What Is a Tax Agent Required for Foreigners Purchasing Real Estate in Niseko and Furano? Explanation of Roles and Necessity

How Can Foreigners Purchase Real Estate in Niseko and Furano? | A Thorough Explanation of the Necessity of a Tax Agent

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Key Considerations for Foreigners Owning Real Estate in Japan

When owning real estate in Japan, it is crucial to understand tax procedures and legal obligations. In particular, if you do not have a residential address in Japan, you must appoint a tax agent to handle property tax and income tax. Without a tax agent, you may not receive tax notifications, leading to delays and potential penalties. To ensure a smooth process, work with judicial scriveners and tax accountants to comply with regulations.

For a comprehensive guide on the entire real estate acquisition process, refer to the JANKEN article: Niseko & Furano Real Estate Purchase Guide | Procedures, Taxes, and Management for Foreigners.

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What Is a Tax Agent? A Clear Explanation of Their Role and Necessity

A tax agent is a designated representative responsible for handling tax payments on behalf of foreigners who own real estate in Japan but do not have a residential address in the country. In Japan, property ownership comes with annual taxes such as fixed asset tax and, in some areas, city planning tax. Normally, tax bills are mailed to property owners by local municipalities, but foreign owners living abroad may not receive them. This is where a tax agent steps in to receive the tax bills and ensure timely payments.

Additionally, when selling a property, owners must properly file a tax return. Since Japan’s tax system and procedures can be complex, errors are common if not handled correctly. Working with a judicial scrivener or tax accountant to appoint a reliable tax agent is crucial. Understanding the role of a tax agent and arranging one in advance will help ensure smooth property management.

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Is a Tax Agent Unnecessary? | Can Foreigners Handle Tax Procedures on Their Own?

Japan’s National Tax Agency clearly states: “Non-residents must appoint a tax agent to fulfill their tax obligations, including filing tax returns, receiving documents from tax offices, paying taxes, and receiving tax refunds.”

Japan’s National Tax Agency　　https://www.nta.go.jp/taxes/shiraberu/taxanswer/shotoku/1923.htm

This means that foreigners who own real estate in Japan but do not have a residential address cannot handle tax procedures directly. Instead, they are legally required to appoint a tax agent to manage these obligations on their behalf.

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Are Japanese Taxes Complex and Confusing? A Tax Agent Can Solve Everything!

Property Tax, Income Tax… Essential Taxes Foreigners Should Know About in Japan

When acquiring real estate in Japan, various taxes apply. Below is a breakdown of each tax:

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Fixed Asset Tax

Fixed asset tax is a local tax imposed on all property owners in Japan. As of January 1 each year, the owner is responsible for paying 1.4% (standard rate) of the property’s assessed value. Foreign owners without a Japanese address must appoint a tax agent to handle the payment.

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City Planning Tax

This tax applies to properties in urban planning areas and is charged in addition to the fixed asset tax. The rate is up to 0.3%, calculated based on the property’s assessed value.

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Real Estate Acquisition Tax

This one-time tax applies when purchasing real estate, with rates of 3-4% of the assessed value. Certain exemptions exist for new homes and specific conditions.

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Registration and License Tax

This tax is required when registering property ownership, with rates varying by registration type. Ownership transfer registration, for example, is taxed at 2% of the assessed value.

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Capital Gains Tax (Income Tax on Property Sales)

Profits from selling property (capital gains) are subject to income tax. The tax rate is 39.63% for properties held under five years and 20.315% for properties held longer than five years. Foreigners selling Japanese real estate are also subject to this tax.

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Resident Tax (Exempt for Non-Residents)

Resident tax applies to those living in Japan, but non-residents are exempt. However, income from Japanese real estate still requires income tax filing.

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Japan’s tax system is complex, especially for foreign investors. Appointing a tax agent helps manage payments, avoid penalties, and ensure smooth real estate operations.

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With a Tax Agent, You’re Worry-Free! A Detailed Guide to Tax Payment Procedures

For foreign nationals who own real estate in Japan, tax payments are typically made through a Japanese bank account or by using a tax payment slip. However, for non-residents who do not live in Japan, handling these procedures independently can be extremely difficult. Below is a step-by-step guide to the tax payment process.

1. How to Pay Fixed Asset Tax and City Planning Tax

Fixed asset tax is levied annually on property owners as of January 1, and a tax notice is sent by the local government. Payment methods include:

• Bank or Convenience Store Payment: Requires a Japanese bank account. Overseas remittance is often not available.
• Automatic Bank Transfer: A Japanese bank account is required. However, opening a bank account in Japan can be challenging for foreigners.

2. How to Pay Income Tax (Annual Tax Return)

If you rent out your property in Japan, rental income is subject to income tax, which requires annual tax filing. The procedure includes:

• Preparing the Tax Return: Calculate income and expenses, and prepare the tax documents (tax knowledge is required).
• Submitting to the Tax Office: Electronic filing (e-Tax) is available, but a Japanese My Number may be required.
• Tax Payment: Can be made via bank transfer, credit card, or convenience store payment, but non-residents may face restrictions.

3. How to Pay Capital Gains Tax When Selling Property

When selling a property, any profit made is subject to capital gains tax. The process includes:

• Calculating the Sale Price, Acquisition Cost, and Other Expenses (requires specialized tax knowledge).
• Filing a Tax Return the Following Year (failure to do so on time may result in penalties).
• Receiving a Notice from the Tax Office and Making the Payment (overseas remittance may not be available).

A tax agent  plays a crucial role in ensuring these taxes are properly managed and paid on time. By appointing a tax agent, foreign property owners can avoid complications and penalties while ensuring smooth property management in Japan.

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Paying Taxes Without a Tax Agent Is Extremely Difficult

Since these tax procedures require a Japanese bank account, a local address, and direct communication with the tax office, it is practically impossible for foreign residents living overseas to handle them independently. Additionally, failure to file tax returns or delays in tax payments can result in penalties such as delinquency taxes and surcharges, increasing the financial burden. By appointing a tax agent, all these procedures can be handled on your behalf, ensuring smooth tax payments while minimizing risks.

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Case Study: Tax Issues Faced by Foreigners in Niseko and How to Avoid Them

After purchasing a vacation home in Niseko, Mr. John missed the payment deadline for property tax and received a warning from the tax office along with a late fee. In a panic, he consulted a tax agent, who contacted the tax office to explain the reason for the delay. Ultimately, he ended up paying additional late fees, but with the support of the tax agent, he was able to obtain clear guidelines for future tax filings.

In this case, by utilizing the help of a tax agent, the issue was resolved early, and future tax troubles were avoided.

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How to Choose a Reliable Tax Agent | Successfully Purchasing Real Estate in Japan

Cost, Qualifications, Track Record… Key Points to Check

When foreigners purchase and own real estate in Japan, selecting a tax agent is crucial. To find a trustworthy tax agent, make sure to check the following points:

1.How much does it cost?
The cost of a tax agent ranges from several tens of thousands to several hundred thousand yen per year. If you hire a tax accountant or judicial scrivener, you might also receive additional support for tax filings and real estate-related matters.

2.Is a qualification necessary?
Legally, tax agents do not need specific qualifications, but it is more reassuring to choose a tax accountant or a judicial scrivener specialized in real estate matters rather than an individual without tax knowledge.

3.How can you confirm their track record and reliability?
Check the reputation of past clients, years of experience, and whether they are knowledgeable about Japan’s real estate and tax system. Getting a referral from a real estate agency is also a good option.

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Frequently Asked Questions (FAQ)

Q. Can I change my tax agent mid-way?
A. Yes, it is possible. You will need to submit a change notification to the tax office.

Q. Can I pay taxes without a tax agent?
A. No, non-residents without a Japanese address are required to appoint a tax agent.

By choosing a reliable tax agent, you can smoothly handle the tax procedures after purchasing real estate in Japan.

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How to Find a Reliable Tax Agent?

To choose a reliable tax agent, it is essential to first ensure they have extensive expertise and experience. They should be well-versed in Japan’s tax system, particularly with experience handling foreign investors. Familiarity with communication with the tax office is also important. Checking reviews and referrals from past clients is an effective way to gauge reliability. Additionally, it is crucial to clearly understand the services and fees provided by the tax agent beforehand, ensuring you can select a trustworthy partner without any concerns.

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Enhanced Peace of Mind with Coordination with Tax Accountants and Judicial Scriveners!

After selecting a reliable tax agent, collaborating with tax accountants and judicial scriveners provides additional peace of mind. Tax accountants, as experts in taxation, can answer complex questions about taxes and suggest optimal tax-saving strategies. Judicial scriveners, on the other hand, handle real estate registrations and review contract documents, ensuring legal procedures are properly supported. By working with these professionals, you can address tax and legal issues after purchasing real estate with more certainty, allowing you to manage your real estate investments in Japan with confidence.

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Conclusion: Achieving the Ideal Real Estate Investment in Niseko and Furano

Achieving Safe and Secure Real Estate Investment with Expert Collaboration

To succeed in real estate investment in Niseko and Furano, collaboration with reliable experts is essential. By working with professionals such as tax agents, tax accountants, and judicial scriveners, you can smoothly navigate tax filings and legal procedures. For foreign investors, Japan’s tax system and real estate transactions can be complex, making it crucial to receive proper support. With the help of experts, you can avoid unexpected issues and make a safe and secure investment. By obtaining accurate information and assistance, you can achieve your ideal real estate investment.

For real estate purchases in Niseko and Furano, leave it to JANKEN.

At JANKEN, we provide tax agent services primarily in the Niseko and Furano areas. We assist with the tax procedures related to real estate purchases in Hokkaido, helping foreign investors proceed with real estate transactions with peace of mind.

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Service Areas

Sapporo City (Chūō-ku, Kita-ku, Higashi-ku, Shiroishi-ku, Toyohira-ku, Minami-ku, Nishi-ku, Atsubetsu-ku, Teine-ku, Kiyota-ku)
Sapporo Suburbs (Ebetsu City, Kitahiroshima City, Eniwa City, Ishikari City, Tōbetsu Town, Shinshimizu Village)Kutchan-Niseko Area (Kutchan Town, Niseko Town, Kyōgoku Town, Makari Village, Toyako Town, Kimobetsu Town, Rusutsu Village, Rankoshi Town, Iwanai Town)
Furano Area (Furano City, Furano Town, Kamifurano Town)

Our experts will provide solid support from tax filings to all related procedures.