Buy property in Tokyo

 

Despite the size of economic activity and city, Tokyo is one of the cheapest cities to purchase a property. An average price of property in Tokyo is JPY 28,190,000 (2013) with a year-to-year change of 10.3% (JPY 25,560,000 in 2012). The Summer Olympics being hosted in Tokyo in 2020, the market is expected to be stable in the central wards of Tokyo with a sustainable population increase.

 

Tips for choosing a right property in Tokyo

  • Condominium, equipped with a security system – a property, equipped with an entrance door-unit/unit-unit intercommunication system is preferred for a security reason.
  • Condominium, equipped with trash collecting station – in Japan, trash (burnable/non-burnable/recyclable) are to be collected at a certain day of every week. Trash is to be allocated a designated spot on a street in the morning. Some condominiums are equipped with a trash collection room, where residents can throw them 24/7.
  • Toilet, equipped with washlet  – washlet, an electric toilet seat (warming capability) with water spray function for washing, is a standard feature at most of the recently built properties and becoming a social norm in Japan. But some of old property is still equipped with a conventional toilet seat.
  • Property in a proximity to a convenience store – due to its convenience, a convenience store is one of the prominent life infrastructures in Japan and its proximity from a residence is quite important to many Japanese.
  • Property in a proximity to public transportation (especially train station) is crucial.
  • River/bay view property rents out with higher price – a property that retain Tokyo bay or river view rents out higher than non-aquatic views.
  • In general, western part of Tokyo is considered to be more affluent than eastern part of Tokyo.
  • Storage space is very important. Check how much storage space the property has.
  • Property with balcony and bigger window is always preferred.
  •  A population projection suggests that the only central part of Tokyo has a steady increase of population until 2050.

Things to watch out when you buy property in Tokyo

  • Avoid condominium property on the lower level, especially the 1F (ground floor in British term) This is attributed to security and amount of sunlight the unit can receive.
  • Avoid properties that are built before 1976 – in 1976, the Building Standards Act was amended to cater higher resistance against earthquake.
  • Avoid property that is more than 10 minutes away from a station – an east of rentability and rent drop beyond the 10 minutes threshold.
  • Avoid property, equipped with a modular bathroom.
  • Preferable to have a separate toilet and bathroom.
  • Avoid purchasing property, located at non-central part of Tokyo (if it is for rental purpose).
  • Avoid property facing north.
  • Avoid property that is made by wood.
  • Avoid property that has restaurants in the building. It can cause insects problem and can cause fire.

 

Best neighborhood in Tokyo

Minato ward has always been said the best neighborhood in Tokyo. This is the place that any folks who has money wants to reside. Especially area called “Azabu“, “Hiroo” , “Akasaka“, “Aoyama” and “Shirogane” are the very nice, cozy, safe yet luxury neighborhood that are especially popular for foreign bankers and diplomats in Tokyo. Most of the Michelin star restaurants and luxury shops are located in those area.

If you want to avoid central Tokyo’s bustling feeling and wish to reside a bit outside of central for more space and privacy, lots of hidden rich folks nestle in “Daikanyama“. It is popular destination for young 20 somethings to go shopping or romantic dining, but it is also where real rich people hide themselves.

“Meguro” ,”Nakameguro” and “Ebisu” are popular destination between high-class young singles and young couples.

Meguro ward and Setagaya ward are popular residential area for families looking for upper class, quiet neighborhoood that are still close to central Tokyo.

Chuo ward / Minato ward / Chiyoda ward / Shinagawa ward

These districts are especially hot for investment purpose. All of the area are located in the city center with a potential growth of population. Plus, redevelopment projects (new stations and other development for Summer Olympic Games in 2020) helps appreciation of property in these areas.

 

Worst neighborhood in Tokyo

Japan is one of the safest country in the world and so as the capital city of Japan, which is Tokyo.
Therefore, there isn’t really bad neighborhood nor anywhere that is dangarous to walk around at night by his/her self in Tokyo.

Although, there are some area that had been infamous for not so nice neighborhood with higher crime rate and lower school rating.

Adachi ward and surrounding area has been said one of the worst area to live. I have actually lived there without knowing that when I was younger but personally, I had no problem nor seen anything happening. However,  people still say “Avoid living in Adachi ward” so, considering reselling your property, it is wise to take the advice.

Especially for families with children, avoid getting a place in busiest places such as “Shinjyuku“, “Ikebukuro“, “Shibuya” and “Roppoingi“. Those are the busiest places and they are pretty packed with many people all the time however, those do have higher crime rate with minor assault like, drunk people making trouble. Although, for young people who want to live close to all the bars, restaurants and all the happening of Tokyo, those are ideal places for them.

 

How to buy property in Japan

Wanto to know how to buy property in Japan?

 

About Tax (as of December 2014)

When you buy:

Stamp duty for sales contract
10.000.000JPY-50.000.000JPY=1.5000 JPY
50.000.001JPY-100.000.000JPY=4.5000JPY

Registration tax
3% of the tax value of the property

For second-hand condo, you may be required to pay the rest of peoperty tax of the year that you purchased.

For New condo, you will be required to pay sale’s tax, which will be taxed on value of the land.

 

When you hold:

Real estate acquisition tax
Although it is called accuisition tax, tax notice will be sent out 6 month to 1 year and half after you purchase the property.
Land and building are evaluated separetly for taxation purpose. In general, 3% of the evaluetion result (minus special tax ease if applicable) is taxed however, currently, there is a special exemption applies. Please check with real estate agent or Tokyo tax office.

Property tax (&City development tax)
Land and building are evaluated separetly. Tax rate applies to the evaluation every 3 years. The calculation of tax rate is extremely complicated and there are many different kinds of special exemption apply, therefore, please check with local tax office in Tokyo or Japanese accountant.

 

When you rent out:

Income tax
If you have rental income, you will need to file income tax. You can deduct cost for the rental property including depriciation of the tax and special exemption, if there is any. Taxable rental income will be merge to another income if any, and progressive tax apply. You will need an accountant to calcurate how much you need to pay the tax.

 

When you sell:

Capital gain tax

It depends on how long you own the property.

If the period of ownership is less than 5 years: 30% of the capital gain is taxed.

If the period of ownership is more than 5 years: 15% of the capital gain is taxed.

There is “Special tax for reconstruction of earthquake” applies.
2.1% of capital gain tax amount is taxed from the period of 2013 to 2037.

 

When you die:

Inheritance tax
Calculating the inheritance tax is extemely complicated since it depends on who the successor are and what kind of inheritance you have. Please refer to accountant or tax professional.