Withholding obligations generally fall on the buyer
Japan's National Tax Agency guidance, reflecting legislation as of April 1, 2026, states that buyers making domestic payments for Japanese land or buildings acquired from nonresidents or foreign corporations must generally withhold 10.21% of the consideration. The obligation may apply to both corporate and individual purchasers. The seller's tax residency is central to the analysis; foreign nationality alone does not determine whether the withholding rule applies.
A limited exemption for personal residential purchases
An exemption applies where an individual purchases property for their own or a relative's residence and the purchase consideration does not exceed ¥100 million. Corporate acquisitions and investment purchases cannot automatically rely on this exception. Withheld tax must generally be remitted by the tenth day of the month following payment. This makes the withholding assessment an important component of settlement planning.
Settlement proceeds may differ from the headline sale price
The 10.21% withholding is generally calculated on the transaction consideration, rather than simply on the seller's capital gain. Consequently, the amount received at settlement may be materially lower than the agreed sale price, even where the actual gain is limited. The relationship between withholding and the seller's final tax liability depends on the applicable filing and tax rules. Overseas owners should distinguish the sale settlement, withholding obligation, subsequent tax filing and international transfer of proceeds as separate processes.