How Much Are the Miscellaneous Costs When Purchasing Income Property? Breakdown, Calculation Methods, and an Example Estimate for a 100 Million Yen Apartment Building
When buying income property, besides the property price, various miscellaneous costs are incurred, such as brokerage fees, registration fees, taxes, and loan fees. Even when using financing, it is common to prepare these miscellaneous costs with your own funds, so it is important to understand how much is needed before purchase.
This article explains the breakdown and calculation methods of miscellaneous costs incurred when purchasing income property, provides an example calculation using a 100 million yen apartment building, and describes the settlement amounts received or paid at closing.
Miscellaneous Costs Are Mainly Four Types
| Type | Main Costs | Payment Timing |
|---|---|---|
| Transaction-related costs | Brokerage fee, stamp duty on sale contract | At contract / closing |
| Registration-related costs | Registration license tax (ownership transfer, mortgage setting), judicial scrivener fee | At closing |
| Loan-related costs | Administrative fee, guarantee fee, stamp duty on loan agreement, group credit life insurance | At closing |
| Taxes and insurance after purchase | Real estate acquisition tax, fire insurance, earthquake insurance | From closing to several months later |
Transaction-related Costs
- Brokerage fee: This fee applies when purchasing through a real estate company as an intermediary. The maximum amount is "Sale price × 3% + 60,000 yen" plus consumption tax if the sale price (excluding tax) exceeds 4 million yen. If the seller is the real estate company and you buy directly from them, this fee does not apply.
- Stamp duty: Applied on the sale contract. For contracts between 50 million yen and 100 million yen it is 30,000 yen, and for 100 million yen to 500 million yen it is 60,000 yen (reduced rates apply. Contracts prepared by March 31, 2027, are eligible).
The calculation method for the brokerage fee is explained in detail at "Brokerage Fee Maximum and Calculation Method".
Registration-related Costs
- Registration license tax for ownership transfer: Calculated by multiplying the fixed asset tax valuation amount by the tax rate. Land is usually 2%, but during the period when the land transfer reduction applies, it is 1.5%, and buildings are 2%. The reduced tax rate for residential houses cannot be used for buildings for investment that the owner does not live in.
- Registration license tax for mortgage setting: When financing is used, 0.4% of the borrowed amount (claim amount).
- Judicial scrivener fee: Fee for entrusting registration procedures to a judicial scrivener. This varies depending on the number of properties and registration contents, so it is confirmed by estimate.
Loan-related Costs
- Administrative fee: Depending on the financial institution, this is either a fixed amount or calculated as a percentage of the loan amount.
- Guarantee fee: Charged when using a guarantee company. It may be included in the administrative fee or added to the interest rate.
- Stamp duty on loan agreement: For loan amounts between 50 million yen and 100 million yen, it is 60,000 yen; between 100 million yen and 500 million yen, it is 100,000 yen (no reduction applies here).
- Group credit life insurance: The premium may be included in the interest rate or paid separately.
Taxes and Insurance After Purchase
- Real estate acquisition tax: Tax payment notice arrives from the prefecture several months after purchase. Calculated by fixed asset tax valuation × tax rate. For land and houses, the rate is 3% (reduced from standard 4%), and there is a special exception to halve the taxable base for residential land.
- Fire insurance and earthquake insurance: Usually required as a condition of financing. Premiums vary depending on coverage and period.
Example Estimate for a 100 Million Yen Apartment Building
The following assumptions are used for the estimate: Property price 100 million yen (fixed asset tax valuation for land 40 million yen, building 20 million yen), purchased through brokerage, financing 80 million yen.
| Cost | Calculation | Amount (approx.) |
|---|---|---|
| Brokerage fee | (100 million yen × 3% + 60,000 yen) × 1.1 | 3,366,000 yen |
| Stamp duty on sale contract | Reduced rate applied | 30,000 yen |
| Registration license tax (land) | 40 million yen × 1.5% | 600,000 yen |
| Registration license tax (building) | 20 million yen × 2% | 400,000 yen |
| Registration license tax (mortgage setting) | 80 million yen × 0.4% | 320,000 yen |
| Stamp duty on loan agreement | Loan amount 50 million yen to 100 million yen | 60,000 yen |
| Loan administrative fee | Example: 1.1% of loan amount | 880,000 yen |
| Real estate acquisition tax (land) | 40 million yen × 1/2 × 3% | 600,000 yen |
| Real estate acquisition tax (building) | 20 million yen × 3% | 600,000 yen |
| Total | Approx. 6.86 million yen |
Additionally, judicial scrivener fees, fire insurance premiums, guarantee fees, etc., are required. In this example, miscellaneous costs are roughly 7% of the property price. These costs vary significantly depending on conditions such as purchasing without brokerage or without financing, so estimates should be obtained and confirmed for each property.
Settlement at Closing
For owner-change properties, the following settlements are made at closing:
- Fixed asset tax and city planning tax: The annual tax amount is prorated based on the handover date, and the buyer pays the seller for the period after handover.
- Rent: Rent for the current month is prorated, and the seller receives the amount for the period after handover.
- Security deposit: The security deposit held by the seller from tenants is transferred with the obligation to return it at tenant move-out. It is generally settled by deducting it from the sale price.
Because the security deposit is transferred, the cash needed at hand may be less, but funds should be reserved to cover deposit refunds at tenant move-out.
Summary
- Miscellaneous costs are in four categories: transaction, registration, loan, and post-purchase taxes and insurance. It is common to prepare them with own funds.
- The reduced registration license tax for residential houses cannot be applied to investment buildings.
- Real estate acquisition tax notification arrives several months after purchase and should be included in financial planning.
- In the example of a 100 million yen purchase, brokerage, and 80 million yen financing, miscellaneous costs are around 7% of property price.
- At closing, prorated settlement of fixed asset tax, rent, and transfer of security deposits are conducted.
Top image: Photo by Jakub Żerdzicki on Unsplash (image)
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.
