Real estate and inheritance tax

[beanhead]

Her parents are in their late 60s/early 70s so we still have time to plan on what to do.
Thanks in advance.

In other countries, passing on assets well before death is recommended, to reduce/avoid these taxes. Does anyone know if that applies in Japan?

[RolandB1]

Her parents are in their late 60s/early 70s so we still have time to plan on what to do.
Thanks in advance.

In other countries, passing on assets well before death is recommended, to reduce/avoid these taxes. Does anyone know if that applies in Japan?

From what I’ve read online there is a 10 year rule where if you live together with your parents for 10 years before you inherit the land you don’t have to pay inheritance tax. It used to be 5 years but the law changed in 2017 to reduce tax evasion.
I also believe that it is possible to give up to 1,000,000 yen per year tax free to your children without having to pay tax.

[beanhead]

Nice problem to have, but seems as though you may have to sell off some of the land to pay the taxes (?)

[RetireJapan]

From what I’ve read online there is a 10 year rule where if you live together with your parents for 10 years before you inherit the land you don’t have to pay inheritance tax. It used to be 5 years but the law changed in 2017 to reduce tax evasion.
I also believe that it is possible to give up to 1,000,000 yen per year tax free to your children without having to pay tax.

I believe that first one refers to a residence, ie not some random plot of land.

Anyone can receive up to 1.1m yen a year in gifts before having to pay gift tax.

You should talk to a professional about this. An initial consultation should be a good investment given the stakes.

[RolandB1]

From what I’ve read online there is a 10 year rule where if you live together with your parents for 10 years before you inherit the land you don’t have to pay inheritance tax. It used to be 5 years but the law changed in 2017 to reduce tax evasion.
I also believe that it is possible to give up to 1,000,000 yen per year tax free to your children without having to pay tax.

I believe that first one refers to a residence, ie not some random plot of land.

Anyone can receive up to 1.1m yen a year in gifts before having to pay gift tax.

You should talk to a professional about this. An initial consultation should be a good investment given the stakes.

I should have mentioned that the parents live in a house on the land, it also has a large shed and the rest is the garden. The plan is to live in the house when we retire (we are currently renting a house in a different prefecture). I’m sure we’ll have to sink some money into the house for renovation etc as it will be 60 years old by the time I retire.

Nice problem to have, but seems as though you may have to sell off some of the land to pay the taxes (?)

Yes, it is a nice problem to have. The only thing is that my wife knows very little about the subject so that’s why I am doing some research about it. I have considered that we might have to sell some of the land as it is mostly garden and a large shed which is mostly full of junk. The land has been passed down in her family but I would be fine with selling it and living elsewhere. It’s not that it’s in a bad location - it’s only 30 mins train ride to Yokohama so relatively close to Tokyo as well.