Affidavit (serving as an alternative to a Japanese Certificate of Residence)

• Passport

  
  

※Required documentation may vary depending on the purchase structure, lender requirements, nationality, and country of residence.

Foreign Exchange Risk

When funds are transferred internationally, fluctuations in exchange rates may affect the total amount ultimately paid.

Cash Purchases

Many foreign buyers purchase property in cash, as mortgage approval requirements in Japan can be stringent for non-Japanese applicants.

Summary

When purchasing property in Japan, buyers should budget not only for the property price itself, but also for various additional costs such as taxes, registration fees, brokerage commissions, and insurance premiums.

As a general guideline, acquisition costs typically range from approximately 6% to 9% of the property price, depending on the type of property, financing arrangements, and individual circumstances.

For foreign buyers, it is particularly important to understand Japan’s unique procedures relating to documentation, registration, financing, and international fund transfers.　Working with experienced professionals can help ensure a smooth and successful transaction.

Dana Estate provides comprehensive support for foreign buyers purchasing property in Japan. From property searches and contract procedures to introductions to English-speaking judicial scriveners and transaction support, we assist our clients throughout the entire purchasing process to help ensure a smooth and successful experience.

Before proceeding with a purchase, we recommend confirming the total acquisition cost—including all fees and taxes—and preparing a comprehensive financial plan accordingly.