Important Points and Procedures Foreign Buyers Should Know When Buying Property in Japan

Japanese Article

Introduction

Purchasing real estate is one of the most important decisions in life. In particular, when foreign buyers purchase property in Japan, it is essential to understand the differences in culture, legal systems, and transaction practices. Knowledge regarding taxation and legal procedures is also extremely important. This article explains the procedures and key points involved in purchasing real estate in Japan and aims to help foreign buyers complete their purchase smoothly and confidently.

Real Estate Purchases in Japan by Foreign Buyer

Foreign buyers can purchase real estate in Japan in essentially the same manner as Japanese people. Regardless of nationality, residency status, or visa type, foreigners may own land and buildings in Japan through purchase, inheritance, gift, or other legal methods. Ownership rights are protected in the same manner as for Japanese people, and there are no restrictions on foreign ownership of land in Japan.

Taxation Details

Foreign buyers are generally subject to the same taxes as Japanese people when purchasing or owning real estate in Japan, including Real Estate Acquisition Tax, Fixed Asset Tax, City Planning Tax, and Capital Gains Tax upon sale. However, purchasing real estate in Japan does not grant permanent residency or visa benefits. Foreign buyers who wish to reside in Japan must separately meet the applicable visa requirements.

1. Financial Planning

Purchasing real estate requires careful financial preparation. Foreign buyers should consider deposit amounts, closing costs, property balances, mortgage options, taxes, and registration fees before proceeding with a purchase.

◼︎ Cash Purchase

• Deposit: Generally around 10% of the purchase price and paid at the time of contract signing.

• Closing Costs: Usually around 6%–9% of the property price for second-hand properties, including taxes, registration fees, and brokerage commissions.

• Remaining Balance: The remaining amount of the property price paid at closing.

◼︎ Using a Mortgage in Japan

Foreign buyers living in Japan may be eligible to obtain a mortgage from Japanese financial institutions. However, foreign buyers without permanent residency may face stricter mortgage screening requirements. It is important to compare mortgage options, interest rates, repayment periods, and lender requirements in advance.

Typical mortgage-related payments include:

• Deposit (at contract signing)

• Closing Costs (at closing)

• Mortgage Amount (borrowed from the lender at closing)

• Down Payment (buyer’s own funds paid at closing)

For detailed information on funding plans and payment examples—both for cash purchases and mortgage purchases—please refer to the page below:

“Costs and Required Documents for Buying Property in Japan”

http://www.danaestate.net/costs-and-required-documents-for-buying-property-in-japan

2. Property Search and Professional Support

Real estate transactions in Japan can be highly technical and involve numerous procedures. Foreign buyers may also require additional documentation and overseas remittance procedures. Therefore, it is strongly recommended to work with a reliable real estate company experienced in supporting international clients.

Dana Estate provides English-language support for foreign buyers considering property purchases in Osaka and the Kansai region, offering assistance from property search to closing procedures.

3. Property Viewings

Property viewings are an important part of the purchasing process. Foreign buyers should carefully inspect the surrounding environment, transportation access, sunlight, ventilation, noise levels, safety, interior condition, and available facilities. Online property viewings may also be available for overseas buyers.

4. Purchase Application

Once a foreign buyer select a property, a purchase application is submitted to the seller. The application generally includes the desired purchase price, deposit amount, preferred contract date, and preferred closing date. If the foreign buyer intends to use a mortgage, a preliminary loan screening is typically conducted at this stage. Please note that a purchase application is not legally binding and does not guarantee that a contract will be concluded.

5. Contract Signing

After negotiations are completed, the sales contract is signed. A foreign buyer signs and seals the agreement and pays a deposit, generally around 10% of the purchase price. If a mortgage is being used, the foreign buyer then proceeds with the formal mortgage application and loan agreement process.

6. Closing and Property Handover

At closing, a foreign buyer pays the remaining balance and related settlement adjustments, including taxes and management fees where applicable. A judicial scrivener handles the ownership registration procedures with the Legal Affairs Bureau. Once all payments are completed, the foreign buyer receives the keys and related property documents.

Summary

Foreign buyers can purchase and own real estate in Japan under conditions that are largely the same as those applicable to Japanese people. However, Japan has many unique systems involving contracts, taxes, mortgages, and required documentation.

For this reason, working with a reliable real estate company that can provide detailed English-language support is highly recommended to ensure a safe and smooth purchasing experience. Dana Estate provides comprehensive support for foreign buyers purchasing real estate in Japan. From property searches to contracts and closing procedures, we are committed to assisting our clients with clear English-language support throughout the entire process. Please feel free to contact us for any questions or consultations.