Inheritance of a house located outside Japan

[alberto]

I have a simple question: in order to calculate the exempt amount, do you count the value of a house which is located outside Japan if it is from your parents? I undertand that in theory it should not count, because the inheritance tax of a house must be paid where the house is located, and in this case is outside Japan. Is my understanding correct? Thank you!

[captainspoke]

... the inheritance tax of a house must be paid where the house is located, and in this case is outside Japan. ...

I don't think this is the case at all. (first time I've heard this angle...)

[Beaglehound]

I have a simple question: in order to calculate the exempt amount, do you count the value of a house which is located outside Japan if it is from your parents? I undertand that in theory it should not count, because the inheritance tax of a house must be paid where the house is located, and in this case is outside Japan. Is my understanding correct? Thank you!

If you are liable through residence and visa status for Japanese inheritance tax, the house will be included in the calculation.

[northSaver]

You may have to pay IT in the country where your parent lived too (this is the case in the UK). If so, you can deduct the tax you paid from the amount due in Japan. In other words, you don't pay it twice.

Inheriting a house from a parent living overseas is complicated and you may have to seek a professional for help and advice. There are a few threads on here that explain some of the issues, so it might be worth finding and going through them to get an idea of how it works.

[alberto]

Thanks a lot for your answers. I guess I was assuming only Spanish law, where my parents are from. In Spain, regions are independent in terms of inheritance tax, so when inheriting a house, the tax is always payed where the house is located, regardless where the heir is located (and of course the heir is exempt to pay that tax where he is located). Then I guess I extrapolated the Japan case as it was another Spanish region. It is very strange for me to think that I have to pay inheritance tax in Japan for a house which is located outside Japan, especially when I would be exempt to pay that tax in that place. If that is the case, I guess I should check with a tax advisor because this may happen in the future and probably there are ways to prepare.

Anyone knows of any tax advisor who understands about Japanese laws and is not extremely expensive?

Thank you!

[alberto]

By the way, I am asking ChatGPT about all this, and I just found out that there is the same exempt of 30M JPY from parents if they make a gift. All this time, I was assuming that the exempt amount was the typical 1.1M JPY, but apparently if it comes from your parents, it is 30M JPY. Can you confirm this?

[captainspoke]

https://www.nta.go.jp/taxes/shiraberu/t ... u/4103.htm

https://www.reddit.com/r/JapanFinance/c ... t/ircud3e/

[TokyoWart]

By the way, I am asking ChatGPT about all this, and I just found out that there is the same exempt of 30M JPY from parents if they make a gift. All this time, I was assuming that the exempt amount was the typical 1.1M JPY, but apparently if it comes from your parents, it is 30M JPY. Can you confirm this?

This seems to confuse two different things. The annual gift tax exemption is 1.1M JPY. Inheritance (where someone died and left you something) has the higher 30M JPY with a somewhat complicated calculation based on the number of inheritors in Japan, etc. In any case, for inheritance taxes don't start until you are receiving something of value far above 1.1 M JPY.

[ClearAsMud]

By the way, I am asking ChatGPT about all this, and I just found out that there is the same exempt of 30M JPY from parents if they make a gift. All this time, I was assuming that the exempt amount was the typical 1.1M JPY, but apparently if it comes from your parents, it is 30M JPY. Can you confirm this?

You should be wary about relying on ChatGPT for up-to-date information about the implications of Japanese gift and inheritance taxes. The 30M JPY exemption for gifts from parents for the purpose of buying property -- which seems to be what you were "told" about -- ended a couple of years ago, and it's now a maximum of 10M JPY. Furthermore, a number of conditions are attached to such a gift, including one that limits recipients to residents of Japan (i.e., it must be a Japanese house in which the recipient will actually live). This exemption, which is reported on a gift-tax return, has nothing to do with inheritance, although it can be used in addition to the usual 1.1M JPY gift deduction.

Inheritance comes with its own deductions, including one for selling an uninhabited house after a last surviving parent has died (it's a deduction of up to 30M JPY applicable to any capital gains that result from the sale, although it's currently scheduled to end this year). But I can't immediately think of any other 30M JPY exemptions or deductions related to inheritance, although the basic deduction used in calculating inheritance tax involves that figure and you would apply the deduction to the portion of the estate you inherit -- and yes, overseas property is taxable under Japanese inheritance law if the heir meets the Japanese residence requirements. As has been mentioned, you can claim a credit in Japan against any tax imposed in your home country, but you can't simply assume that Japanese tax law is the same as the tax law of other countries.

The first of the links provided by captainspoke concerns the early-inheritance system, under which children and grandchildren can be gifted assets of up to 25M JPY tax-free and which you might consider using. But that system would would almost certainly require professional help to navigate the case of gifting overseas property, and the gift would be treated as part of the decedent's estate when the time comes. Using this system requires the filing of a gift tax return when the gift is made and an inheritance tax return when the donor dies, regardless of any actual liability for inheritance tax.

I think you should follow the suggestion to seek professional advice, but those of us who aren't professionals and haven't actually dealt with the situation aren't in a good position to make specific recommendations.

[Tkydon]

Depending on how long you have been resident in Japan, and the status of your Visa, if you are resident in Japan, and you inherit a property or any asssets from an Estate located overseas, you will most likely be liable for Inheritance Tax in Japan.

You can offset that with any Estate Taxes or Inheritance Taxes paid in the country where the property / assets / Estate is located.

See some information here:

https://retirewiki.jp/wiki/Inheritance_tax

You have just 10 months from the death of the deceased in which to file an initial Inheritance Tax Return, if necessary. It can then be amended later, if neccesary, due to Probate or other delays overseas...

You should consult an Inheritance Tax Professional.

By the way, I am asking ChatGPT about all this, and I just found out that there is the same exempt of 30M JPY from parents if they make a gift. All this time, I was assuming that the exempt amount was the typical 1.1M JPY, but apparently if it comes from your parents, it is 30M JPY. Can you confirm this?

That is completely wrong.