Capital Gain Tax
A capital gain is the profit realised on the sale of a property. Capital gains tax is charged on the taxable portion of the gain. Any gain is declared on your income tax statement as ‘other income‘ and is taxed separately to your own income. Both residents and non-residents (eg. those living overseas) are liable to pay this tax, although non-residents are not required to pay the municipal tax. Also, both foreign and domestic investors may be liable to pay consumption tax to the Japanese tax office upon the sale of Japanese property. This may include private individuals who were renting out their property to a tenant.
Taxes on Gifts and Inheritances
( 1 ) Gift Tax
Those who acquired property as a gift must file a return to pay gift tax in the period from February 1 to March 15 of the year following the acquisition of the property. The taxable value is the amount after deducting the basic allowance (¥1,100,000) and the special spouse allowance (¥20,000,000).
The donee who receives a gift from the parents or grandparents has an option to apply the inheritance tax adjustment system in which the donee pays smaller amount of tax on gifts and settles the final amount as inheritance tax later.
( 2 ) Inheritance Tax
Those who acquired properties by inheritance or bequest, and the total value of the properties exceeds the basic deductible allowance, must file a return to pay inheritance tax within, in principle, ten months after the date of the acquisition. The person who died is called the ancestor, and the person who inherited property is called the inheritor. The scope of property subject to inheritance tax varies depending on whether the inheritor’s address (domicile) is within or outside of Japan.