How to transfer title of the house to the wife

[Tkydon]

I too am confused by this "gift tax". We transfer money all the time from my bank account and business account to my wife's PO account because that's where the credit cards, most taxes and a lot of other bills are paid from. Surely the amount over 1.2M isn't subject to gift tax?

Japan does not have the concept of communal property between spouses.

However, there are a set of Exempt Gifts, including: (Inheritance Tax Law, Article 21 Paragraph 3)

2. Gifts between persons who have a legal responsibility to support each other, unless the gift is made for a purpose other than support or livelihood.

Transfer of money between spouses to pay living expenses would be covered under this exemption.
Transfer of Residential Property would not.

We transfer money to our children too for living expenses while at university. It's only 600K each because they have student loans, but I know people who give their children more than 1.2M each per year. Surely not subject to gift tax?

Payment of living expenses for dependent children would be covered under this exemption.
Payment into iDECO, J-NISA, NISA, Pension Contributions, transfer of shares, and other gifts would not.

Another example: my wife's grandma kindly lent us 6M when we bought our house. We paid it back in full over time (regularly each month) and made a contract too, though probably not legally binding. Was that subject to gift tax?

No, it was a loan and repaid. If Grandma charged you interest on the load, then Grandma would be liable for Income Tax on the Interest Income.

Or maybe I've got it wrong. Perhaps gift tax is only paid on gifted property (physical buildings), and not other kinds of assets? Anecdotally my wife and I have never heard of anyone paying this tax in the above situations. I wonder if it's one of those things that the authorities turn a blind eye to? Don't get me wrong, we don't shirk on taxes and have always paid what we thought was due in the past, both in Japan and the UK. But the principle of this tax seems odd, especially in the cases I've outlined above.

No, anything that would be categorized as a Gift is subject to Gift Tax on the value of the gift, on the value of all gifts received in the year over the Gift Tax Allowance of Y1.1M. If gifted within 3 years before the death of the donor, it would be reassessed as Inheritance, and may be subject to additional tax under the Inheritance Tax.
There are some rules regarding valuation of certain types of gifts.

[trajan]

I too am confused by this "gift tax". We transfer money all the time from my bank account and business account to my wife's PO account because that's where the credit cards, most taxes and a lot of other bills are paid from. Surely the amount over 1.2M isn't subject to gift tax?

Japan does not have the concept of communal property between spouses.

However, there are a set of Exempt Gifts, including: (Inheritance Tax Law, Article 21 Paragraph 3)

2. Gifts between persons who have a legal responsibility to support each other, unless the gift is made for a purpose other than support or livelihood.

Transfer of money between spouses to pay living expenses would be covered under this exemption.
Transfer of Residential Property would not.

We transfer money to our children too for living expenses while at university. It's only 600K each because they have student loans, but I know people who give their children more than 1.2M each per year. Surely not subject to gift tax?

Payment of living expenses for dependent children would be covered under this exemption.
Payment into iDECO, J-NISA, NISA, Pension Contributions, transfer of shares, and other gifts would not.

Another example: my wife's grandma kindly lent us 6M when we bought our house. We paid it back in full over time (regularly each month) and made a contract too, though probably not legally binding. Was that subject to gift tax?

No, it was a loan and repaid. If Grandma charged you interest on the load, then Grandma would be liable for Income Tax on the Interest Income.

Or maybe I've got it wrong. Perhaps gift tax is only paid on gifted property (physical buildings), and not other kinds of assets? Anecdotally my wife and I have never heard of anyone paying this tax in the above situations. I wonder if it's one of those things that the authorities turn a blind eye to? Don't get me wrong, we don't shirk on taxes and have always paid what we thought was due in the past, both in Japan and the UK. But the principle of this tax seems odd, especially in the cases I've outlined above.

No, anything that would be categorized as a Gift is subject to Gift Tax on the value of the gift, on the value of all gifts received in the year over the Gift Tax Allowance of Y1.1M. If gifted within 3 years before the death of the donor, it would be reassessed as Inheritance, and may be subject to additional tax under the Inheritance Tax.
There are some rules regarding valuation of certain types of gifts.

Thank you for taking the time to explain the matter.

[northSaver]

Yes, thank you very much Tkydon. Very informative. And a relief!

[RetireJapan]

1. Japanese tax law is designed to prevent you from sending and receiving assets without paying tax.

2. These rules apply to spouses too.

3. There are exception foe inheritance after death, but everything follows well established rules.

The law is basically setup to prevent what you want to accomplish, a tax-free transfer of assets.

I too am confused by this "gift tax". We transfer money all the time from my bank account and business account to my wife's PO account because that's where the credit cards, most taxes and a lot of other bills are paid from. Surely the amount over 1.2M isn't subject to gift tax?

We transfer money to our children too for living expenses while at university. It's only 600K each because they have student loans, but I know people who give their children more than 1.2M each per year. Surely not subject to gift tax?

Another example: my wife's grandma kindly lent us 6M when we bought our house. We paid it back in full over time (regularly each month) and made a contract too, though probably not legally binding. Was that subject to gift tax?

Or maybe I've got it wrong. Perhaps gift tax is only paid on gifted property (physical buildings), and not other kinds of assets? Anecdotally my wife and I have never heard of anyone paying this tax in the above situations. I wonder if it's one of those things that the authorities turn a blind eye to? Don't get me wrong, we don't shirk on taxes and have always paid what we thought was due in the past, both in Japan and the UK. But the principle of this tax seems odd, especially in the cases I've outlined above.

Household expenses are excluded from gift tax calculations. So most families are fine.

However, giving someone money to invest, or gifts, would be subject to gift tax. I'm fairly sure the tax office doesn't pay much attention to this within households, but they could if they wanted to.

[Haystack]

1. Japanese tax law is designed to prevent you from sending and receiving assets without paying tax.

2. These rules apply to spouses too.

3. There are exception foe inheritance after death, but everything follows well established rules.

The law is basically setup to prevent what you want to accomplish, a tax-free transfer of assets.

I too am confused by this "gift tax". We transfer money all the time from my bank account and business account to my wife's PO account because that's where the credit cards, most taxes and a lot of other bills are paid from. Surely the amount over 1.2M isn't subject to gift tax?

We transfer money to our children too for living expenses while at university. It's only 600K each because they have student loans, but I know people who give their children more than 1.2M each per year. Surely not subject to gift tax?

Another example: my wife's grandma kindly lent us 6M when we bought our house. We paid it back in full over time (regularly each month) and made a contract too, though probably not legally binding. Was that subject to gift tax?

Or maybe I've got it wrong. Perhaps gift tax is only paid on gifted property (physical buildings), and not other kinds of assets? Anecdotally my wife and I have never heard of anyone paying this tax in the above situations. I wonder if it's one of those things that the authorities turn a blind eye to? Don't get me wrong, we don't shirk on taxes and have always paid what we thought was due in the past, both in Japan and the UK. But the principle of this tax seems odd, especially in the cases I've outlined above.

Household expenses are excluded from gift tax calculations. So most families are fine.

However, giving someone money to invest, or gifts, would be subject to gift tax. I'm fairly sure the tax office doesn't pay much attention to this within households, but they could if they wanted to.

Indeed one can theoretically reimburse their spouse for household expenses, and they could use that money to invest. However, if their spouse has no income, and they are over the gift tax limit, this would be rather easy for an auditor to spot.

The move from adulthood to 20->18 effects gift tax to I believe, right? One might need to worry about college aged children.

The standard advice for avoiding estate tax here is...... do not wait to die to give away your money to your relatives. Hit their gift tax threshold ever year if your assets allow it.

[trajan]

The standard advice for avoiding estate tax here is...... do not wait to die to give away your money to your relatives. Hit their gift tax threshold ever year if your assets allow it.

I thought this was a one time thing.

What is the yearly gift tax threshold?

I am still trying to understand this multiple taxation scheme that punishes particularly stay-at-home wives. Not only would their pension be small but attempts to allocate for them additional resources would require taxing the already taxed income of their husbands. Doubtless, there must be something I fail to grasp.

[trajan]

Found these:

https://www.smejapan.com/japan-business ... -gift-tax/

https://www.smejapan.com/business-news/ ... -gift-tax/

https://www.tsujiuchi.com/en/link/zouyo.html

[Haystack]

The standard advice for avoiding estate tax here is...... do not wait to die to give away your money to your relatives. Hit their gift tax threshold ever year if your assets allow it.

I thought this was a one time thing.

What is the yearly gift tax threshold?

I am still trying to understand this multiple taxation scheme that punishes particularly stay-at-home wives. Not only would their pension be small but attempts to allocate for them additional resources would require taxing the already taxed income of their husbands. Doubtless, there must be something I fail to grasp.

I think you're missing that

A. Spouses can reimburse outside the gift tax for household expenses. Children as well can be given money for education and living expense.

B. A large amount of inheritance is tax exempt for a spouse.

The yearly gift tax is 1.1 million per-person. That's 1.1 million total from all sources.

If your wife received 1 million from her father and 1 million from her uncle. That other .9 million would be taxed according to the gift tax table.

[trajan]

I think you're missing that

A. Spouses can reimburse outside the gift tax for household expenses. Children as well can be given money for education and living expense.

B. A large amount of inheritance is tax exempt for a spouse.

The yearly gift tax is 1.1 million per-person. That's 1.1 million total from all sources.

If your wife received 1 million from her father and 1 million from her uncle. That other .9 million would be taxed according to the gift tax table.

That makes sense.

However, it still leaves the issue of the wife specifically, meaning, how can I set her up with a good pension/investment fund without having to pay taxes on income I have already paid taxes on?

Say, for example, I transfer 3 million yen per year to her account for her to do IDECO, NISA, etc.

How does this work out?

[Tkydon]

The move from adulthood to 20->18 effects gift tax to I believe, right? One might need to worry about college aged children.

If they are still your dependents, then supporting them is not taxable.