The withholding obligation generally falls on the buyer
According to Japan's National Tax Agency, a person paying consideration for Japanese land or buildings to a non-resident individual or foreign corporation generally must withhold income tax and reconstruction surtax at a rate of 10.21% of the payment. The rule applies not only to land but also to buildings and related structures. It can apply to individual buyers as well as companies. One important exception exists when an individual buyer acquires the property for their own or a relative's residence and the purchase price is ¥100 million or less. For payments made in Japan, withheld tax is generally due by the tenth day of the following month.
The 10.21% withholding is not the seller's final tax rate
A frequent misunderstanding is to treat 10.21% as the final tax rate on a non-resident's property gain. It is a withholding mechanism applied to the gross payment at settlement. The seller's final taxable capital gain is calculated separately based on factors including acquisition cost, selling expenses and holding period, and the withheld amount may be reconciled through a Japanese tax return. For overseas owners, residency status should therefore be established early in the transaction because the rule materially affects cash received at closing. Net-sale proceeds should be modeled separately from the ultimate tax liability.