Buying Property in Japan as a Foreigner: Financing, Paperwork, Tax and Management
In Japan, foreign nationals and people living overseas can, as a rule, buy and own real estate on the same terms as Japanese citizens. There are, however, some differences from Japanese residents in how easily you can get a loan, the paperwork at purchase, and the tax on rental income and on a sale.
This article walks through what foreign buyers should know when buying an investment property in Japan, particularly in Tokyo, in the order you will meet it: before buying, at purchase, while holding, and when selling.
Foreign nationals can own property in Japan
Japan has no law that generally restricts foreign nationals from owning land or buildings. You can buy without a residence status, and while living abroad.
There are a few exceptions and procedures:
- Act on Important Land: buying or selling land or buildings of a certain size (200㎡ or more) in a designated "special monitoring zone", such as around defence facilities, requires prior notification.
- FEFTA reporting: when a person who does not live in Japan (a non-resident) acquires Japanese real estate, they must in principle report it to the Minister of Finance through the Bank of Japan within 20 days (some cases, such as buying a home for yourself or your family, are exempt).
Before buying: Japan's and Tokyo's rental market
- Urban rental demand: Japan's overall population is shrinking, but people keep moving to the Tokyo area for study and work, and rental demand, especially for single-person units, continues.
- Secure ownership: many properties come with full freehold ownership including the land, and ownership can be checked through the land registry.
- A changing interest-rate environment: the Bank of Japan ended its negative interest rate policy in March 2024 and has raised its policy rate in steps since. Rates are no longer as low as they were, so check the gap between the property's yield and your borrowing rate before you buy.
- Currency: the property is a yen asset, so its value in your home currency moves with the exchange rate.
For typical yields by area, see "How to choose an investment property" (in Japanese).
Financing: it depends on your residence status and where you live
When lending to foreign nationals, Japanese banks look closely at whether the borrower will keep living in Japan.
| Your situation | How easy a loan tends to be |
|---|---|
| Permanent resident, or married to a Japanese national | Often assessed on terms close to a Japanese borrower's |
| Living and working in Japan on a work visa | Possible depending on the length of your permit, years in your job and income; a larger down payment is often required |
| Living overseas (non-resident) | Difficult at most Japanese banks; buyers mostly pay cash or use one of the few lenders serving foreign buyers |
Some lenders also consider whether you can deal with them in Japanese. For what a loan review looks at, see "Real estate investment loan basics" (in Japanese).
At purchase: documents and money transfer
- Seal and seal certificate: people without a residence registration in Japan cannot register a seal (inkan), so a signature plus a signature certificate issued in your home country or by your embassy in Japan is normally used instead.
- Proof of address: an affidavit made under your home country's notarial system, or similar, replaces the Japanese residence certificate.
- Money transfer: when sending the purchase price from abroad, you may be asked for documents explaining the source of funds. International transfers take time, so plan back from the settlement date.
- Language: the explanation of important matters and the sale contract are in Japanese. Work with an agent who can explain them in your language or in English, or bring an interpreter, so that you fully understand what you sign.
The purchase steps themselves are the same as for a Japanese buyer; see "The investment property buying process" (in Japanese).
While holding: management and tax
- Property manager: if you live overseas, handling tenants and arranging repairs yourself is not realistic, so a management company is the practical choice.
- Tax agent: a non-resident filing a tax return and paying tax in Japan normally appoints a tax agent (nozei kanrinin) living in Japan.
- Withholding on rent: companies and others paying rent to a non-resident must in principle withhold 20.42% of the rent. The difference from the actual income tax due is settled in your tax return.
- Fixed asset tax and city planning tax: paid every year to the municipality where the property is located.
- Tax at home: if the rental income is also taxed in your home country, a tax treaty may relieve double taxation. Check with a tax adviser.
When selling: tax and withholding
- Capital gains tax: a gain on sale is subject to income tax and resident tax. The rate depends on whether you had held the property for more than five years as of 1 January of the year of sale (as of 2026: 20.315% long-term, 39.63% short-term; non-residents may not owe resident tax).
- Withholding by the buyer: a buyer purchasing from a non-resident must in principle withhold 10.21% of the price and pay it to the tax office (except in cases such as an individual buying a home for themselves or their family for ¥100 million or less). The seller settles this in their tax return.
For the selling process, see "Selling an investment property" (in Japanese).
Summary
- Foreign nationals can own property in Japan. Watch for notification in special monitoring zones and FEFTA reporting for non-residents.
- How easily you can borrow depends heavily on permanent residency, your permit and where you live. Non-residents mostly buy with cash.
- A signature certificate replaces the seal certificate and an affidavit replaces the residence certificate. Allow time for international transfers.
- While holding, arrange a property manager and a tax agent. Rent paid to non-residents is subject to withholding.
- On a sale, the buyer may have to withhold 10.21% of the price. Check your tax position with a tax adviser.
Cover photo: Photo by Ryo Yoshitake on Unsplash (illustrative)
About this article
- Author
- Emi Tokudomi（Acquisition Staff）Qualifications: Real Estate Transaction Agent
After working in real estate sales support, rental property management, and brokerage, now engages in acquisition operations. Holds a Real Estate Transaction Agent license and bookkeeping qualifications, and supports property value with extensive hands-on experience and specialized expertise.
View profile → - Publisher
- TLL合同会社宅地建物取引業 東京都知事(1)第108202号住宅宿泊管理業 国土交通大臣(01)第F03424号
Data in this article cite their source and as-of date. Market conditions and regulations change, so check the latest information and consult a professional before deciding. Translated from the Japanese original.
