Australians, let’s chip in for a willing and competent Tax Lawyer w

[AustinJapan]

I know that this is somewhat out of the ‘flow’ of this thread, but I wanted to post this about inheritance taxes. Say you were to inherit some real estate, shares and the like …knowing that Tokyo could take 55% when inheritances are not taxed at all in Australia for local residents is a concern to say the least. It is from the Atlas Expat group which is Mark Evans and crew.

https://atlaswealth.com/news/death-taxe ... -in-japan/

How are you all dealing with or feeling about this?

[RetireJapan]

I know that this is somewhat out of the ‘flow’ of this thread, but I wanted to post this about inheritance taxes. Say you were to inherit some real estate, shares and the like …knowing that Tokyo could take 55% when inheritances are not taxed at all in Australia for local residents is a concern to say the least. It is from the Atlas Expat group which is Mark Evans and crew.

https://atlaswealth.com/news/death-taxe ... -in-japan/

How are you all dealing with or feeling about this?

Inheritance tax in Japan is fairly reasonable for the non-wealthy: https://www.retirejapan.com/blog/japane ... nce-taxes/

In order to pay 55%, the estate would need to be over $6m USD, after deductions, and like income tax, it works in bands. So only the amount over $6m USD would have a 55% tax rate applied.

People who don't want to pay Japanese taxes should make plans to leave Japan before they come due.

[RetireJapan]

For overseas estates inherited by Japan residents, only in portion inherited by the individual is taxed, and the full exemption is applied before taxes are calculated: https://www.retirejapan.com/blog/overse ... -in-japan/

[AustinJapan]

Thank you for this...

For overseas estates inherited by Japan residents, only in portion inherited by the individual is taxed, and the full exemption is applied before taxes are calculated: https://www.retirejapan.com/blog/overse ... -in-japan/

a wee bone to distract the little anxiety terrior nippin' away....

I continue to try to seek out a Financial Advisor/Accountant to help figure out the 'Negative Gearing' thing in Australia, and how it applies in a Japanese Tax Return.

Just to summarise. After four years, of trying for a while, backing away, trying again....
so far,

1) "Under no circumstances, ask at the local tax office" "We have stories to warn you off that approach" "Will trigger audit" (source: Seventh Sense Group Tokyo, https://seventhsensegroup.com/en/)
2) "Ask at the local tax office" "They are nice and helpful" (source: these threads)
3) "be careful what you ask for", "Avoid a full mea-cupla" (source: these threads)
4) "Japan don't care about Negative Gearing, it's just an Aussie thing, they'll tax you on the net rent inflow regardless and you'll probably be double-taxed once/if it goes positive" (source: former colleague)
5) "We need to make some inquiries in order to know that" (source: Seventh Sense Group Tokyo, https://seventhsensegroup.com/en/)
6) "Sorry, we don't know the Japanese side, you'll have to find a lawyer/accountant in Japan for that" (both ATLAS https://atlaswealth.com/, SMATS https://www.smats.net/)
7) "You can pay 38,500 yen for a 60 minute consultation" {and we may or may not be able to tell you?} https://www.kaori-fuchi.com/en/office/
8) "I'm leaving Japan" (a number of Aussie expats)

[Tkydon]

Negative Gearing has no impact on the Japanese Tax.

As a Permanent Resident for Tax Purposes you have to declare Rental Income as follows:

The Gross Rental Income minus Reasonable Expenses; Interest on the Loans, Maintenance and Repairs, Contract Expenses and Realtor Fees, etc. in the year.
(You can no longer claim Depreciation as an Expense on overseas properties).

Then, they will assess your Real Estate Income on this amount, and charge you Tax accordingly.

When you complete your Aus Taxes, you then need revisit your Kakuteishinkoku to claim the amount of tax you have paid in Aus as a Foreign Tax Credit in Japan (Kakuteishinkoku Form B - Page 2 - Item 146 (2020 Form)) with documentary evidence.

[AustinJapan]

Tkydon,

I'll take your word on it...it sounds more convincing than what I have heard thus far.
THanks and thanks very much!

It is bad news basically. But at least I know where the goal posts sit...sort of.

Sort of, because you say you can deduct interest payments from gross rental flow.

So...say...

a) Gross flow is AU 20K
b) Body Corporate fees for the place 6K (for maintenance..a non optional cost) is AU 6K (net now 14K)
c) Costs and expenses pertaining to owner's property only (new shower etc.) Au 2K (net is now 12K)
d) Interest on loan 6K (net is now 6K)
e) Accrued losses in Australia and depreciation result in a nil tax balance the previous Australian financial year.
f) You declare 6K at the JTO in February and that is added to your local income and tax is adjusted accordingly.

Is that how it goes?

[Tokyo]

So...say...

a) Gross flow is AU 20K
b) Body Corporate fees for the place 6K (for maintenance..a non optional cost) is AU 6K (net now 14K)
c) Costs and expenses pertaining to owner's property only (new shower etc.) Au 2K (net is now 12K)
d) Interest on loan 6K (net is now 6K)
e) Accrued losses in Australia and depreciation result in a nil tax balance the previous Australian financial year.
f) You declare 6K at the JTO in February and that is added to your local income and tax is adjusted accordingly.

Is that how it goes?

Sort of. If you have paid Oz income tax on the property, then it’s unlikely your Japanese national tax will change, if at all since you are eligible for tax credits. What will change, however, is your prefectural and city taxes since they regard these as not being paid. (That’s another sore point for discussion later. )

Also, for any investment property, local or international, you need to maintain a 記帳 . Basically a record of monthly income and outgoings by month, and tallied up at the end of the year.

A little troublesome to maintain but if you do it, you get figures you can plug straight into the Japanese tax office forms for real estate income.

By the way, I also never bothered declaring my Oz real estate income until recently, having arrived here way back in the 1980s when worldwide income was treated separately. After retiring a few years ago, however, I began to declare foreign income to Japan. I admitted to the tax office guys, maybe several different guys during the first couple of years that I hadn’t declared this income in earlier years. They all said that I needed to refile for the previous 4 years of missing income. But I haven’t refiled for 3 years now and nobody has chased me up. So far.

There is no guarantee that’s how you’re going to be treated but since chasing me up to refile will cost them more in their time than the little income they may obtain, I doubt they will. But who knows? I could be called in to their offices tomorrow. Good luck!

[AustinJapan]

So...say...

a) Gross flow is AU 20K
b) Body Corporate fees for the place 6K (for maintenance..a non optional cost) is AU 6K (net now 14K)
c) Costs and expenses pertaining to owner's property only (new shower etc.) Au 2K (net is now 12K)
d) Interest on loan 6K (net is now 6K)
e) Accrued losses in Australia and depreciation result in a nil tax balance the previous Australian financial year.
f) You declare 6K at the JTO in February and that is added to your local income and tax is adjusted accordingly.

Is that how it goes?

Sort of. If you have paid Oz income tax on the property, then it’s unlikely your Japanese national tax will change, if at all since you are eligible for tax credits. What will change, however, is your prefectural and city taxes since they regard these as not being paid. (That’s another sore point for discussion later. )

Also, for any investment property, local or international, you need to maintain a 記帳 . Basically a record of monthly income and outgoings by month, and tallied up at the end of the year.

A little troublesome to maintain but if you do it, you get figures you can plug straight into the Japanese tax office forms for real estate income.

By the way, I also never bothered declaring my Oz real estate income until recently, having arrived here way back in the 1980s when worldwide income was treated separately. After retiring a few years ago, however, I began to declare foreign income to Japan. I admitted to the tax office guys, maybe several different guys during the first couple of years that I hadn’t declared this income in earlier years. They all said that I needed to refile for the previous 4 years of missing income. But I haven’t refiled for 3 years now and nobody has chased me up. So far.

There is no guarantee that’s how you’re going to be treated but since chasing me up to refile will cost them more in their time than the little income they may obtain, I doubt they will. But who knows? I could be called in to their offices tomorrow. Good luck!

Tokyo,
Thank you so much!
I can't tell you how despondent and sulky I was getting about this...no answers...no one to ask.!

I was hoping - once upon a time - in an imaginary world, that an Aussie foreigner could buy a couple of cheap places in Australia and retire in Japan's countryside, and live modestly off the rent returns... Then I learned about the 32.5 cents Canberra take from the FIRST rent dollar....and then this..

Well, one thing I am at least happy about is that I am finally finding out something..THanks to you Tkydon and others here. I am sure many (most) keep the whole matter very quiet, or use family trusts etc., etc., but kinda thing won't happen for me.

So if rent inflows start to outweigh costs and the property goes from negative to positive, I can take those 32.5 cents of credit and use them at the JTO.

One thing that still concerns me is that paying a property's principle down, as opposed to just the interest, is not counted....and if there are legacy years here...it is a bit scary. More on that later!

[7-seasons.com]

It sounds like there are some people with tax experience on this thread so I am going to throw out my own Hail Mary:
If we swap out this thread's Australia with Canada and rental income with trading / crypto capital gains, what would be the tax procedure form and/or recommended tax accountant for a permanent resident?

[Tkydon]

Can you start a new thread for Canadians?

Crypto in Japan is classed as Miscellaneous Income.