JAPAN Law and Practice Contributed by: Satoru Hasumoto, Takahiro Sato and Fuyuki Uchitsu, Mori Hamada & Matsumoto
8.5 Tax Benefits A depreciation deduction is available for a person who owns a building. The deprecia - tion expense is allocated to each taxation year equally or by a declining rate for the life of the building as prescribed by law, depending on the structure and purpose of the building. Land is not a depreciable asset.
If the lessor is a non-resident individual or foreign corporation, the tenant is required to withhold 20.42% of the rent, payable to the tax authority no later than the tenth day of the month following the date of the payment of the rent. Withholding is not required if the tenant is a natural person using the property as a residence for themselves or their relatives. Any amount withheld by the tenant from the rent can be used as a deduction for corporation or income tax. There is no exemption for taxation on rental income from real property in Japan. Taxation on Gains From the Disposition of Real Property Capital gains from the disposition of real proper - ty in Japan are subject to corporation or income tax in the same manner as rental income. If the owner of the real property to be sold is a non-resident individual or foreign corporation, the buyer is required to withhold 10.21% of the purchase price, payable to the tax authority no later than the tenth day of the month following the date of payment of the purchase price. With - holding is not required if the purchase price does not exceed JPY100 million and the buyer will use the property as a residence for themselves or their relatives. Any amount withheld by the buyer from the purchase price can be used as a deduction for corporation or income tax. There is no exemption for taxation on capital gains from the disposition of real property in Japan.
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