Income from renting out real estates located in Japan is considered to be income from domestic source. If a non-resident is renting out a property, the amount of lease multiplied by the tax rate of 20.42% will be withheld as withholding tax.

However, taxes will not be withheld on rent paid by individuals who rented the land and house for themselves or their relatives to reside in

Non-residents are required to file a final tax return form to a District Director of Tax Office that has jurisdiction over the place for tax payment during the filing period for final tax return between February 16 and March 15 of the following year.

The amount of withholding tax will be settled in the final tax return process.

When a non-resident files the final tax return form, he/she is required to appoint a tax representative and submit a declaration naming the person to the Tax Office.

This issue is solved if you purchase a property via me. I can file for a tax to reimburse  the withholding tax you paid as long as you appoint me as a tax representative. All I have to do is follow the instructions of the national tax agency website. There is a page I can fill out online. The site automatically calculate your rent income and expenses. It calculate the final tax you have to pay. Most likely 5% of the rent income is a rent income tax unless you purchase a few millions dollars properties. I know how to calculate the depreciation. It varies on the materials of the building. Let’s say, the property made from wood is shorter period time to save the tax but if you want to resell the property in 6-7 years it doesn’t matter.

Koji Kitada. Certified real estate agent. Ask me for any real estate investment questions. I am willing to answer your questions.