The 2026 government land price survey, published in March, recorded a nationwide increase of 2.8% across all land categories, the strongest single-year rise since 1992. In central Tokyo, commercial and residential land in Minato-ku (港区) and Shibuya-ku (渋谷区) posted gains well above that average. For foreign owners already holding property, or for those evaluating a purchase now, rising valuations translate directly into higher tax bases, and 2026 brings two structural changes that make understanding Japan’s land tax system more urgent than in any recent year.

How Japan’s Annual Land Tax Works

Every property in Japan is subject to 固定資産税 (kotei-shisan-zei, the annual fixed-asset tax), levied at a standard rate of 1.4% of the 固定資産税評価額 (kotei-shisan-zei hyoukagaku, the assessed value for fixed-asset tax purposes). This assessed value is set by the municipality and is typically 60% to 70% of market value for land in central Tokyo, though the gap narrows in high-demand neighborhoods.

Properties within urban planning zones carry an additional 都市計画税 (toshi-keikaku-zei, city-planning tax) of up to 0.3%, bringing the combined ceiling to 1.7% of assessed value annually. Virtually all residential property in Azabu (麻布), Hiroo (広尾), Shirokane (白金), and the surrounding Minato-ku ward falls within an urban planning zone, so the 1.7% combined rate is the practical figure for buyers in those areas.

Fixed-asset valuations are revised on a three-year cycle. The last base year was 2024, meaning FY2026 assessments carry forward 2024 valuations with no general reset. The Tokyo Metropolitan Government confirmed that FY2026 land and building valuations were made available for public inspection from April 2026. The next reset will be FY2027.

The Residential Land Relief That Most Buyers Miss

A statutory reduction called 住宅用地の特例 (jutaku-yochi no tokurei, the residential land special provision) significantly lowers the effective tax base for land under a residence. The reduction is automatic and applies as follows:

• Land area up to 200 ㎡: assessed at 1/6 of standard value for fixed-asset tax purposes, and at 1/3 for city-planning tax purposes.
• Land area exceeding 200 ㎡: assessed at 1/3 and 2/3 respectively.

For a detached house in Nishi-Azabu (西麻布) on a 300 ㎡ plot with a fixed-asset assessed value of ¥600 million, the effective tax base is not ¥600 million. The first 200 ㎡ is taxed at 1/6 of its proportional value, the remaining 100 ㎡ at 1/3. The annual fixed-asset tax bill on the land portion alone drops to a fraction of the headline rate. This relief applies to the land component only; the building is assessed separately at its full fixed-asset value, subject to its own set of reductions described below.

Payment Schedule and Practical Administration for Non-Residents

FY2026 fixed-asset tax is payable in four instalments: June, September, and December 2026, and February 2027. Lump-sum payment at the first instalment is permitted. Tax notices arrive between April and June.

For foreign owners without a registered domestic address in Japan, the municipality requires a 納税管理人 (nouzei-kanri-nin, a designated tax agent with a Japanese address) to receive notices and handle payments on the owner’s behalf. Failure to appoint one does not cancel the tax obligation; it simply means notices go undelivered, penalties accrue, and the municipality retains statutory collection authority over the property itself. Appointing a qualified tax agent before completing a purchase is a practical necessity, not an optional step.

Non-residents pay the same fixed-asset tax and city-planning tax rates as Japanese residents. There is no surcharge for foreign nationality or non-resident status. The bills are denominated in yen, payable at Japanese financial institutions or via designated payment services.

For a fuller breakdown of all property-related taxes and fees at acquisition, the property tax Japan rates and fees: 2026 complete guide covers acquisition tax, registration tax, and stamp duty alongside the annual holding costs discussed here.

The 2026 Tax Reform: What Changed and What Is About to Change

The 令和8年度税制改正大綱 (Reiwa 8-nendo Zeisei Kaisei Taikou, the FY2026 Tax Reform Outline), published by the Japanese government on 19 December 2025, introduced several measures directly relevant to foreign owners of Tokyo real estate.

Registration Tax Reduction on Land Transfers

The 登録免許税 (touki-menkyozei, the registration tax on property title transfers) for land has been reduced from the standard 2.0% to 1.5% of the fixed-asset assessed value. This reduction is available through 2028. On a land transfer where the assessed value is ¥200 million, the saving relative to the standard rate is ¥1 million. Buyers closing transactions in 2026 and 2027 benefit from this reduction automatically at 登記 (touki, the transfer of legal title recorded at the Legal Affairs Bureau).

New-Build Fixed-Asset Tax Relief Extended

The halving of the building-portion fixed-asset tax for newly constructed properties has been extended for five years, to 2030. The relief period is three years for detached houses and five years for マンション (manshon, Japanese usage for a freehold condominium unit, not ‘mansion’ in the English sense). For a new-build manshon in Roppongi Hills (六本木ヒルズ) or Azabudai Hills (麻布台ヒルズ) with a building assessed value of ¥80 million, the annual fixed-asset tax saving during the relief period is approximately ¥560,000 per year.

The 認定長期優良住宅特例 (nintei chouki yuuryou jutaku tokurei, the certified long-life housing special provision) has also been extended, with the halving period extended to five years for detached houses and seven years for condominiums. The minimum floor-area threshold for this certification was relaxed from 50 ㎡ to 40 ㎡, making more units eligible.

The Inheritance Valuation Rule Changing on 1 January 2027

This is the reform with the greatest long-term consequence for high-net-worth foreign buyers, and it is the one least covered in English-language commentary.

Under the current system, the inheritance-tax value of real estate is calculated using 路線価 (rosenka, the roadside price published annually by the 国税庁, the National Tax Agency), which typically produces a valuation of 60% to 80% of market price. Buyers have historically used this gap to reduce taxable estates by acquiring real estate shortly before death or a gift event, a strategy sometimes called “buy-to-compress.”

The FY2026 Tax Reform Outline closes this arbitrage effective 1 January 2027. Under the new rule, real estate acquired within five years before an inheritance or gift event will be valued at its acquisition price, targeting approximately 80% of market value, rather than at the traditional rosenka or fixed-asset assessed value. The five-year clock resets on each acquisition.

For a foreign buyer who purchased a Shirokane (白金) property in March 2024 for ¥500 million, any inheritance or gift occurring before March 2029 would trigger valuation at or near ¥500 million rather than at the rosenka-derived figure, which might otherwise have been ¥350 million to ¥400 million. The estate-planning benefit of that acquisition is effectively suspended for five years from the purchase date.

Also affected are 不動産小口化商品 (fudousan koguchika shouhin, fractional real-estate investment products structured as TK/GK vehicles), which will be valued at near-market price regardless of holding period under the new rules.

Foreign heirs of Japanese-sited real estate are subject to Japanese 相続税 (souzoku-zei, inheritance tax) on those assets regardless of their own domicile. The new valuation rule applies equally to non-resident estates. Any buyer acquiring Tokyo property in 2026 with estate planning considerations should model the five-year acquisition-price window explicitly. For a detailed overview of how foreign buyers navigate the legal and tax framework at acquisition, Japan Foreign Property Ownership: Legal Framework, Nationality Disclosure, and Transaction Requirements in 2026 provides the statutory context.

How Rental Property Changes the Tax Calculation

Owners who lease their Tokyo property, rather than occupying it, face a different inheritance-tax valuation stack. The relevant framework is the 貸家建付地 (kashiya-tateitsuki-chi, land under a leased building) discount, which reduces the inheritance-tax assessed value of both the land and the building.

The formula for land under a leased building is: assessed value multiplied by (1 minus the 借地権割合 (shakuchiken-wariai, the borrowing-right ratio) multiplied by the 借家権割合 (shakka-ken-wariai, the tenancy-right ratio) multiplied by the 賃貸割合 (chintai-wariai, the occupancy rate)). The tenancy-right ratio is fixed nationally at 30%. The borrowing-right ratio varies by location; for central Tokyo, it is typically in the D to E range (60% to 50%).

Using a borrowing-right ratio of 50% (zone E), a tenancy-right ratio of 30%, and 100% occupancy, a ¥100 million land parcel under a leased building is assessed at ¥85 million for inheritance-tax purposes, a 15% reduction. The building itself is assessed at 60% of its fixed-asset value, further reduced by 30% for the tenancy right, producing an effective building valuation of 42% of fixed-asset assessed value.

Layered on top of this is the 小規模宅地等の特例 (shokibo-takuchi-tou no tokurei, the Small Residential Land Special Provision). For rental land, this provision reduces the assessed value of up to 200 ㎡ by 50%. For an owner-occupied primary residence, the reduction is 80% on up to 330 ㎡. These provisions apply to qualifying heirs under specific conditions and require careful structuring well in advance of any transfer event.

The Japan Real Estate Tax: Complete 2026 Guide for Foreign Buyers in Tokyo covers the full interaction between acquisition costs, annual holding taxes, and disposal taxes including capital gains.

Practical Figures for a ¥500 Million Minato-ku Property in 2026

The following is an illustrative but arithmetically grounded example for a ¥500 million マンション unit in Minato-ku, purchased in 2026.

At acquisition:

• 不動産取得税 (fudousan shutoku-zei, real estate acquisition tax): 3% of assessed value for residential property (reduced rate, applicable through March 2027). On an assessed value of ¥120 million for the building component, this is ¥3.6 million, subject to statutory deductions for new construction.
• Registration tax on land transfer: 1.5% of land’s fixed-asset assessed value (reduced rate through 2028). On a land assessed value of ¥80 million, this is ¥1.2 million.
• Registration tax on building: 0.15% for new construction, 2.0% for existing buildings.

Annual holding (fixed-asset tax and city-planning tax combined, approximate):

• Land portion: assessed value reduced by the residential land relief to approximately ¥13.3 million (1/6 of the proportional 200 ㎡ portion). At 1.7% combined rate, approximately ¥226,000 per year on the land.
• Building portion: if new-build, halved for five years. On a building assessed value of ¥120 million, the annual tax is ¥1.02 million at 1.7% combined, reduced to approximately ¥510,000 per year during the relief period.
• Combined annual holding tax during the new-build relief period: approximately ¥736,000.

These figures are illustrative and depend on the specific assessed values assigned by the Tokyo Metropolitan Government, which vary by building, floor, and year of construction. Actual tax notices should be reviewed with a qualified 税理士 (zeirishi, licensed tax accountant) and, where property rights are being transferred, a 宅建士 (takken-shi, Japan’s licensed real-estate transaction specialist).

At transactions of ¥300 million and above, the difference between a properly structured acquisition and an unstructured one, measured across acquisition tax, registration tax, annual holding costs, and eventual inheritance-tax exposure, routinely exceeds several tens of millions of yen over a ten-year hold. Koukyuu works exclusively at this level, with a licensed 宅建士 personally handling every stage of each engagement, from the initial brief through the 重要事項説明 (juuyou-jikou-setsumei, the statutory pre-contract disclosure meeting) and on to signing, ensuring that the tax and legal dimensions of each transaction are addressed with the same precision as the property search itself.

What to Do Before the January 2027 Deadline

The five-year acquisition-price rule takes effect on 1 January 2027 for deaths and gifts occurring on or after that date. Any property acquired after 1 January 2022 will fall within the five-year window at the moment the new rule becomes operative. This is not a transitional arrangement with grandfathering; it applies to the existing holding period of properties already owned.

For buyers considering a purchase in 2026, the practical implication is that the estate-planning clock for a new acquisition begins immediately. A property acquired in June 2026 will exit the five-year window in June 2031. Structuring the ownership vehicle, whether individual, corporate, or through a 一般社団法人 (ippan-shadan-houjin, a general incorporated association, commonly used in estate planning), should be decided before, not after, the purchase agreement is signed.

According to the 2026 government land price survey reported by Housing Japan, the strongest price increases were recorded in commercial zones and high-demand residential districts, meaning the market-to-assessed-value gap, the very gap the new rule targets, is widest precisely in the neighborhoods where foreign buyers concentrate their interest.

For non-residents evaluating their first Tokyo acquisition, the sequencing matters: appoint a 納税管理人 before closing, confirm the assessed value used for registration tax at 登記, verify eligibility for the residential land relief and new-build halving, and model the five-year inheritance-tax window against your estate plan. None of these steps is optional at the ¥300 million level, and none should be delegated to a party who has not read the transaction documents in full.

Koukyuu is a private buyer’s advisory for distinguished Tokyo residences in Omotesando (表参道), Aoyama (青山), and Nishi-Azabu (西麻布), operating exclusively on transactions of ¥300 million and above, with a licensed 宅建士 personally present at every stage from first consultation to contract signing. Book a private consultation) to begin a confidential conversation about your acquisition.