Buying a House in Japan as a Foreigner: Mortgages, Taxes and the Purchase Process

Two questions get mixed together whenever a foreign resident in Japan starts thinking about buying a home. Are you legally allowed to own the property? And will a bank lend you the money? Separating them clears up most of the confusion at once.

The first has a short answer. Article 3, paragraph 2 of the Civil Code gives foreign nationals the same private rights as Japanese nationals except where a law or treaty says otherwise. A pre-war statute, the Alien Land Act, still sits on the books and would allow restrictions by Cabinet order, but no such order exists, so it does not operate. Land and buildings are registered in your name on exactly the same terms, whatever passport you hold.

The second is where the work is. In the Ministry of Land, Infrastructure, Transport and Tourism's most recent survey of private housing lenders, 801 of 994 responding institutions — 80.6% — listed nationality as one of the items they screen on. That figure explains more about the foreign homebuying experience in Japan than any amount of general advice.

Who Is Allowed to Own Property in Japan

Japan is unusual among developed economies in how little it restricts who may buy real estate. The House of Representatives Research Bureau, reviewing the framework in February 2026, put it plainly: aside from farmland, which needs permission from an agricultural committee, transfers of ownership are in practical terms unregulated for Japanese and foreign buyers alike. Three specific rules do exist, and only one is likely to touch an ordinary house purchase.

• Farmland. Acquiring farmland or grazing land needs permission from the agricultural committee, regardless of nationality; a transaction without it is void.
• The National Land Use Planning Act. Acquiring 0.2 hectares or more inside an urbanisation promotion area, with larger thresholds elsewhere, requires a post-transaction notification to the prefectural governor, who reviews the intended use rather than the price.
• The Act on the Regulation of Land Use around Important Facilities. Inside a designated special watch zone — areas around defence-related facilities, Japan Coast Guard installations, certain nuclear and airport facilities, and border islands — a transaction involving land or a building of 200 square metres or more requires advance notification to the Prime Minister, measured per land parcel and per building. Seller and buyer are separately obliged to notify; one party filing does not discharge the other's duty. Contracting without notifying, or filing false information, carries imprisonment of up to six months or a fine of up to one million yen. The law does not restrict the acquisition itself.

Property taxes are likewise charged without distinction by nationality, though some rules differ between residents and non-residents for tax purposes.

Buying Property Does Not Create a Residence Status

There is no Japanese residence status granted on the basis of buying real estate, and no property price that unlocks one. This needs saying because the opposite belief circulates widely.

The status people usually have in mind is Business Manager, whose requirements are about running a business, not holding assets: an actual office facility, at least one full-time employee, and — under the revised landing standards ordinance effective 16 October 2025 — either a doctoral, master's or professional degree in management or a related field or three years of relevant management experience, plus documentary evidence of Japanese language ability. The home you live in is a private asset; it creates no business and shortens no route to permanent residency. The practical sequence runs the other way: stable employment and a stable residence status are what make a lender say yes.

The Mortgage Question, in Numbers

The Ministry of Land, Infrastructure, Transport and Tourism surveys private housing lenders every year. The FY2025 round was conducted in October and November 2025 and published in June 2026: 1,175 institutions surveyed, 1,112 replies (94.6%), 1,021 of them offering housing loans. On the screening question, 994 answered.

The follow-up question asked what those institutions actually accept, with multiple answers allowed. Of the 801 that screen on nationality, 721 named Japanese nationality, 678 named permanent residents or special permanent residents, 118 named spouses of Japanese nationals, and 36 gave another answer. Permanent residency is therefore named almost as often as Japanese nationality itself, being a spouse of a Japanese national is a recognised route at a meaningful minority of lenders, and a small number operate on some other basis entirely.

Several other rows hit foreign applicants disproportionately.

• Length of service. Of the 933 institutions screening on it, 661 set the bar at one year or more, 45 at two years and 121 at three. Applying two months into a new job is the most common self-inflicted rejection.
• Health condition. 866 institutions require enrolment in group credit life insurance, which pays off the loan if the borrower dies; only 88 make it optional. If a health condition makes you uninsurable, the loan usually stops there regardless of income.
• Business area. 850 institutions require the applicant to live within their operating area and 572 accept working within it. Regional banks and shinkin banks are geographically bounded by design.
• Employment type and burden ratio. Of the 702 institutions screening on employment type, 357 exclude dispatched workers and 286 exclude fixed-term contract employees. The commonest repayment burden ceilings were 40%, 35% and 30% of annual income across all debts.

Individual banks do not publish this, which is why the survey is useful: settle into the job, clear other loans, resolve the residence status question, and approach lenders whose branches cover where you live and work.

Flat 35: The One Published Rulebook

Flat 35 is a long-term fixed-rate loan offered by private financial institutions in partnership with the Japan Housing Finance Agency. Its conditions are published in full, which makes it the natural benchmark.

The nationality condition is the hard edge. Without permanent residence permission, Flat 35 is unavailable and you are in the private bank market, where criteria are unpublished and vary institution by institution — the situation the survey figures above describe.

What the Purchase Actually Costs

The headline price is not the number to budget against: Japanese practice loads one-off taxes and fees on top, most payable within the first few months.

Stamp duty on the contract

A reduced scale applies to property transfer contracts created up to 31 March 2027. For a price over ¥10 million and up to ¥50 million the duty is ¥10,000 against a statutory ¥20,000; over ¥50 million and up to ¥100 million it is ¥30,000 against ¥60,000.

Registration and licence tax

Charged when title is registered at the Legal Affairs Bureau, calculated on the assessed value.

The residential-building and mortgage reductions require the floor area to be 50㎡ or more, acquisition by an individual for their own residence, registration within one year, and a certificate from the municipal mayor attached to the application. Their current expiry is 31 March 2027. The reduced 1.5% rate on land transfers was extended under the FY2026 tax reform to run from 1 April 2026 to 31 March 2029.

Real estate acquisition tax

A prefectural tax charged once, some months after you buy, on the fixed asset tax assessed value rather than the price you paid. The standard rate is 4%, reduced to 3% for housing and land under a time-limited special measure, and the taxable base for residential land is halved under a separate measure; newly built homes meeting the conditions get a further deduction. Both measures have expiry dates and have been extended repeatedly, so confirm the position for your acquisition date with the prefectural tax office.

Consumption tax and brokerage commission

Land is non-taxable, always. The building is taxable when the seller is a business acting as a business — a developer, or a company reselling — and outside the scope of consumption tax when you buy from a private individual.

The brokerage commission is capped by ministerial notification and is taxable in all cases. For a sale the ceiling is 5.5% of the portion up to ¥2 million, 4.4% of the portion above ¥2 million up to ¥4 million, and 3.3% above ¥4 million, all including consumption tax. A separate rule lets an agent handling a sale of ¥8 million or less charge up to ¥330,000.

The remaining line items

• Judicial scrivener fees for preparing and filing the registration, settled on closing day.
• Fire insurance, usually required by the lender for the loan term; earthquake cover is a rider to a fire policy under the government-backed scheme.
• Loan administration and guarantee fees, which vary sharply between lenders and can exceed the taxes.

The Transaction, Step by Step

Documents a Foreign Buyer Is Asked For

Foreign residents have been recorded on the Basic Resident Register since 9 July 2012, when the old alien registration system was abolished. Mid- to long-term residents — broadly, holders of a residence card — get a resident record at their municipal office and can register a personal seal there, which is what makes the standard document set available to you.

• Resident record, which for foreign residents also shows nationality or region and residence card details.
• Certificate of registered seal and the registered seal itself, for the contract and the registration application.
• Residence card for identity verification.
• Income evidence — the previous year's withholding slip, municipal tax certificates, and for the self-employed tax returns. Lenders typically want two to three years, and unpaid residence tax or social insurance shows up in screening.

The Costs That Continue After You Move In

Fixed asset tax is charged by the municipality on whoever is recorded as the owner on 1 January each year, at a standard rate of 1.4% of the assessed value, with urban planning tax of up to 0.3% added in urbanisation promotion areas. Residential land gets a substantial break: the taxable base is reduced to one sixth for the portion up to 200㎡ and to one third above it. That is why the annual bill on a small house is far lower than the headline rate suggests, and why a plot with the house demolished suddenly costs much more to hold.

A condominium adds a monthly management fee and a repair reserve, neither optional and both rising over a building's life. A reserve that is thin relative to the building's age is a known source of later special levies.

The mortgage tax deduction

Available to residents of Japan for tax purposes — which foreign residents living and working here generally are, and non-residents are not. The core conditions are occupation within six months of acquisition and continued occupation to 31 December of the year claimed, a loan repayable over ten years or more, and total income within the ceiling. The FY2026 tax reform extended the scheme by five years, covering moves in through 2030.

Caps and eligible categories differ by the year you move in and by the building's energy performance, and support for lower-performance housing is being phased down. The first year is claimed by filing a tax return; employees generally handle later years through year-end adjustment. Confirm the treatment of your purchase with a licensed tax accountant.

The Withholding Rule When the Seller Lives Abroad

This one catches buyers because the obligation lands on the wrong-feeling party. When land or a building in Japan is bought from a non-resident, the buyer must withhold income tax and the reconstruction surtax at 10.21% of the transfer price and pay it to the tax office by the 10th of the month following payment.

A targeted exemption applies: an individual buyer acquiring the property as a residence for themselves or a relative, at ¥100 million or less, need not withhold. Most owner-occupier purchases fall inside it — but a purchase above that figure, one made through a company, or one where the property will not be your residence does not. The seller's tax residence is not always obvious from the contract, so ask in writing before closing.

Rules Currently Under Review

Foreign acquisition of Japanese real estate became a live political issue during 2025, and the framework is being adjusted. What is changing so far is data collection, not the right to buy.

The Ministry of Land, Infrastructure, Transport and Tourism published an analysis of registration data on new condominiums in November 2025, covering roughly 550,000 units registered between January 2018 and June 2025. It found acquisition from overseas addresses concentrated in and around central Tokyo and rising. The minister noted that registration records do not contain nationality, so the results distinguish overseas from domestic addresses, not foreigners from Japanese.

A package announced in December 2025 addresses that gap. Nationality is to be added to the information submitted when applying for a transfer registration — recorded internally rather than published as a registered particular — and to notifications under the Forest Act, with the nationality of representatives and controlling shareholders added for corporate filings under several land-related statutes. Reporting by non-residents under the Foreign Exchange and Foreign Trade Act is to be widened to acquisitions of any purpose. The changes are being made by ministerial ordinance, targeted from April 2026 and, for registration, during fiscal 2026.

Where Foreign Buyers Most Often Get Stuck

For a foreign resident with settled employment, a clean tax record and either permanent residence permission or a Japanese spouse, buying in Japan is a documented, predictable process with no nationality barrier at the ownership stage. The work is in answering the financing question honestly before anything else begins.

Frequently Asked Questions