Cash gifts between spouses

[Gulliver]

I’ve got a new head scratcher.

Status: US citizen with Japanese permanent residency married to Japanese citizen with no US residency.

Japanese spouse wants to give JPR spouse some money in Japan.

In the US this is usually not an issue because of joint bank accounts (which are unusual here),and even if the spouse in the US is a non-US citizen the gift exclusion amount is, I think, in the area of $150,000.

From what I’ve been reading, it sounds like in Japan the gift exclusion is only ¥1.1 million before you start incurring tax liabilities. Can this be right? That’s barely enough for a one day shopping trip in Omotesando.

How do you spouses in Japan transfer money to each other? Is it all done under the table? Or maybe just borrow each other‘s ATM cards.

[Beaglehound]

You have it right, 1.1m per year is the maximum you can receive each year. The workaround would be to spread the ‘gift’ over several years if possible. If you need the cash immediately I don’t think there is any legal way to do it without incurring high levels of tax.

[Beaglehound]

On your jest about borrowing ATM cards, having your wife take care of the household expenses is probably a sensible way to go about it. Hard to imagine that being picked up on as it will be the way many families operate, with one earner paying for everything.

[mighty58]

Even the generally rule abiding Japanese have an expression for this sort of situation: "正直者が馬鹿を見る"

[Gulliver]

"正直者が馬鹿を見る"

Nice one! I’ll have to memorize this, even though it is quite a mouthful. It’s always a laugh riot when I pull out unexpected Nihongo phrases around my Japanese friends.

[Tkydon]

In addition to the yearly Y1.1M tax free gift allowance per recipient (anything over Y1.1M is subject to Gift Tax)

Anyone can make a once in a lifetime for the same spouse Tax Free Gift of upto Y20,000,000 to a spouse of more than 20 Years of Marriage as a Primary Residence or for the purpose of Purchasing a Primary Residence

https://www.nta.go.jp/english/taxes/others/02/15004.htm


Anything in excess of Y21,100,000 in that year will be subject to Gift Tax

Anything Gifted in the three years prior to the death of donor will be reassessed as Inheritance, and reassessed for Inheritance Taxes, with a Tax Credit for Gift Taxes already paid.

[Gulliver]

On your jest about borrowing ATM cards, having your wife take care of the household expenses is probably a sensible way to go about it. Hard to imagine that being picked up on as it will be the way many families operate, with one earner paying for everything.

Yeah, I was wondering about that. I am fairly certain that most middle class and higher housewives in Japan receive more than ¥1.1 million per year from their husbands’ bank accounts.

Hey Japan Gov, if you’re listening, I have found huge new source of revenue for you. Imagine if this law was enforced. You could probably eliminate some, if not all, of the consumption tax.

[TokyoSophia]

I've recently just learned about this nonsense too. We're thinking of buying a bigger place and I was hoping to put my husband's name on the deeds of the new place by giving him half of the money that we'll make from selling our current place. But because the current place and mortgage is all in my name the estate agent told us we won't be able to do that without my husband filing his taxes claiming that money as a gift, even though he's been paying half the mortgage from our combined finances for the past 10 years. We've also only been married for 19 years (!!) so we wouldn't qualify for the tax benefit for buying property until next year. Grrr.

How do Japanese couples get around this? Do they just hoard the money in actual cash and move it around that way?

[captainspoke]

...
How do Japanese couples get around this? Do they just hoard the money in actual cash and move it around that way?

When we bought (1990), I didn't have PR, bank didn't want my name on the loan or the deed/title.

But I had a considerable downpayment, more than what would be my wife's portion. Also, we both fully intended to pay toward the mortgage till that was done. (The bank did say that tho it couldn't be official, they were "considering" my income in granting the loan.)

We went to a notary/scrivener, 公証人役場, and had them draw up a paper that described our respective contributions to the downpayment, along with our intent/plan to share in the mortgage going forward. We took a draft of that to the tax office and asked for any feedback, suggestions, what might need clarifying, and so on (they were mostly, "Huh? they wouldn't give you a loan?!?"). Then back to the notary, doc was finalized (lots of hanko-ing all over it). We finished the loan in 8-9yrs, but, fast forward another 20yrs, and we have never re-done the ownership--my wife is still 100% owner.

I think we still have the document, also a sheaf of furi-komi receipts for deposits I made to her bank account. There was never a peep from the tax office then about the transfers. So if we wanted to, sorting out our exact contributions might be possible. (Not sure how much it would cost to re-title the property.)

We're older now, or at least I am (70). I'll likely die first, so having it in her name will just simplify settling my assets and inheritance, not only here, but on the US side, too (screw you, IRS--it's hers, not mine). If she does precede me, the property is not worth that much. I suppose I could show that "in reality" I owned xx% of it, but given the amount that can be inherited between spouses, I don't think it will matter.

[Wales4rugbyWC23]

Can anybody give a justification for gift taxes between spouses in Japan??? whilst I understand gift taxes about inheritance to children and grandchildren, we do have these in the UK. I think it is ridiculous that in the 21st century spouses in Japan cannot have a joint bank account because of gift taxes. Both my wife and I have a joint bank account in the UK and it is a far better and more honest way to run your family finances.