Gross Sale Price and Net Proceeds May Differ
Japan's National Tax Agency explains that buyers must withhold tax from payments for Japanese real estate acquired from non-resident sellers when the transaction falls within the relevant rules. Under the legislation applicable as of April 1, 2026, the general withholding rate is 10.21%. For a hypothetical transaction priced at 50 million yen, this would produce withholding of 5.105 million yen before considering whether an exception applies. The actual requirement depends on the purchaser's status and the intended use of the property.
Buyer Obligations and Residential Exceptions
Where withholding applies, the purchaser generally must remit the deducted amount to the tax office by the tenth day of the month following payment. An exception exists for certain individual purchases of no more than 100 million yen intended for the buyer's or a family member's residence. Corporate acquisitions and investment purchases do not automatically qualify. Determining whether withholding is required is therefore an important part of preparing the sales contract and closing arrangements.
Cash Planning for Overseas Sellers
For overseas owners, withholding may significantly reduce the cash received on the closing date. This matters where sale proceeds are intended for overseas remittance, mortgage repayment or another property acquisition. The withheld amount is not necessarily the seller's final capital gains tax liability and may be reconciled through a subsequent tax return. International sellers and buyers need to distinguish the contractual sale price from the actual movement of settlement funds.