One thing you are wondering after you purchase an investment property in Japan is how to file for the tax return form, especially for overseas resident who own a property and gain a rent income in Japan. It is required to file for a tax return as long as your rent income is over 480,000 JPY per year.
First of all you need to choose a tax administrator, he or she will file for a tax return for you. You can choose anybody as long as he or she lives in Japan.
Usually a real estate agent becomes the tax administrator but as I mentioned you can choose anybody. The local tax office sends the property tax bill to the tax administrator, too. The tax administrator pays the property tax after you transfer the funds to Japan.
The tax administrator files for the tax return form for you. It is a very easy process. The tax administrator needs to subtract expenses from the rent incomes. They are as follows.
1 The property tax
2 Management fee
3 if you borrow money from a bank only interest can be considered as an expense.
4 Repair fee if needed
5 The depreciation.
These are primary expenses. Most likely you leave someone to manage the property. Usually he or she will charge 7-10% of the rental income, in return he or she will take care of the property, such as complaint from the tenant, repair the broken door etc…..you need to pay for the repair fee, it is regarded as an expense so you can subtract from your rental income.
How to calculate the depreciation is not too hard, there is a chart. The depreciation apply to the building only not for the land.These are separate value.
After the statement forms are filled out the tax administrator will take it to the local tax office between 2/16 and 3/15. During this time many book keepers are from everywhere in that region. They will fill out the form B on the computer, you are all set. Sometime later the tax office will send the rent income tax bill to the tax administrator.
If you are interested in investing in the Japanese real estate market, please let me know. I can be a tax administrator for you.
Koji Kitada. Licensed real estate person.