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Buying a Property with Cash

Table of Contents

Buying a Property with Cash

Buying Flowchart

Various Costs
Necessary Items

There are several attractions for foreigners to purchase properties in Japan. Japan's reputation for safety and cleanliness is attractive to foreigners, especially those with families or those seeking a peaceful living environment. Some foreigners are drawn to purchasing properties in Japan due to their strong affinity for Japanese culture, lifestyle, and the opportunity to immerse themselves in the country's unique way of life.

Unlike some of the other countries in the world, taxes and various purchase costs of buying properties are the same for foreigners as for any Japanese, and so are the costs to own one. Also, Japan has a well-established legal system that protects property rights and ensures a fair and transparent process for property transactions which gives people a sense of security to invest their money in Japanese real estate.

However, how property transactions are done in Japan may be different from how they are done in other countries, such as, instead of lawyers and escrows playing a vital role in transactions, real estate agents and judicial scriveners (司法書士, shihō shoshi) take on that role. Sales contracts are drafted by the agent using the standard formats provided by their member real estate organization and not by lawyers. Your deposit or purchase money is paid to the seller directly and not to an escrow or lawyer. However, the judicial scrivener will conduct due diligence to verify the ownership status, property details, and any existing liens or encumbrances on the property before you make your payment, ensuring that there are no legal issues or disputes related to the property. Judicial scriveners are also responsible for registering property transactions with the appropriate government offices and see through that the ownership title will be transferred to you once your purchase payment is made. 

Here is the step-by-step process of buying a real estate property in Japan.

Buying Flowchart

Sort out your funding

Find out how much your various purchase fees will cost and decide how much you want to spend.

Initiate your property search

Contact an agent and initiate your property search.

Receive the Explanation of Important Matters, sign the sales contract, and pay the deposit 

Prior to signing the sales contract, receive the Explanation of Important Matters (重要事項説明書 Jyu-yo-jiko-setsumei-sho) from a licensed broker. Once the contract is signed, you will simultaneously pay the seller the deposit (手付金 Tetsu-kay-kin). The deposit amount is capped at 10% of the purchase price, but any amount more than 5% could be accepted at a high chance.
 

Perform final check of the property

Perform final check of the property with the seller. You will not want any doubts remaining before closing the deal and should ideally have them all brought up at this time.

Settle the outstanding balance of the purchase price and all other fees which are due 

Settle the outstanding balance of the purchase price and split fees (清算金 Sei-san-kin) with the seller reckoned on the closing day, such as property taxes and monthly apartment fees. You will also need to pay all other related closing fees which are due at the same time. 

Receive delivery

Receive the keys.

Execute ownership title transfer

Immediately after the payment and delivery, an entrusted judicial scrivener (司法書士 Shiho-shoshi) with the necessary documents from both parties will go to the Legal Affairs Bureau to legally transfer the property ownership title.

Pay any acquisition fee that may arise post-sale

Acquisition tax (不動産取得税 Fudosan-shoe-toku-zei) will be imposed on you, if there is any, by the local tax office within 1 – 3 months after purchase.

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Various Costs

Various costs (4 - 7% of sales price, excluding "post-sale fees" and "fees incurred yearly")

 

When signing the contract

Deposit (手付金 Tetsu-kay-kin) up to 10% of the sales price

Stamp duty (収入印紙 Shu-new-inshi) for sales contract (corresponds to the sales price)

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When settling the outstanding balance of sales price (closing)

・ Ownership title transfer registration tax

・ Building description registration and ownership preservation tax (for new building purchase)

・ Agency fee {( Sales price×3%) + 60,000Yen} + consumption tax

・ Judicial scrivener fee

・ Pro-rated annual property tax of the year of sale

・ Pro-rated monthly apartment fee of the month of sale (apartments only)

・ Housing insurance premium (your choice of 1 to 5-year term, with or without earthquake coverage)

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Post-sale

Property acquistion fee (不動産取得税 Fudosan-shoe-toku-zei) imposed 1 - 3 months after closing)

 

Fees Incurred Yearly

・ Fixed asset tax towards land and building

・ City planning tax towards land and building

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Necessary Items

Necessary Items for Buying 

Residence certificate (住民票 Ju-min-hyo) 1*

Non-registered seal (認印 Mitome-in) 2*

・ID (residence card, passport, and other photo ID) 3*

When will you need it

1* upon closing

2* upon contract signing and closing

3* upon contract signing and closing

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