The requested extension would run through December 2031
Japan's Ministry of Land, Infrastructure, Transport and Tourism included an expansion and extension of the inherited vacant-home capital-gains deduction in its fiscal 2027 tax reform requests released on August 28. Under the current framework, qualifying heirs selling a deceased owner's former home or site can deduct up to ¥30 million from capital gain. Where three or more heirs inherited the house and land, the deduction is ¥20 million. The ministry is requesting a four-year extension covering the period from January 1, 2028 through December 31, 2031.
The proposal would relax the building-age condition
The request also seeks to relax the current condition limiting qualifying houses to those built on or before May 31, 1981. The ministry notes that a decade has passed since the special measure was introduced and that deterioration is increasingly seen even among inherited vacant houses built to newer earthquake standards. It also proposes including certain cases where a house and land are acquired through the termination of a civil trust that can be treated similarly to inheritance or bequest. These remain tax reform requests rather than enacted changes.
Overseas heirs need to separate eligibility from broader tax liability
When a Japanese property is inherited by someone living overseas, eligibility for the vacant-home deduction and the person's broader Japanese tax obligations are separate questions. The special measure has multiple conditions involving inheritance, timing of disposal, property condition and use, so it cannot be assumed that every inherited vacant home automatically qualifies for a ¥30 million deduction. If the proposal is enacted, more properties may become eligible. Owners should also weigh ongoing property tax, maintenance and deterioration against the timing of a future sale.