RetireJapan

Great topic, summary and thread!
I recently learned about 「おしどり贈与」 (Oshidori Zo-yo). Official name is 「贈与税の配偶者控除」.

In summary, for those married for over 20 years, one-time tax-free gift of house or funds of value up to 20M JPY [SEP29 Edit] to buy a house is possible. Key requirements are 1) it's for Primary home in Japan 2) moved in by MAR15 following year. Bonus is, it's separate from 1.1M JPY annual tax-free gifting.

Caution is needed. If your assets are below the 160M JPY inheritance tax exemption amount between spouse, then using Oshidori zo-yo probably don't have any tax advantage; only costs associated with property tax, tax accountant etc . If receiving spouse passes away first, that'll also trigger in heritance (part of the risk).

Benefit that I didn't realize was that Oshidori Zo-yo will help support joint purchase of home which when you sell, each half of sale price can take advantage of 30M JPY tax exemption amount. In effect boosting exemption to 60M JPY instead of 30M JPY with just one owner.

Ref: [JP]
https://media.rakuten-sec.net/articles/-/3112
https://www.nta.go.jp/taxes/shiraberu/t ... o/4452.htm

Cheers

Good post, but just want to clarify the following:

1. Like many inheriting from their spouse, neither my wife or I will have to pay inheritance tax since the total inheritance forthcoming to the surviving spouse will be under the ¥1.6 oku (approx US$1.5 million) limit beyond which inheritance tax must be paid. That’s good news.

I am not sure of your circumstance - but if you have children, this amount can go higher than the 1.6 oku limit. There is a spouse deduction which goes up to the legally taxable inherited amount.

So, if you have 6 oku in assets and 2 kids - you would split 50% to spouse and 25% each to the kids - this is the legally determined way. That 50% part is considered non-taxable - so your spouse would have 3 oku and not pay inheritance tax. The kids portion is taxable per the normal calculations.

That is my understanding and just wanted those with kids to not limit yourself to 1.6 oku.

I am not sure of your circumstance - but if you have children, this amount can go higher than the 1.6 oku limit. There is a spouse deduction which goes up to the legally taxable inherited amount.

So, if you have 6 oku in assets and 2 kids - you would split 50% to spouse and 25% each to the kids - this is the legally determined way. That 50% part is considered non-taxable - so your spouse would have 3 oku and not pay inheritance tax. The kids portion is taxable per the normal calculations.

The information you provided about getting the spouse’s 50% exempted from tax, even if it’s more than ¥1.6 oku, is news to me. Can you please provide a source and an inheritance tax simulation proving this claim. If it were from the Japanese National Tax Office it would be ideal.

This is the best explanation for it - in Japanese

https://www.youtube.com/watch?v=suN2rgDHF0E

Essentially you get the 1.6 oku or the legal amount - whichever is higher.

While this sounds great, if you are trying to reduce the amount of taxation as you pass along the estate to a next generation, it is likely better to set aside less to the remaining spouse.

I think this spouse benefit is only helpful where one spouse (with the assets) passes away very early and the other spouse lives for decades more.

However, if there is a short period of time between the other spouse passing away, the full amount is taxed - and this is explained well in the video. Each situation is different, but that is how I understand.

Please note, that I am not a financial planner, or tax expert - simply what I learned on the internet....

@Mingya
You are correct. A spouse is entitled to the legal amount, up to 50%, free of inheritance tax even beyond ¥1.6 oku. But as you noted, it’s not the best way to minimize total inheritance taxes. Thanks for setting me straight.

Regarding #6 (investment property), do you have any information about purchasing "fractional ownership properties" like the kind offered by a firm called Aoyama Zaisan (Advantage Club)? Would that type of investment qualify as a viable, low-tax rate (or no tax burden) way to pass along financial assets to children?

Does it make a difference if you don't hold your ETFs, stocks, bonds etc. directly but they are in a company you set up to hold your investments (possibly foreign based e.g. Estonia or so) ? I think doing so is kind of popular in Europe.