Tokyo land prices rose 2.8% across all categories in 2026, the strongest increase since 1992, according to the government’s annual survey published in April. For foreign buyers acquiring property in Minato-ku (港区) or Shibuya-ku (渋谷区), that appreciation is welcome news. The tax obligations attached to that land, however, are less frequently understood. Japan’s property tax framework is layered, municipality-specific in its surcharges, and currently in the middle of a three-year assessment freeze that directly affects how much owners pay through FY2026. One significant reform, targeting inheritance tax treatment of rental real estate, takes effect on 1 January 2027, with a window period that closes faster than most buyers realise. This article covers every material component of Japan land tax as it stands on 27 April 2026: the standard rates, the Tokyo-specific ordinances, the reductions available to residential owners, and the estate-planning change that restructures the arithmetic of luxury buy-to-let.

Fixed Asset Tax and Urban Planning Tax: Core Mechanics for 2026

The foundational annual charge on Japanese real estate is 固定資産税 (kotei-shisan-zei, fixed asset tax), levied under Article 342 et seq. of the 地方税法 (Local Tax Act). The standard rate is 1.4% of assessed value. In every one of Tokyo’s 23 wards, a second charge applies: 都市計画税 (toshi-keikaku-zei, urban planning tax), at up to 0.3% of assessed value. Together, the headline annual cost on a property with a ¥200 million assessed value reaches ¥3.4 million before any reductions.

The assessed value used for these calculations is the figure recorded in the 固定資産課税台帳 (fixed asset cadastral register), maintained by the relevant tax authority. In Tokyo’s 23 wards, both taxes are collected as 都税 (to-zei, metropolitan tax) by the Tokyo Metropolitan Government, a structural distinction from the rest of Japan where municipalities collect separately. The taxable event is ownership as of 1 January each year, the 賦課期日 (fukazeiteki, assessment reference date). A buyer who closes on 2 January 2026 or later does not owe fixed asset tax for FY2026; that liability rests with the seller. Practically, mid-year sales in Tokyo luxury transactions conventionally prorate the tax between parties by private contractual arrangement, but this is not a statutory obligation under the Local Tax Act.

For a fuller breakdown of how these rates interact with acquisition costs and ongoing holding charges, Japan Property Tax for Foreigners: A Complete 2026 Guide for Tokyo Buyers covers the full cost stack from purchase through disposition.

FY2026 Assessment Cycle: Why There Is No Revaluation This Year

Japan revalues all land and buildings on a three-year cycle, with each revaluation year designated a 基準年度 (kijun-nendo, base assessment year). The most recent base year was FY2024 (令和6年度). FY2025 and FY2026 (令和8年度) are therefore freeze years, meaning assessed values are held at FY2024 levels unless a specific property was newly built, extended, subdivided, or merged during the intervening period.

For buyers active in 2025 or 2026, this japan tax assessment cycle has a concrete implication: a luxury property acquired in either year will be taxed on the FY2024 assessed value until the next revaluation in FY2027. The Tokyo Metropolitan Government published FY2026 land and building prices in April 2026, confirming that the freeze-year values are now publicly viewable. Buyers can request the specific assessed value for any parcel before completing a purchase, which allows for accurate modelling of the annual tax liability before contracts are exchanged.

The next base year, FY2027, will incorporate the land price appreciation recorded in 2025 and 2026. Given the 2.8% nationwide increase cited in the April 2026 government report, and the considerably sharper gains in central Tokyo wards, owners should anticipate a meaningful step-up in assessed values when FY2027 bills arrive.

Residential Land Reductions and Tax Exemptions Explained

The headline rates of 1.4% and 0.3% are rarely what residential owners actually pay. The 住宅用地の特例 (jutaku-yo-chi no tokurei, residential land special measures), codified in Articles 349-3-2 and 702-3 of the Local Tax Act, reduce the taxable base substantially.

The structure is tiered by plot area per dwelling unit:

• Up to 200 m² (小規模住宅用地, small-scale residential land): fixed asset tax base reduced to 1/6 of assessed value; urban planning tax base reduced to 1/3 of assessed value
• Above 200 m² (一般住宅用地, general residential land): fixed asset tax base reduced to 1/3 of assessed value; urban planning tax base reduced to 2/3 of assessed value

To illustrate the practical effect: a luxury Tokyo house on a 300 m² plot with an assessed land value of ¥150 million applies the 1/6 reduction to the first 200 m² and the 1/3 reduction to the remaining 100 m². The blended taxable base is approximately ¥33.3 million, producing a fixed asset tax liability of roughly ¥467,000 rather than the ¥2.1 million that the headline rate on the full assessed value would suggest. The residential land reduction is one of the most consequential features of Japan land tax for buyers of detached houses.

For newly constructed buildings, a separate 新築住宅減額 (shinchiku-jutaku-gengaku, new-build housing reduction) halves the building component of fixed asset tax. The duration depends on construction type:

• Standard wood-frame construction: halved for 3 years from completion
• RC or SRC structures of three floors or more (the category covering most luxury マンション (manshon, Japanese usage for freehold condominium, not the English word ‘mansion’)): halved for 5 years
• 認定長期優良住宅 (nintei choki yuryo jutaku, Certified Long-Life Housing): halved for 5 years, or 7 years for RC/SRC structures

The new-build reduction applies to the floor area equivalent of up to 120 m² per unit. For a 200 m² penthouse, only the tax attributable to 120 m² of floor area receives the halved rate; the remaining 80 m² is taxed at the standard building rate. Buyers considering new construction in Azabudai Hills (麻布台ヒルズ) or comparable large-scale developments should confirm whether the specific unit qualifies for long-life housing certification, as the two-year extension is material over a five-year holding period.

Tokyo-Specific Tax Ordinances and Burden Adjustment Caps

Tokyo’s 23 wards operate under a set of ordinance-level modifications that diverge from the national statutory defaults. Foreign buyers accustomed to uniform national tax codes will find these locally enacted layers unfamiliar.

Year-on-year increase cap. Tokyo’s ordinance limits the annual increase in fixed asset tax and urban planning tax: if the calculated liability exceeds 1.1 times the prior year’s amount, the excess is rebated. This cap applies through FY2026 and provides a degree of predictability for owners of properties whose assessed values are rising. Urban planning tax halved for small-scale residential land. For 小規模住宅用地 in the 23 wards, Tokyo’s own ordinance further reduces the urban planning tax by half, through FY2026. This is a Tokyo-specific measure; it does not apply in other Japanese cities. Commercial land burden-adjustment cap. For 商業地等 (commercial and equivalent land) in the 23 wards, the burden-adjustment cap is set at 65% of assessed value, compared with the national statutory cap of 70%. Owners of mixed-use luxury assets, retail-podium buildings, or commercial parcels in Omotesando (表参道) or Aoyama (青山) benefit from this Tokyo-specific ordinance reduction.

One risk that applies to any owner, foreign or domestic, is the 特定空家 (tokutei-akiya, Specified Vacant House) designation under the 空家等対策の推進に関する特別措置法 (Vacant House Measures Act, 2015). A property designated under this statute loses the 住宅用地 1/6 reduction. The effective tax on the land can increase by up to six times. Foreign owners who leave Tokyo properties unoccupied for extended periods, whether due to relocation, estate proceedings, or investment strategy, face this risk and should maintain documentation of periodic use or engage a property management firm to ensure the property does not meet the designation criteria.

The 2026 Inheritance Tax Reform: Impact on Real Estate Valuation

The single most consequential development for high-net-worth foreign buyers using Tokyo real estate in estate planning is the japan inheritance tax reform contained in the 令和8年度税制改正大綱 (FY2026 Tax Reform Outline). The reform takes effect 1 January 2027 and restructures how certain categories of real estate are valued for inheritance and gift tax purposes.

Rental property valuation reform. Under the current rules, 貸付用不動産 (kashitsuke-yo-fudosan, income-producing or rental real estate) is valued using 路線価 (rosen-ka, road-frontage price) for land and 固定資産税評価額 (assessed value) for buildings. These figures typically represent 30 to 50% of market value, creating a substantial discount that has made Tokyo buy-to-let attractive as an inheritance tax vehicle. From 1 January 2027, rental properties acquired within five years prior to the inheritance or gift event will be valued at 80% of acquisition cost. For a ¥1 billion apartment purchased in 2024 and inherited in 2028, the taxable value shifts from roughly ¥300 to ¥400 million (under the current road-frontage method) to ¥800 million. The arithmetic changes materially. Real estate fractional investment products. 不動産小口化商品 (fudosan-koguchika-shohin, real estate fractional investment products, including TK/GK fund structures) face a stricter change: from 1 January 2027, they will be valued at actual market value (時価, jika) at the time of inheritance or gift, with no time limit on acquisition date. This effectively eliminates the inheritance tax discount on these structures entirely. The 2026 window period. Acquisitions and gifts completed before 31 December 2026 still use the old valuation rules. However, practitioners and tax advisers consistently flag that aggressive 2026 transactions may be challenged under 総則6項 (Sosoku Roku-ko, General Rule 6 of the Property Valuation Rules), the anti-avoidance provision that allows Japan’s National Tax Agency to substitute market value when a transaction is structured primarily to reduce tax. The 2022 Supreme Court ruling (令和4年最高裁判決) confirmed the NTA’s authority to apply this override, and the agency has signalled continued scrutiny of transactions that exploit the pre-reform window. Foreign buyers considering acquisitions in the remaining months of 2026 with estate planning objectives should obtain written tax advice from a qualified 税理士 (zeirishi, Japanese certified tax accountant) before proceeding.

For a detailed treatment of how the 2027 reform interacts with residency status and offshore estate structures, Estate Tax in Japan: 2026 Rates, Residency Rules, and Property Implications for Foreign Owners addresses the cross-border dimensions in full.

Tax Considerations for Foreign Buyers and Non-Resident Property Owners

Japan imposes no nationality-based surcharge on real estate ownership. A non-resident foreign buyer pays the same fixed asset tax and urban planning tax as a Japanese resident holding an identical property. The 1.4% and 0.3% rates, the residential land reductions, and the Tokyo ordinance caps all apply equally. There is no foreign buyer tax of the kind introduced in Australia, Canada, or Singapore.

The January 1 ownership rule is a practical point in every Tokyo luxury transaction. Whoever holds title on 1 January is liable for the full year’s tax. A buyer who completes on 2 January 2026 owes nothing for FY2026. This creates a negotiating dynamic in year-end transactions: sellers approaching December closings may price or structure differently to avoid carrying the liability into the new year. In practice, Tokyo luxury transactions above ¥300 million typically include a contractual proration clause, but this is a matter of negotiation, not statutory right.

For non-resident owners, the mechanics of receiving and paying the 納税通知書 (nozei-tsuchisho, tax payment notice) require advance planning. Notices for FY2026 are dispatched between April and June 2026 by the Tokyo Metropolitan Government. Payment falls in four instalments: the first by end of June 2026, the second by end of September 2026, the third by end of December 2026, and the fourth by end of February 2027. Lump-sum payment at the first instalment is permitted. Non-residents without a Japanese bank account or a local representative will need to designate a 納税管理人 (nozei-kanrinin, tax payment agent) to receive notices and remit payments on their behalf. Failure to designate one when required can result in penalties.

The rental property valuation reform described above is particularly material for foreign principals who have structured Tokyo real estate inside offshore holding companies or trust arrangements. The 80% acquisition-cost floor applies to the Japanese inheritance and gift tax calculation regardless of the offshore wrapper, because Japan’s inheritance tax jurisdiction extends to Japanese-situs assets. Foreign buyers using real estate as part of a broader estate plan should review their structures against the 1 January 2027 effective date with both a Japanese 税理士 and their home-country estate counsel.

At the transaction level, buyers navigating these tax layers benefit from having a licensed specialist present at every stage. Koukyuu is a private buyer’s advisory focused exclusively on transactions of ¥300 million and above in Nishi-Azabu (西麻布), Kita-Aoyama (北青山), Roppongi Hills (六本木ヒルズ), and Azabudai Hills (麻布台ヒルズ). Every engagement is handled personally by a 宅建士 (takken-shi, Japan’s licensed real-estate transaction specialist) from the first consultation through contract execution, including coordination with the buyer’s tax advisers during due diligence.

Property Tax Payment Schedule and Practical Filing Notes for FY2026

The FY2026 property tax payment schedule for Tokyo’s 23 wards follows the Tokyo Metropolitan Government’s standard timetable. Tax notices are issued between April and June 2026. The four instalment deadlines are:

• 1st instalment (第1期): end of June 2026
• 2nd instalment (第2期): end of September 2026
• 3rd instalment (第3期): end of December 2026
• 4th instalment (第4期): end of February 2027

Owners who prefer to pay in full may do so at the first instalment. The total annual amount is stated on the notice; no separate calculation is required.

For buyers who acquired property after 1 January 2026, the first notice they receive will cover FY2027 (issued April to June 2027), since the FY2026 liability rested with the seller as of 1 January 2026. This is a common source of confusion for first-time Japanese property owners: the absence of a tax notice in 2026 does not mean the property is tax-exempt.

Buyers who believe their assessed value is incorrect may file a 審査申出 (shinsa-moushide, assessment review petition) with the 固定資産評価審査委員会 (Fixed Asset Valuation Review Committee) of the relevant municipality. In Tokyo’s 23 wards, this body sits within the Tokyo Metropolitan Government. The petition window opens when the tax notice is issued and closes within three months. Given that FY2026 is a freeze year, disputes over assessed value are less common than in base years, but newly constructed properties or those that underwent significant renovation may have assessments worth reviewing.

For context on how assessed values compare to transaction prices in Tokyo’s luxury market, Japan Land Tax 2026: What Foreign Property Owners in Tokyo Actually Pay provides a worked example using current Minato-ku transaction data.

Koukyuu is a private buyer’s advisory for distinguished Tokyo residences in Nishi-Azabu, Kita-Aoyama, and Roppongi Hills, focused exclusively on transactions of ¥300 million and above, with a licensed 宅建士 personally handling every stage of the engagement from the first consultation to the signing. To begin a private conversation, book a private consultation).