Moving from overseas to retire early in Japan
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Moving from overseas to retire early in Japan
Anybody else living outside Japan, but looking to retire there? Would be keen to hear your experiences and thoughts on our plans.
So: my Japanese wife and I are living & working overseas (high income, high cost of living) and plan to do so until the kids graduate high school and we retire in our 50s. She's fluent in English, I'm fluent in Japanese (N1). We could retire in either country, but we're both leaning towards Japan because our money would go a lot further there.
Financially, our situation is unusual in that the vast majority of our assets are in a tax haven where there are basically no taxes on investment gains. (This wasn't planned, we just lived and worked there for a long time.) I understand Japan taxes on worldwide income if we become Jp residents, including investment income, but merely spending down previous assets does not incur tax.
We have next to no assets in Japan, I have no Jp pension, my wife might qualify for a marginal one. We will likely inherit some Jp property etc when my wife’s parents pass away, but not anywhere we’d want to live, so we plan to sell it and it's not hugely valuable anyway. I do intend to run a hobby company but it'll be incorporated outside Japan, selling only digital goods and I don't expect to make serious money from it.
We're weighing three options:
Okinawa. We love the place, it's nice and warm (I hate the cold), it's big enough that we can get a nice semi-rural property that ticks all my boxes and there's a proper city with everything we need. Yes, summers get hot, but we spent 10 years in tropical SE Asia so we can handle it for a couple of months per year. Downsides: no family or friends, going anywhere off island requires a flight, traffic, airplane noise, not hearing great things about the level of available medical care, being constantly mistaken for US military gets old, top of the list to get nuked if Xi starts WW3.
Kansai. My wife is from the region and still has some friends there, countless travel and culture opportunities (classical music, art museums etc), top notch medical care available, easy international travel. Downsides: winters are cold, summers are still sweaty, not sold on the general idea of living out my days in some random concreted-over suburb when I could be near the beach with palm trees. We also don't really have a concrete idea of where to go in Kansai to strike a good balance between amenities and space: Hyogo, Wakayama, somewhere else?
Stay overseas. Main advantage would be to be closer to kids & any future grandchildren, but it's a globalized world, who knows where they will end up. Downside: everything including housing is way more expensive, kinda boring, wife has lived in gaikoku for 20+ years now and would prefer to go back to where the sushi is decent and she doesn't need to deal with casual racism.
Thoughts? Any major advantages or pitfalls I'm missing? What would you do?
So: my Japanese wife and I are living & working overseas (high income, high cost of living) and plan to do so until the kids graduate high school and we retire in our 50s. She's fluent in English, I'm fluent in Japanese (N1). We could retire in either country, but we're both leaning towards Japan because our money would go a lot further there.
Financially, our situation is unusual in that the vast majority of our assets are in a tax haven where there are basically no taxes on investment gains. (This wasn't planned, we just lived and worked there for a long time.) I understand Japan taxes on worldwide income if we become Jp residents, including investment income, but merely spending down previous assets does not incur tax.
We have next to no assets in Japan, I have no Jp pension, my wife might qualify for a marginal one. We will likely inherit some Jp property etc when my wife’s parents pass away, but not anywhere we’d want to live, so we plan to sell it and it's not hugely valuable anyway. I do intend to run a hobby company but it'll be incorporated outside Japan, selling only digital goods and I don't expect to make serious money from it.
We're weighing three options:
Okinawa. We love the place, it's nice and warm (I hate the cold), it's big enough that we can get a nice semi-rural property that ticks all my boxes and there's a proper city with everything we need. Yes, summers get hot, but we spent 10 years in tropical SE Asia so we can handle it for a couple of months per year. Downsides: no family or friends, going anywhere off island requires a flight, traffic, airplane noise, not hearing great things about the level of available medical care, being constantly mistaken for US military gets old, top of the list to get nuked if Xi starts WW3.
Kansai. My wife is from the region and still has some friends there, countless travel and culture opportunities (classical music, art museums etc), top notch medical care available, easy international travel. Downsides: winters are cold, summers are still sweaty, not sold on the general idea of living out my days in some random concreted-over suburb when I could be near the beach with palm trees. We also don't really have a concrete idea of where to go in Kansai to strike a good balance between amenities and space: Hyogo, Wakayama, somewhere else?
Stay overseas. Main advantage would be to be closer to kids & any future grandchildren, but it's a globalized world, who knows where they will end up. Downside: everything including housing is way more expensive, kinda boring, wife has lived in gaikoku for 20+ years now and would prefer to go back to where the sushi is decent and she doesn't need to deal with casual racism.
Thoughts? Any major advantages or pitfalls I'm missing? What would you do?
Re: Moving from overseas to retire early in Japan
I’d check your assumptions about Japan not taxing capital gains on your existing assets. After you acquire permanent residency for tax purposes (not the same as PR for visa purposes, natch) I believe that when you sell down these assets to “spend down previous assets” you would be expected to pay Japanese CGT on the gains.
On where to live, I don’t know if you are in a position to do this but splitting your time between Kansai and Gaikoku might be a decent option, avoid the harsh winters and sweaty summers in Japan, as well as being closer to your children and potential grandchildren for a few months of the year?
On where to live, I don’t know if you are in a position to do this but splitting your time between Kansai and Gaikoku might be a decent option, avoid the harsh winters and sweaty summers in Japan, as well as being closer to your children and potential grandchildren for a few months of the year?
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Re: Moving from overseas to retire early in Japan
sounds like a fun problem to have!bulbocavernosus wrote: ↑Thu May 30, 2024 12:49 am ...
Okinawa. We love the place, it's nice and warm (I hate the cold), it's big enough that we can get a nice semi-rural property that ticks all my boxes and there's a proper city with everything we need. Yes, summers get hot, but we spent 10 years in tropical SE Asia so we can handle it for a couple of months per year. Downsides: no family or friends, going anywhere off island requires a flight, traffic, airplane noise, not hearing great things about the level of available medical care, being constantly mistaken for US military gets old, top of the list to get nuked if Xi starts WW3.
As summer in Tokyo is now at least 6 months long. I'm wondering how it's only a couple of months way down south..
The eternal town mouse country mouse dilemma can be solved by keeping a pied-à-terre in one location.
Then you allocate your time how you choose.
Maybe think about which location might have visitors flying to see you more as you might want more rooms there.
Many resort type areas have "affordable" 2 bed apartments if you aren't that fussy about location and can manage without a lot of creature comforts when spending time there.
I know people that rent a place on the coast just to use 2 months of the year and a few weekends.
It would make more sense for me to keep an apartment in Tokyo but I know that won't be allowed. So it's house in Tokyo and something modest out of town. Spending 12 months of the year trapped in concrete should be reserved for sticky fingered Mafioso..
— Funemployment commencing in Sept 2025 —
Re: Moving from overseas to retire early in Japan
Nothing more than a personal opinion here (and my retirement plan, until plans change) and what I would (will?) do.
I would go with option 2, north of Kyoto City, around Kokusaikaikan. It's green enough, away from the city center and the tourist crowd while still being within the city, and you can still find reasonably priced plots of land to build a small house. Good balance between amenities and space. Two hours drive to Amanohashidate for beach time during the summer.
I love Okinawa, but I agree with all your point, and prefer to go there once or twice a year for holidays.
I would go with option 2, north of Kyoto City, around Kokusaikaikan. It's green enough, away from the city center and the tourist crowd while still being within the city, and you can still find reasonably priced plots of land to build a small house. Good balance between amenities and space. Two hours drive to Amanohashidate for beach time during the summer.
I love Okinawa, but I agree with all your point, and prefer to go there once or twice a year for holidays.
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Re: Moving from overseas to retire early in Japan
Not an expert, but OP could sell everything and the re-buy the same or similar things before entering japan, which would reset their basis. Any gains/dividends after that would then be taxable, but this would sidestep any tax on previous gains.Deep Blue wrote: ↑Thu May 30, 2024 1:32 am I’d check your assumptions about Japan not taxing capital gains on your existing assets. After you acquire permanent residency for tax purposes (not the same as PR for visa purposes, natch) I believe that when you sell down these assets to “spend down previous assets” you would be expected to pay Japanese CGT on the gains.
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Re: Moving from overseas to retire early in Japan
Used to like popping into the Kitayama Kouchakan. Great scones
Have you personally lived here before? I mean for longer than a holiday. Maybe be here a year or so before deciding whether it's for you long-term.
Last edited by adamu on Thu May 30, 2024 8:21 am, edited 1 time in total.
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Re: Moving from overseas to retire early in Japan
You could rent for a year in both Okinawa and Kansai to give you a better idea.
Re: Moving from overseas to retire early in Japan
ff that is indeed tbe cost basis used for calculating CGT that would seem a very sensible idea. I know some countries like Australia take the value of property on the day you immigrate as the cost basis for calculating CGT (effectively meaning you only pay Aussie CGT for the amount of capital gains you accure while in Australia) but i have no idea if Japan is as enlightened. I guess... it isn't.captainspoke wrote: ↑Thu May 30, 2024 6:13 am Not an expert, but OP could sell everything and the re-buy the same or similar things before entering japan, which would reset their basis. Any gains/dividends after that would then be taxable, but this would sidestep any tax on previous gains.
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Re: Moving from overseas to retire early in Japan
Thanks all for the insights, in particular the capital gains angle which had not occurred to me! Slightly saddened if unsurprised that the consensus is heavily weighted towards practical Kansai over tropical Okinawa
Yes, I've spent about 4 years there, it would have been chotto muzukashii to get to N1 otherwise But this was a while ago, and yes, the plan would be to explore our options on the ground before we make the plunge and buy a house/apartment.
Last edited by bulbocavernosus on Fri May 31, 2024 7:07 am, edited 1 time in total.
Re: Moving from overseas to retire early in Japan
Shikoku is really nice. How about that as close enough to Kansai but also a bit tropical.
Kagawa, for example?
Okayama is also beautiful, too, come to think of it.
Kagawa, for example?
Okayama is also beautiful, too, come to think of it.
Aiming to retire at 60 and live for a while longer. 95% index funds (eMaxis Slim etc), 5% Japanese dividend stocks.