Tokyo’s residential land prices rose for the fourth consecutive year in 2026, with prime Minato-ku (港区) parcels now trading at assessed values exceeding ¥2 million per square metre in some blocks. Against that backdrop, foreign buyer enquiries into the Tokyo market have accelerated, driven partly by a yen that remains historically weak against the dollar and euro and partly by Asia Pacific net buying intentions reaching 17% for 2026, up from 13% the prior year according to CBRE survey data. What many prospective buyers do not yet know is how straightforward the legal framework actually is, and how specific the tax and financing mechanics are once you look at the detail.

Foreign Nationals Can Buy Property in Japan With No Restrictions

Japan imposes no statutory restrictions on foreign nationals purchasing real estate. Non-residents, visitors, and holders of any visa category, including those with no visa at all, may acquire freehold land and buildings on legally identical terms to Japanese citizens. There is no government pre-approval process, no minimum purchase amount mandated by law, and no requirement to hold 永住権 (eijuuken, Japanese permanent residency) or any other immigration status.

The governing statute is the 外国為替及び外国貿易法 (Foreign Exchange and Foreign Trade Act, commonly abbreviated FEFTA). Under FEFTA, a post-purchase reporting obligation to the Bank of Japan applies when a transaction exceeds ¥100 million, and the report must be filed within 20 days of closing. This is a notification, not a permission. Your 司法書士 (shiho-shoshi, judicial scrivener, the licensed professional who handles title registration) will typically coordinate this filing.

One practical caveat applies in 2026: the 経済安全保障推進法 (Economic Security Promotion Act), which has been in force since 2022 and continues to be refined, requires advance notification for acquisitions of land adjacent to Self-Defense Force bases or designated critical infrastructure. This affects a narrow set of locations, primarily rural or coastal properties, and is unlikely to arise in central Tokyo neighbourhoods. For a thorough walkthrough of the legal framework, see our Buying Property in Japan as a Foreigner: Complete Guide 2026.

What It Actually Costs to Buy: Taxes and Transaction Fees in 2026

Buyer-side transaction costs in the luxury segment run approximately 5 to 8% of the purchase price. The components are specific and worth understanding individually before you sign anything.

Agent commission is capped by law at 3% of the purchase price plus ¥60,000, plus 10% 消費税 (shouhizei, Japan’s Consumption Tax / JCT). On a ¥500 million transaction, the maximum legal commission is roughly ¥15.66 million including tax. 不動産取得税 (Real Estate Acquisition Tax) applies to the assessed value of the property, not the purchase price. For residential land, the current rate is assessed value multiplied by one-half, then multiplied by 3%, under the 宅地等の特例 (residential land special measure) extended through 31 March 2027. For residential buildings, the rate is 3% on assessed value with a ¥12 million deduction. For non-residential buildings, the rate rises to 4% with no deduction. 登録免許税 (Registration and License Tax) covers the cost of 登記 (touki, the transfer of legal title recorded at the Legal Affairs Bureau). The reduced rate for land ownership transfer is 1.5% of assessed value, extended through 31 March 2026. For new residential buildings, the building transfer rate is 0.3%. If you are financing with a Japanese mortgage, the mortgage registration tax is 0.1% of the loan amount under the residential reduced rate. 印紙税 (Stamp Duty) on the sale contract follows a sliding scale from ¥10,000 to ¥600,000 depending on contract value, with reduced rates on residential contracts extended through 31 March 2027. 司法書士 fees for title registration and related documentation typically run ¥150,000 to ¥500,000 depending on complexity.

Once you own the property, annual holding costs are predictable. 固定資産税 (Fixed Asset Tax) is levied at 1.4% of the 固定資産税評価額 (assessed value, typically 60 to 70% of market value). 都市計画税 (City Planning Tax) adds a further 0.3% on the same base within the Tokyo 23 wards. For residential land up to 200 square metres per unit, the Fixed Asset Tax is reduced to one-sixth of the standard assessment and the City Planning Tax to one-third, under the 小規模住宅用地の特例 (small-scale residential land special provision). Tokyo’s FY2026 assessed values became viewable from April 2026 per the Tokyo Metropolitan Tax Bureau.

Financing: What Non-Residents and Foreign Nationals Can Access

Japanese banks impose no legal prohibition on lending to foreign nationals, but in practice, domestic lenders typically require either a stable Japanese income source or permanent residency before approving a mortgage. Buyers who hold neither will find their options narrow quickly among local institutions.

The practical alternatives used by most HNW foreign buyers fall into two categories. The first is cash acquisition using offshore funds, which is common at the ¥300 million and above price point and avoids the domestic financing conversation entirely. The second is offshore or international private banking financing, where a buyer’s relationship bank in Singapore, Hong Kong, or Europe extends a loan secured against assets held in that jurisdiction, with the Tokyo property purchased free of domestic encumbrance.

For buyers who do qualify for Japanese bank financing, fixed mortgage rates in April 2026 remain in the 1.5 to 2.5% range for 35-year terms at major city banks, reflecting the Bank of Japan’s gradual policy normalisation from the near-zero rate environment of prior years. Variable rates remain lower but carry increasing duration risk as the rate cycle shifts. A detailed breakdown of lender criteria and product structures is available in our Mortgage in Japan for Foreigners: 2026 Complete Guide.

For transactions at the upper end of the market, Koukyuu’s private buyer’s advisory model is built around a licensed 宅建士 (takken-shi, Japan’s licensed real-estate transaction specialist) personally handling every stage of the engagement, including due diligence and the 重要事項説明 (juuyou-jikou-setsumei, the statutory pre-contract disclosure meeting). Most Tokyo agencies route clients through unlicensed salespeople until the closing day, when a takken-shi appears briefly to read the disclosure document. Koukyuu operates differently, with the same licensed specialist present from the first consultation through to signing.

Capital Gains, Inheritance, and the 2027 Tax Reform You Need to Know About

Capital gains on the sale of Japanese real estate are taxed as 譲渡所得税 (transfer income tax). The rate depends on how long you have held the property. For assets held five years or less (短期, short-term), the combined rate is 39.63%, comprising 30% income tax, 9% resident surtax, and a 0.63% reconstruction surtax. For assets held more than five years (長期, long-term), the combined rate falls to 20.315%, comprising 15% income tax, 5% resident surtax, and 0.315% reconstruction surtax. The five-year threshold is measured as of 1 January of the year of sale, not the exact calendar anniversary of purchase.

For inherited property, the holding period for capital gains purposes runs from the original decedent’s acquisition date, not from the date of inheritance. This is a significant planning point for foreign heirs who may be considering a prompt sale after inheriting a Tokyo asset.

The most consequential development for HNW buyers in 2026 is a structural change to inheritance tax assessment that takes effect on 1 January 2027. Under the 令和8年度税制改正大綱 (FY2026 Tax Reform Outline, published 19 December 2025), rental real estate acquired within five years of an inheritance or gift will be assessed at approximately 80% of the time-of-acquisition purchase price, rather than at the traditional 路線価方式 (Rosenka, Road-Frontage Method) assessed value. The Rosenka method typically produces an assessed value of around 60% of market for buildings and 80% for land, and when layered with rental-encumbrance discounts, has historically allowed significant compression of the taxable estate.

The practical impact is material. A ¥1 billion Tokyo マンション (manshon, Japanese usage meaning freehold condominium, not ‘mansion’ in the English sense) purchased in 2025 and inherited after 1 January 2027 would, under the new rules, be assessed at approximately ¥800 million rather than the roughly ¥600 million that might have applied under current methodology. That ¥200 million difference in taxable estate is a planning variable that buyers considering Tokyo real estate as a wealth transfer vehicle need to model now, before acquisition. Properties held for five years or more continue to use existing Rosenka and fixed-asset-tax-value methodology.

The Purchase Process Step by Step

The Tokyo residential purchase process for a foreign buyer follows a defined sequence. Understanding each stage reduces the risk of surprises at signing.

Property identification and offer. At the luxury end of the market, the most relevant properties are rarely listed publicly. Serious inventory circulates through agent networks and off-market introductions. A buyer’s brief, submitted to a trusted advisory, produces a curated shortlist rather than a portal search result. Offer and 手付金 (tetsuke-kin, the earnest-money deposit, typically 10% of the purchase price). Once an offer is accepted, the buyer pays the tetsuke-kin at contract signing. This deposit is forfeited if the buyer withdraws without contractual justification. If the seller withdraws, they must return double the deposit amount. 重要事項説明 (juuyou-jikou-setsumei, the statutory pre-contract disclosure meeting). Before the sale contract is executed, a licensed takken-shi must read and explain a detailed disclosure document covering legal status, encumbrances, zoning, building inspection results, and material facts about the property. This meeting is a legal requirement, and the takken-shi must be present in person or via approved video link. For foreign buyers, having the same licensed specialist who has been advising you throughout the process conduct this meeting, rather than a stranger appearing for the first time, is a meaningful quality difference. Contract execution and balance payment. The sale and purchase agreement is signed, the tetsuke-kin is credited, and the balance is paid, typically on the same day as 登記 (touki, title transfer). The shiho-shoshi registers the transfer at the Legal Affairs Bureau. Post-closing. FEFTA reporting to the Bank of Japan within 20 days if the transaction exceeds ¥100 million. Fixed Asset Tax for the year is typically apportioned between buyer and seller at closing. First annual tax bill arrives the following May.

For a detailed look at price benchmarks by neighbourhood and property type, our guide on how much a house costs in Japan in 2026 covers the full range from entry-level to ultra-prime.

Non-Resident Rental Income and Withholding Tax

Foreign buyers who purchase Tokyo property and then return abroad, renting the asset out, face a specific tax mechanic that catches many first-time investors off guard. Non-resident landlords are subject to 20.42% withholding at source on gross rent paid by Japanese tenants, under Article 212 of the 所得税法 (Income Tax Act). The tenant or their agent is legally required to withhold this amount and remit it to the tax authority.

The withholding is on gross rent, meaning no deduction for management fees, depreciation, loan interest, or property taxes before the withholding is calculated. However, a non-resident landlord may file a 確定申告 (kakutei-shinkoku, annual tax return) with the Japanese tax authority, declare all allowable deductions against the gross rental income, and recover any overpayment. Appointing a 税理士 (zeirishi, certified tax accountant) as your domestic tax representative is the standard approach.

For buyers considering Japan as a longer-term domicile, the inheritance tax picture is more nuanced. Japan applies inheritance tax based on domicile (住所). Foreign nationals domiciled outside Japan for ten or more consecutive years are generally outside Japan’s worldwide inheritance tax net for foreign-situs assets, but Japanese real estate remains taxable regardless of where the owner is domiciled. Post-2017 rules tightened the framework considerably, and specialist cross-border tax advice is essential before structuring a significant acquisition.

Koukyuu is a private buyer’s advisory for distinguished Tokyo residences in Nishi-Azabu (西麻布), Omotesando (表参道), and Azabudai Hills (麻布台ヒルズ), focused exclusively on transactions of ¥300 million and above. A licensed 宅建士 personally handles every stage of the engagement, from the first consultation to the signing, a continuity most Tokyo agencies do not offer. Book a private consultation) to begin.