🔑 Key Takeaway: Japan's annual holding tax is fixed asset tax (固定資産税) at 1.4% of the assessed value — plus, in cities, city planning tax (都市 計画税) up to 0.3%. The assessed value is roughly 70% of market value, and residential land up to 200m² gets its base cut to 1/6. Net result: annual tax on a typical condo is far lower than headline rates suggest — often 0.2%–0.5% of market price. Every owner pays it, regardless of nationality or residency.
Of all the recurring costs of owning Japanese property, fixed asset tax (固定資産税 / kotei shisanzei) is the one buyers most often misestimate — usually by applying the 1.4% rate to the purchase price and overstating the bill. This guide explains exactly how the tax is built up, the reductions that apply, and what non-resident owners specifically need to handle.
For the full picture of recurring ownership costs, see our Japan property running costs guide. For acquisition and other taxes, see the property tax guide for foreign investors.
What Is Fixed Asset Tax?
Fixed asset tax (固定資産税) is a municipal annual tax levied on owners of land, buildings, and depreciable business assets, based on their value as of January 1 each year. The owner registered on January 1 is liable for that entire year's tax — an important date when buying or selling.
In most urban areas, a second municipal tax — city planning tax (都市計画税 / toshi keikaku zei) — is levied alongside it on property within "urbanization promotion areas" (市街化区域).
Both apply to all owners equally: Japanese nationals, foreign residents, and non-residents all pay the same rates on the same basis. Nationality and visa status are irrelevant to the tax itself.
How the Tax Is Calculated
The two taxes share the same foundation — the assessed value — but use different rates.
| Tax | Standard rate | Base |
|---|---|---|
| Fixed asset tax (固定資産税) | 1.4% | Assessed taxable value |
| City planning tax (都市計画税) | up to 0.3% | Assessed taxable value |
Step 1 — The assessed value (固定資産税評価額)
The municipality independently assesses each property's value. As a rule of thumb:
- Assessed value ≈ 70% of market value for land (based on the official land-value framework)
- Buildings are assessed on reconstruction cost and depreciate with age
- Assessed values are reviewed every 3 years (評価替え)
This is why applying 1.4% to your purchase price overstates the bill — the taxable base is the assessed value, which is materially lower.
Step 2 — The residential land reduction (住宅用地の特例)
This is the single biggest reduction and applies to virtually all standard homes:
| Land area | Fixed asset tax base | City planning tax base |
|---|---|---|
| Up to 200m² ("small-scale residential land") | 1/6 of assessed value | 1/3 of assessed value |
| Portion above 200m² | 1/3 of assessed value | 2/3 of assessed value |
So residential land up to 200m² is taxed on just one-sixth of its assessed value for fixed asset tax purposes — a dramatic cut.
⚠️ Demolition trap: This reduction applies to land with a residence on it. If you demolish the building and leave bare land, you can lose the exemption and see the land tax jump by up to 6×. This catches many akiya buyers — see akiya hidden costs.
Step 3 — New-building reductions
Newly built homes may receive a temporary reduction of the building portion (commonly halved) for an initial period (e.g., 3–5 years depending on type), subject to conditions and floor-area limits.
A Worked Example
A 30m² condominium purchased for ¥40,000,000 in central Tokyo:
| Component | Calculation | Amount |
|---|---|---|
| Assessed value (≈70%) | ¥40M × 0.7 | ~¥28,000,000 |
| Land share (assume ~40%) | ~¥11,200,000 | — |
| Building share (assume ~60%) | ~¥16,800,000 | — |
| Land base after 1/6 reduction | ¥11.2M ÷ 6 | ~¥1,866,000 |
| Fixed asset tax — land | ×1.4% | ~¥26,000 |
| Fixed asset tax — building | ¥16.8M × 1.4% | ~¥235,000 |
| City planning tax (combined, simplified) | — | ~¥40,000–60,000 |
| Approx. annual total | ~¥250,000–320,000 |
That's roughly 0.6%–0.8% of purchase price for a building-heavy condo — and considerably less for land-heavy houses where the 1/6 land reduction dominates. Actual figures vary by municipality and the land/building split; treat this as illustrative.
See estimated taxes for specific areas in our running costs guide and compare real transaction prices on JRE's location pages.
When and How You Pay
- The municipality mails a tax notice (納税通知書) around April–June.
- Payment is split into four installments (commonly April, July, December, and February — timing varies by municipality), or you can pay in a lump sum.
- Payment methods include bank transfer, convenience store, direct debit, and increasingly credit card / smartphone payment apps.
What Non-Resident Owners Must Do
Non-resident owners face two extra requirements:
- Appoint a tax representative (納税管理人 / nōzei kanrinin). This is mandatory for non-residents owning taxable property. The representative — often your judicial scrivener, tax accountant, or property manager — receives the tax notice at a Japanese address and handles payment. Annual fees typically run ¥30,000–¥100,000.
- Arrange reliable payment. Since notices and installments are tied to Japanese dates and addresses, most non-residents have their representative or property manager pay locally, then reconcile via international transfer. See paying Japan property bills from abroad.
Non-payment is serious: unpaid fixed asset tax accrues delinquency charges and can ultimately lead to a tax lien (差押え) and forced auction. The obligation stays attached to the registered owner and cannot be escaped by abandoning the property.
Buying or Selling Mid-Year: Tax Proration
Because the January 1 owner is legally liable for the whole year, buyers and sellers customarily prorate the tax at settlement (固定資産税の精算): the buyer reimburses the seller for the portion of the year after the handover date. This is a contractual custom, not a tax rule — confirm it appears in your purchase contract. Review this as part of your due diligence.
Frequently Asked Questions
How is fixed asset tax calculated in Japan?
Fixed asset tax is 1.4% of a property's assessed taxable value (固定資産税評価額), which is roughly 70% of market value. Residential land up to 200m² has its base cut to 1/6, and cities add a city planning tax of up to 0.3%. Because the base is the assessed value (not the purchase price) and reductions apply, the effective rate on a typical home is often well under 1% of market price.
Do foreigners pay fixed asset tax in Japan?
Yes. Fixed asset tax and city planning tax apply to all property owners equally, regardless of nationality or residency. Non-residents must additionally appoint a tax representative (納税管理人) to receive the tax notice at a Japanese address and handle payment.
What is the difference between fixed asset tax and city planning tax?
Fixed asset tax (固定資産税, 1.4%) is levied on owners of land and buildings nationwide. City planning tax (都市計画税, up to 0.3%) is an additional municipal tax on property within designated urbanization promotion areas, funding urban infrastructure. Both are based on the same assessed value and billed together.
Why is my Japanese property tax lower than 1.4% of the price?
Because the 1.4% rate is applied to the assessed value (about 70% of market value), not the purchase price — and residential land up to 200m² is taxed on just 1/6 of its assessed value. These reductions typically bring the effective annual tax to roughly 0.2%–0.8% of the purchase price.
What happens if I demolish a building on my land?
You can lose the residential land reduction. Land with a home on it is taxed on 1/6 of its assessed value (up to 200m²); bare land is not, so demolishing a structure can increase the land's fixed asset tax by up to roughly 6×. This is a common and costly mistake for buyers of dilapidated akiya.
Related Articles
- Japan Property Running Costs: Monthly & Annual →
- Japan Property Tax Guide for Foreign Investors →
- Repair Reserve & Management Fees Explained →
- Paying Japan Property Bills From Abroad →
- Akiya Hidden Costs for Foreign Buyers →
- Japan Property Due Diligence Checklist →
Disclaimer
This article is for informational purposes only and does not constitute tax, legal, or financial advice. Fixed asset tax and city planning tax rates, assessment methods, reductions, and payment procedures vary by municipality and are subject to change. Worked examples are illustrative and simplified. Figures reflect general conditions as of June 2026. Consult a qualified Japanese tax accountant (税理士) and your local municipal tax office for guidance specific to your property.