Selling Your Property in Japan While Living Overseas

If you are looking to sell property in Japan but you are residing overseas, it is actually possible to look for a buyer and complete the sales contract without going to Japan.

In this article, we explain the general procedure and some points for consideration when a non-resident who lives overseas wants to sell their property in Japan.

■ Finding an agent and preparing the required documents

In order to sell your property in Japan while living overseas without having to visit the country, it is indispensable that you find an agent in Japan. If you have a relative or a trusted friend in Japan, you can ask them to be your agent.

However, since your agent will need to prepare a lot of documents on your behalf, it is much preferable if they have the necessary knowledge and expertise.

One option is to entrust the work to a judicial scrivener. If you do not know any judicial scrivener in Japan, your real estate agent can introduce one to you.

In order to sell your property through an agent, you will need to prepare the following documents.

• Power of Attorney

This document grants your agent the authority to conduct legal transactions on your behalf. It indicates the personal details of the delegator (yourself) and the agent, the conditions of the delegation, as well as the details of the property to be sold. It must be signed by both yourself and the agent.

• Affidavit

In order to sell a property in Japan, you normally need to have an officially registered seal and a seal registration certificate. However, these items can only be obtained by residents of Japan.

For property owners living overseas, you need to prepare an affidavit that shows your signature. This affidavit must be notarized by your home country’s embassy or consulate in Japan.

• Resident Registration Certificate or Affidavit that indicates your current address

In order to sell a property in Japan, you also need to prepare a resident registration certificate issued in your home country. If your country does not issue such certificates, you can prepare an affidavit that indicates your address, and it must be certified by a notary public in your home country.

You can ask the judicial scrivener who is acting as your agent to prepare these documents on your behalf and have them sent to your address. Once you receive the documents, you should check that their contents are correct. If everything is in order, fill out the necessary information, do the necessary notarizations, then return the documents to the judicial scrivener.

■ Choosing a reliable real estate agency is the key to a successful sale

Unlike in many other countries, it is rare in Japan for individuals to conduct real estate transactions directly between themselves. Real estate sales and purchases are almost always conducted with a real estate agency as an intermediary.

However, there are over 300,000 real estate companies in Japan, including large enterprises and small and medium businesses. Some companies may focus on leasing, while others specialize in brokering property sales.

As a foreigner living overseas, the key to a successful property sale in Japan is choosing a reliable real estate agency with the expertise and experience in dealing with foreign clientele. Such real estate agencies proactively promote themselves on the Internet, so they should be fairly easy to find.

Once you find a suitable real estate agency on the Web, you should thoroughly check their website for the services and support they offer. Since the real estate agency you select will be your partner in Japan, you should choose wisely.

At wagaya Japan, we have a business network that includes lawyers and judicial scriveners who are experienced in real estate transactions and procedures involving overseas clients. We can introduce an appropriate person whom you can trust to act as your agent.

■ Setting a selling price strategically

Once you have found an agent and chosen your real estate agency, the next steps for your property sale are to conduct a property valuation, set a selling price, then put out advertisements to find a buyer.

Property valuations in Japan are fairly standardized, and it can serve as a useful reference when deciding on a selling price, but it does not necessarily mean that your property will sell at the valuation price.

The important point here is to set the selling price strategically and allow some room for price adjustment in order to find a buyer. For example, if you do not find a buyer after advertising for two weeks, you should consider lowering the price by about 5%.

To make sure that your sales plan proceeds smoothly, it is a good idea to consult the details with your real estate agent in advance.

■ Payment of taxes to complete the sale

Once you have found a buyer to whom you are willing to sell, you will begin the sales contract procedures through your agent. At this point, you should take note of the following taxes that may arise from the sale.

• Stamp duty

Stamp duty is a tax imposed on the sales contract, which you pay by affixing a prepaid stamp on the document. The value of the stamp depends on the property sale price. For example, if the price is between 10 million and 50 million yen, the stamp duty is 10,000 yen. If the price is between 50 million and 100 million yen, the stamp duty is 30,000 yen. You should ask your agent to acquire the stamp on your behalf, and discuss how you should pay it back.

• Registration and license tax

This is a tax levied on the registration of transfer of ownership or the establishment of a mortgage on a property. This tax applies if you took out a loan from a bank to buy the property that you are selling. If you bought the property in one lump sum, you do not need to pay a registration and license tax.

• Capital gains tax (income tax and municipal tax)

When you sell property in Japan, you have to pay income tax and municipal tax levied on your capital gains, even if you do not reside in the country. The capital gains should be declared by filing an income tax return in Japan between February 16th and March 15th of the following year after the sale. For overseas residents, you need to assign a tax agent who will file the return and pay the tax on your behalf.

• Withholding tax

When a non-resident sells property in Japan, to prevent the omission of report on income tax, the buyer has to pay a withholding tax equivalent to 10.21% of the transaction value. This means that the seller will not receive 100% of the sales price due to the deduction of the withholding tax. Note that payment of withholding tax is only required in the following cases:

・The transaction value is more than 100 million yen

・The buyer is using the property for a purpose other than their own personal residence

・The buyer is not a private individual

■ Summary

If you are a non-resident of Japan who owns property in the country, you can still sell the property without going to Japan. However, the process can be complicated, involving the preparation of many documents and the payment of several taxes.

To ensure that the sale goes smoothly and you don’t suffer any setbacks, you should form a team that includes a trustworthy agent and a dependable real estate agency. Through thorough communication and careful, step-by-step planning, you can realize a successful sale of your property.

At wagaya Japan, we have worked with many foreign clients based overseas in their sale of property in Japan. Feel free to consult us with your real estate needs. Feel free to consult us with your real estate needs.