Taxed on Japanese Rent While Living Abroad? A Non-Resident Owner's Guide
Many investors keep a property in Japan after moving or returning abroad. This article answers a common question: "I no longer live in Japan—is my rental income still taxed there?"
In short, rental income from real estate located in Japan is generally taxed in Japan even after you become a non-resident. Whether tax is withheld and how you file, however, depends on factors such as who the tenant is.
How Does Non-Resident Status Change Japanese Taxation?
Under Japan's income tax rules, an individual with no address in Japan and no residence of a year or more is a non-resident, taxed only on income arising in Japan (Japan-source income). Rent from property in Japan is a typical example.
By contrast, salary earned abroad is generally not taxed in Japan. Resident tax is, as a rule, not levied if you have no address in Japan on January 1.
When Is Tax Withheld from the Rent?
A payer of rent to a non-resident generally has a duty to withhold 20.42% (20% income tax plus the special reconstruction surtax). Withholding is not required when an individual rents the property as a home for themselves or relatives.
If a company rents the property, or it is rented for business or investment use, the rent you receive may already be net of withholding. If a management company handles payments, check your remittance statement to see which treatment applies.
Non-Resident Owner Taxation in Numbers
- Withholding rate where it applies
- 20.42%
- Income tax rate on a filed return (progressive)
- 5–45%
- Tax representative to appoint before leaving
- 1agent
20% income tax + reconstruction surtax
Reconstruction surtax is added
A person with a Japanese address
Do You Need a Tax Return and a Tax Representative?
A non-resident with real estate income generally has to file a return whether or not tax was withheld. Withheld tax is settled (credited) on the return, and expenses are claimed at the filing stage.
To keep filing and paying from abroad, owners generally appoint a tax representative to handle domestic procedures. The usual flow is to notify the tax office before leaving, and many owners engage a Japanese tax accountant.
Legal Basis
- Income Tax Act, Art. 2, para. 1, item 5
- Defines a non-resident as an individual who has no address in Japan and has not had a residence there continuously for one year or more.
- Income Tax Act, Art. 161, para. 1
- Provides that rent and similar income from real estate in Japan is Japan-source income.
- Income Tax Act, Art. 212, para. 1
- Sets the withholding obligation of those paying Japan-source income to non-residents (with exceptions such as an individual renting as a home).
- Income Tax Act, Art. 213, para. 1
- Sets the withholding rates on payments to non-residents.
- Income Tax Act, Art. 120
- Sets the final return deadline (March 15 of the following year) and related rules.
- Act on General Rules for National Taxes, Art. 117
- Provides for notification of a tax representative.
What Changes Between Residents and Non-Residents?
Resident vs. non-resident: main differences (guide)
| Item | Resident | Non-resident |
|---|---|---|
| Taxable scope | Worldwide income (exceptions for non-permanent residents) | Japan-source income only |
| Withholding on rent | Generally none | 20.42%, depending on the tenant |
| Income deductions | Wide range available | Available deductions are limited |
| Resident tax | Based on address on January 1 | Generally none without a Japanese address |
| Filing and payment | Self or tax accountant | Usually through a tax representative |
Tax treaties may adjust the treatment. Real estate income is generally taxable where the property is located, but relief from double taxation in your country of residence differs by country, so check individually.
Common Slip-Ups and Fixes
✕Did not notify a tax representative when leaving, so notices never arrived and payments were late.
→Appoint a representative and notify the tax office before leaving. If you hire an accountant, review the engagement terms.
✕Assumed no return was needed because tax was withheld.
→A return is generally still required. Expenses and settling the tax are handled in the return.
✕Did not tell the manager or tenant about the move, so remittance and withholding got out of sync.
→Tell the management company the date you became a non-resident and check each month's statement for withholding.
Checklist Before Moving Abroad
- I confirmed my departure date and when I become a non-resident
- I appointed a tax representative and notified the tax office
- I told my management company that I will be a non-resident
- I checked remittance statements for withholding
- I set up a way to keep receipts and contracts in Japan
- I checked the filing rules and tax treaty treatment in my country of residence
FAQ
- Q. Do I skip the Japanese tax return if I live abroad?
- A. If you have rental income from Japanese property, a Japanese return is generally required even as a non-resident.
- Q. Can I get withheld tax back on my return?
- A. Withheld tax is settled on the return. If expenses are large and the tax is small, a refund may result.
- Q. Is the tax the same when I sell the property?
- A. Sale gains are treated separately as capital gains. Check with a tax accountant before selling, including whether the buyer must withhold.
The SUMIMOTO Hub app's 24-hour AI advisor explains the basics of taxes on holding Japanese real estate in multiple languages. For your own return or treaty application, please consult a qualified professional such as a tax accountant.
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