Okinawa Real Estate: Buy and Sell | Villa Resort

[Real Estate Purchase Process in Japan for Foreign Buyers]

1. Eligibility Check

2. Property Search & Requirements

3. Purchase Application (Letter of Intent)

4.Price Negotiation　

5.Agreement in Principle　

6.Scheduling of Contract Date

7. Explanation of Important Matters (Before Contract)

8. Sale and Purchase Agreement (SPA)
9. Closing & Settlement (Same-Day Settlement)

10. Real Estate Acquisition Tax (After Purchase)

11. Remittance of Purchase Funds (Non-Resident Foreign Buyer)

12. Annual Fixed Asset Tax & Tax Agent

13. Key Message to Foreign Buyers

※What Is the Taxable Assessed Value in Japan?

1. Eligibility Check

In principle, foreign nationals may purchase land and buildings in Japan regardless of nationality or residency status.

Certain properties, such as agricultural land or restricted areas, may be subject to additional regulations.

2. Property Search & Requirements

Buyers search for properties through a real estate brokerage and clarify the intended use (residential, investment, or second home).

Working with a brokerage experienced in foreign transactions is recommended.

3. Purchase Application (Letter of Intent)

The buyer submits a Purchase Application (Letter of Intent) stating the proposed purchase price, preferred closing date, and basic conditions.
This document is non-binding and serves as the basis for negotiation.

Indicative Timeframe:1 day to several days

4.Price Negotiation　

The Buyer and Seller negotiate the price and conditions, usually with broker assistance.

Indicative Timeframe: Several days to 1 week

5.Agreement in Principle　
Once the Seller agrees to the main terms, an agreement in principle is reached, but no binding contract exists yet.

Indicative Timeframe: Within approximately 2 weeks from the Purchase Offer

6.Scheduling of Contract Date

After agreement in principle, the contract date is scheduled and legal documents are prepared.

Indicative Timeframe: Several days to 1 week after agreement

7. Explanation of Important Matters (Before Contract)
Before executing the Sale and Purchase Agreement, the buyer receives the legally required Explanation of Important Matters, which explains ownership, legal restrictions, utilities, management rules, and risks.
For foreign buyers, an English summary is usually provided as a reference.

8. Sale and Purchase Agreement (SPA)
The buyer signs the SPA and pays a deposit, typically 5-10% of the purchase price.
After execution, unilateral cancellation by the buyer is generally not permitted.

9. Closing & Settlement (Same-Day Settlement)

(1) Prorated Settlement at Closing

At closing, the following expenses are prorated and settled between buyer and seller:

・Fixed Asset Tax and City Planning Tax

・Electricity, water, gas (if applicable)

・For condominiums:

• Management fee
• Repair reserve fund

Proration is usually calculated on a daily basis, with the seller bearing costs up to the day before closing and the buyer from the closing date onward.

(2) Ownership Transfer Registration

A judicial scrivener(Shiho-shoshi) handles the ownership transfer registration.
Registration is filed immediately after settlement, and ownership legally transfers to the buyer.

(3) Buyer's Closing Costs (Typical Calculation)

• Registration & license tax: approx. 0.1-2.0% (depending on property type and use)
• Judicial scrivener fee: JPY 80,000-150,000
• Brokerage fee: up to 3% + JPY 60,000 + tax
• Prorated taxes and fees (actual amount)

10. Real Estate Acquisition Tax (After Purchase)

Real Estate Acquisition Tax is imposed after purchase.
Tax notices are issued by the prefectural government, usually 3-6 months after registration.

Calculation (Typical)
Tax = Assessed value × 3% (reduced rate may apply)

Filing & Payment

• Filing: Generally not required (assessment is made by authorities)
• Payment: Pay by the deadline stated on the tax notice

11. Remittance of Purchase Funds (Non-Resident Foreign Buyer)

Foreign buyers without Japanese residency, spouse visa, or Japanese bank accounts may remit funds via:

• Overseas bank → seller's or escrow-style designated account
• International remittance services (e.g., Wise)
• Japanese bank accounts of judicial scriveners or sellers (subject to compliance)

Source of funds documentation is usually required.

12. Annual Fixed Asset Tax & Tax Agent

Property owners must pay Fixed Asset Tax annually.
Non-resident owners must appoint a Tax Payment Agent in Japan to receive tax notices and make payments.

13. Key Message to Foreign Buyers

In Japan, buyers are expected to understand costs, taxes, and obligations before closing, and to prepare post-purchase tax and payment arrangements in advance.

※What Is the Taxable Assessed Value in Japan?

1. What Is the Taxable Assessed Value?

In Japan, property-related taxes are not calculated based on the purchase price.
Instead, taxes are calculated using a Taxable Assessed Value, which is determined by the local government.

The taxable assessed value is a government-assessed value used exclusively for tax purposes.

2. Fixed Asset Tax Assessed Value vs. Purchase Price

The Fixed Asset Tax Assessed Value is usually lower than the actual purchase price.
As a general reference:

• Purchase price: Market value agreed between buyer and seller
• Assessed value: Approximately 60-70% of market value (varies by location and property type)

Therefore, even if a property is purchased at a high price, taxes may be calculated on a lower assessed value.

3. Who Determines the Assessed Value?

The assessed value is determined by the municipal government (city, ward, or town) where the property is located.

The valuation is conducted by municipal tax authorities based on national valuation standards.

4. How Is the Assessed Value Calculated?

(1) Land

Land is assessed based on official land price standards, location, road access, zoning, and usage.

The assessment reflects standardized land values rather than individual transaction prices.

(2) Building

Buildings are assessed based on construction cost standards, structure, materials, size, age, and depreciation.

Older buildings generally have lower assessed values due to depreciation.

5. How Often Is the Assessed Value Updated?

Fixed Asset Tax Assessed Values are reviewed every three years under Japan's reassessment system.

Market fluctuations between reassessment years do not immediately affect the assessed value.

6. Relationship to Real Estate Acquisition Tax

Real Estate Acquisition Tax is calculated based on the assessed value, not the purchase price.

Tax = Assessed value × applicable tax rate
(typically 3%, subject to reductions)

7. Key Message for Foreign Buyers

In Japan, taxes are calculated based on government-assessed values, not market prices.
Understanding this system helps buyers accurately estimate taxes and avoid confusion after purchase.

Contact Us for Direct Acquisition Solutions

We also have numerous off-market properties not listed on our website. If you let us know your desired conditions (area, budget, etc.), we will propose the most suitable properties for you from our latest listings. Please feel free to contact us first!

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Hotline: +81-98-869-3575

Email: infovilla@villa-realty.com

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