Japan’s fixed asset tax (kotei shisan zei) is an annual municipal property tax charged at a standard rate of 1.4% of the government-assessed value of land, buildings, and depreciable business assets. Whoever is listed as the owner on January 1 owes the full year’s bill, regardless of nationality or where they live. Properties inside designated urban zones also pay a City Planning Tax of up to 0.3% on top.
Who Owes the Bill
The person or entity recorded in the official registry on January 1 is legally responsible for the entire year’s tax, even if the property changes hands the next day. Sell in March, transfer in August, it makes no difference to the municipality: the books on that single date decide everything.1World Bank. Property Tax Practices in Japan: The Case of Yokohama City
Because the cutoff is rigid, buyers and sellers in private real estate transactions almost always negotiate a pro-rata reimbursement at closing. The seller pays the full year’s tax to the municipality, and the buyer reimburses the seller for the portion of the year after the transfer date. The municipality has no role in this arrangement and will not split the bill.
How the Assessed Value Is Set
The tax does not apply to what you paid for the property or to its current market value. It applies to a separate assessed value calculated by the municipality and recorded in the Fixed Asset Tax Ledger. That value is revalued once every three years, with the current cycle running from 2024, and generally stays fixed between revaluations unless the property changes materially.2Inagi City. What Is the Revaluation of Fixed Assets?
Land is valued using government-published reference prices (koji chika) adjusted for location and use. Buildings are valued by estimating what it would cost to rebuild the structure today, then depreciating that figure for age, materials, and condition. A building’s assessed value falls over time but does not drop below roughly 20% of the original reconstruction cost.
Very small properties fall out of the system entirely. Land assessed under ¥300,000, buildings assessed under ¥200,000, and business depreciable assets totaling less than ¥1,500,000 within a single municipality generate no tax bill at all. The thresholds apply municipality by municipality.
The Rate and the City Planning Add-On
The standard rate is 1.4% of the assessed value. Municipalities can adjust this through local ordinance, but most stick with the standard figure.3Japan External Trade Organization. 3.8 Other Principal Taxes
Properties inside a designated City Planning zone owe an additional City Planning Tax (toshi keikaku zei) of up to 0.3%, which funds urban infrastructure. Combined, the maximum standard rate is 1.7% of the assessed value. Because assessed values tend to run well below market prices, the effective burden relative to what you paid is usually noticeably lower than 1.7%.3Japan External Trade Organization. 3.8 Other Principal Taxes
Reductions for Residential Land
Residential land gets the largest single reduction in the system, and it applies automatically based on the registered use of the property.
- For the first 200 square meters of a residential parcel, the taxable base is reduced to one-sixth of the assessed value.
- For the portion above 200 square meters, the taxable base is reduced to one-third.
A typical family home on a 180-square-meter lot qualifies entirely for the one-sixth treatment. On a 350-square-meter parcel, the first 200 square meters get one-sixth and the remaining 150 square meters get one-third. This reduction is what keeps annual bills manageable for most homeowners in Japan.
Vacant and Neglected Homes Lose It
Since December 2023, a home classified as “neglected” under the revised Vacant Houses Special Measures Act loses the residential land reduction entirely once the municipality issues a formal recommendation. A small residential lot whose taxable base had been cut to one-sixth can see its bill jump roughly sixfold. The rule was designed to stop owners from leaving deteriorating structures standing simply to preserve the tax break, so keeping a vacant property in reasonable condition now affects the annual bill directly.
Reductions for New Construction
Newly built residential buildings qualify for a 50% reduction on the building portion of the tax (not the land) for a limited period. The reduction covers the first 120 square meters of residential floor area, and the building’s total floor area must fall between 50 and 280 square meters.4Inagi City. What Is the Reduction for Newly Built Houses Under Property Tax?
- Standard detached houses: 3 years.
- Mid-to-high-rise fire-resistant buildings of three or more stories, such as condominiums: 5 years.
- Certified long-term superior detached houses: 5 years.
- Certified long-term superior mid-rise fire-resistant buildings: 7 years.
The “long-term superior housing” (chouki yuuryou jutaku) designation is a government certification for enhanced durability, earthquake resistance, and energy efficiency. Claiming the extended period requires filing a declaration with the municipality by January 31 of the year following construction.4Inagi City. What Is the Reduction for Newly Built Houses Under Property Tax?
When the reduction period ends, the building portion of the bill roughly doubles. Owners who bought during the reduced years and budgeted from those figures often find the jump unwelcome.
Reductions for Renovations
Three renovation categories qualify for their own reductions. Each requires the work to be completed by March 31, 2026, and each requires an application within three months of finishing the work. The three reductions cannot be combined.5Inagi City. Reduction of Property Tax for House Renovations
Seismic retrofitting. Homes built before January 1, 1982 that are upgraded to current earthquake-resistance standards receive a 50% reduction for the following fiscal year on up to 120 square meters, provided the renovation cost exceeds ¥500,000. If the retrofitted home is certified as long-term superior housing, the reduction rises to two-thirds.5Inagi City. Reduction of Property Tax for House Renovations
Barrier-free modifications. Homes older than 10 years modified for accessibility receive a one-third reduction for the following fiscal year on up to 100 square meters. The home must be occupied by someone 65 or older, a person with a disability, or someone certified for long-term care. Qualifying work includes handrails, removing indoor steps, widening corridors, and renovating bathrooms or toilets. Out-of-pocket costs after any government subsidies must exceed ¥500,000.5Inagi City. Reduction of Property Tax for House Renovations
Energy-saving renovation. Thermal insulation work, primarily window upgrades and optionally floor, ceiling, or wall insulation, earns a one-third reduction for the following fiscal year on up to 120 square meters. Out-of-pocket cost for the insulation work must exceed ¥600,000, and the home’s floor area must be between 50 and 280 square meters.
When Bills Arrive and How to Pay
The municipal office mails a tax notice (nousei tsuchisho) to the registered owner or their tax agent, generally between April and June. The notice breaks down the total owed and sets four installment deadlines, typically in June, September, December, and February of the following year. You can also pay the full year in a single lump sum during the first installment window.
Notices carry barcodes for payment at convenience stores nationwide. Most municipalities also accept automatic bank debits, electronic transfers, and credit card payments through authorized online portals.
Late Payment and Seizure
Missing a deadline triggers a delinquency surcharge that grows with the number of days unpaid, and the rate escalates the longer the debt sits.
The enforcement process moves faster than many foreign owners expect. Under the Local Tax Act, if full payment is not made within 10 days of a reminder notice, the municipality has legal authority to seize the taxpayer’s property without a court order, without further notice, and without the owner’s consent.6Inagi City. Delinquent Tax Collection
Seizure can reach real estate, vehicles, bank deposits, wages, and other movable property, and seized assets can be sold at public auction to cover the unpaid tax. An overseas owner without someone in Japan receiving mail can move from a missed payment to a seizure without ever seeing the reminder.6Inagi City. Delinquent Tax Collection
Owners Living Outside Japan
Foreign nationals and Japanese citizens living abroad owe fixed asset tax on the same terms as residents. The added requirement is to appoint a tax agent (nozei kanrinin), a person residing in Japan who receives tax correspondence and handles payment on your behalf.7Kyoto Prefecture. Tax Agent (Nouzei Kanrinin)
The agent can be a relative, a friend, a tax accountant, or a property management company. You formalize the appointment by filing a notification form with the tax office in the jurisdiction where the property sits. Without an agent, tax notices and payment slips go nowhere, and delinquency procedures can start before you know a bill was issued.8National Tax Agency Japan. Real Estate Income of Non-Residents
Challenging Your Assessment
If the assessed value looks wrong, you can file a formal challenge with the Fixed Asset Valuation Review Committee (kotei shisan hyouka shinsa iinkai), an independent body in each municipality that exists specifically for these disputes.9Chigasaki City. Fixed Asset Valuation Review Committee
The window opens when the new assessed values are posted in the ledger and closes three months after you receive the tax notification. The committee reviews the assessed value only; the tax rate and other policy questions are not within its scope. Court appeal remains available if the committee’s decision is unsatisfactory, though it is rarely pursued given cost and time.
Every spring, property owners can inspect the Fixed Asset Tax Ledger during a designated viewing period and compare their assessed value against similar nearby properties. Most valuation errors get caught here, and doing this review first gives a formal challenge its strongest footing.
Business Depreciable Assets
Businesses also pay fixed asset tax on machinery, equipment, fixtures, and other tangible property used in operations, at the same 1.4% rate applied to the depreciated value.3Japan External Trade Organization. 3.8 Other Principal Taxes
Unlike land and buildings, depreciable assets are self-reported. Business owners file a return by January 31 each year listing every taxable asset held as of the previous January 1, along with acquisition cost and year of purchase. The municipality calculates the depreciated value and issues a bill. Businesses whose total depreciable assets in a single municipality fall below ¥1,500,000 are exempt, though some municipalities still require the annual filing. Automobiles and other property covered by separate vehicle taxes are excluded from this category.