Question about 年末調整 forms and house sale

[Roger Van Zant]

I am in the process of filling out the 年末調整 forms given to me by my company. I am 正社員 at my company.
Normally I just fill in my name, address, date of birth, write 本人, and then write down my expected income from salary/bonuses (収入) in the year.
All very simple and takes five minutes.
But back in the summer of this year, I sold my house.
In addition to entering my expected income from salary/bonuses, do I also have to enter the amount I sold the house for, under 所得?
Or is this an entirely separate form?

I believe the amount I sold the house for (18m yen) is not liable for capital gains tax.
I think the first 29m yen of a house sale is capital gains tax free.
What about income tax though? Do I have to pay income tax on this 18m, and therefore must declare it on my 年末調整 forms?

I am paranoid about unwittingly committing tax fraud and getting in trouble.

Thanks.

[sutebayashi]

I am pretty certain year end tax adjustment doesn’t concern anything other than wage income, and deductions for things like life insurance and mortgage balance tax related stuff.

Capital gains etc including house related stuff should be dealt with in a kakutei shinkoku next spring, methinks.

[Tkydon]

I am in the process of filling out the 年末調整 forms given to me by my company. I am 正社員 at my company.
Normally I just fill in my name, address, date of birth, write 本人, and then write down my expected income from salary/bonuses (収入) in the year.
All very simple and takes five minutes.
But back in the summer of this year, I sold my house.
In addition to entering my expected income from salary/bonuses, do I also have to enter the amount I sold the house for, under 所得?
Or is this an entirely separate form?

I believe the amount I sold the house for (18m yen) is not liable for capital gains tax.
I think the first 29m yen of a house sale is capital gains tax free.
What about income tax though? Do I have to pay income tax on this 18m, and therefore must declare it on my 年末調整 forms?

I am paranoid about unwittingly committing tax fraud and getting in trouble.

Thanks.

Tax Withholding - Gensen Chosu, Year End Adjustment - Nenmatsu Chosei, and Certificate of Tax Withheld - Gensen Choshu Hyo

If you are in full-time employment then your primary employer does the Year End Adjustment or Nenmatsu Chousei.

Based on your Statement of Dependents for the coming year, submitted at the previous year's Nenmatsu Chousei, your remuneration history for the previous year's total annual salary, projected income for the coming year, and some other details, they project how much they think you will earn in Taxable Income after Allowances and Deductions for this Tax Year.

They then use a table provided by the Tax Office to calculate how much Tax they should Withhold from your Salary every month, which they are obliged to do under the Tax Law, in order to fullfil your Tax obligations for the Tax Year.

Then at the end of the Tax Year, they send you another set of forms; a Statement of Dependents for the coming year, and a Statement of Dependents for the past year, confirming the Statement of Dependents you submitted at the end of the previous Tax Year, and a form for claiming additional Allowances and Deductions such as certain Insurance Premiums, Home Mortgage Tax Allowance (from the second year onwards), and so on...

They then calculate how much you really should have paid in the Tax Year to cover your Tax Liability on the Income you received from them, and they either a) give you a rebate in your December Payroll if you have overpaid through the year (which may be the case if you are claiming Home Mortgage Tax Allowance), or b) withhold additional tax from your December Payroll if there is a deficit.

They then issue you the Gensen Choushu Hyo - The Statement of Taxes Withheld.

If you have no other Allowances, Deductions (Furusato Nozei, Medical Expenses, etc.), or Income of any kind (if any additional income is less than Y200,000, or Capital Gains less than Y500,000, or less than Y30M on the sale of your Primary residence), then you do not need to file a Tax Return - Kakutei Shinkoku.

If you do have other Allowances, Deductions or Income of any kind; employment income from more than two sources, other income, interest or dividends over Y200,000, or Capital Gains over Y500,000, or over Y30M on the sale of your Primary residence, or if after the fact you wish to change your Allowances, Deductions or Income of any kind (including the first year of Home Mortgage interest Tax Relief), then you have to go and file a Tax Return - Kakutei Shinkoku.

If you are filing a Tax Return - Kakutei Shinkoku, you will need to take the Statement of Taxes Withheld - Gensen Choushu Hyo from each Withholding Agent; Employee, Broker, etc., with you to fill in the correct values and calculate the correct taxes.

The company will only deal with the taxes due on the income they have paid you, and issue you with the Gensen Choushu Hyo accordingly.

[adamu]

year end tax adjustment doesn’t concern anything other than wage income

There is literally a field for non-employment income. I've never used it so not sure how it works, though. I think theoretically you could avoid doing a tax return even with multiple income sources if you declare it here, and it doesn't go over 20M yen.

My guess in Roger's case would be don't put it on the EOTY, but possibly need to file a tax return next year if capital gains tax is due (which it sounds like it isn't). But I'm not sure.

[RetireJapan]

There is literally a field for non-employment income.

Miscellaneous income! That's where the meagre pickings from RetireJapan go at the moment. It is very easy, you just self-declare total income and total expenses. They don't check anything unless you get audited

[adamu]

Here's the official guidance: https://www.nta.go.jp/taxes/tetsuzuki/s ... 5_en02.pdf

I believe the amount I sold the house for (18m yen) is not liable for capital gains tax.
I think the first 29m yen of a house sale is capital gains tax free.
What about income tax though? Do I have to pay income tax on this 18m, and therefore must declare it on my 年末調整 forms?

If you are worried, I think you should check with your employer and the tax office. But from a quick read of some Japanese sites it looks like

1) you are right about the capital gains tax (assuming it was your main home)
2) you wouldn't put it on your end of year tax adjustment
3) you should make a tax return and claim a tax deduction for the exception amount (unsure about the details of this or whether it's required if you are within the allowance)

[Roger Van Zant]

There is literally a field for non-employment income.

Miscellaneous income! That's where the meagre pickings from RetireJapan go at the moment. It is very easy, you just self-declare total income and total expenses. They don't check anything unless you get audited

But since my house sale proceeds are non-employment income, don’t they fall under miscellaneous income.
?

[Roger Van Zant]

I am pretty certain year end tax adjustment doesn’t concern anything other than wage income, and deductions for things like life insurance and mortgage balance tax related stuff.

Capital gains etc including house related stuff should be dealt with in a kakutei shinkoku next spring, methinks.

In twenty years in Japan, I have never had to do kakutei shinkoku. How do I go about this? Just go to my local tax office in January and tell them I wish to do kakutei shinkoku?
Also, I sold my house in town A and I now live in town B.
Do I go to the tax office of town A or town B?
Is there a specific date range when I have to do this?
January 1st to March 31st?

[RetireJapan]

But since my house sale proceeds are non-employment income, don’t they fall under miscellaneous income.
?

No, they are capital gains.

[Tkydon]

There is literally a field for non-employment income.

Miscellaneous income! That's where the meagre pickings from RetireJapan go at the moment. It is very easy, you just self-declare total income and total expenses. They don't check anything unless you get audited

But since my house sale proceeds are non-employment income, don’t they fall under miscellaneous income.
?

No, the profit from a house sale is Capital Gains - Jouto Shotoku - 譲渡所得

If the property is held for less than 5 years, then it is classified as Short-Term Capital Gain - 短期譲渡所得, and if the property is owned for more than 5 years, it then becomes Long-Term Capital Gain - 長期譲渡所得. The Tax rates for Short-Term Capital Gains (30% National, 0.63% Reconstruction, and 10% Residents' Taxes) are double those for Long-Term Capital Gains (15% National, 0.315% Reconstruction, and 5% Residents' Taxes).

However, as it was your Primary Residence, if the Capital Gain after deduction of the Purchase Price, and all Buying and Selling Costs from the Selling Price, but adding back any depreciation claimed (not in your case), is less than Y30M, then you do not need to file a Kakutei Shinkoku.