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Re: Assets in UK and Japan writing a will
Posted: Wed Aug 28, 2024 6:12 am
by northSaver
captainspoke wrote: ↑Wed Aug 28, 2024 5:34 am
One note is that
the wiki here talks about inheritance--excellent to have as a reference point. (and that's the main page, inheritance tax is in the second block on the left)
Yes, that wiki article is nicely written and explains IHT clearly. I have no qualms with IHT in Japan, and agree that it is generous for foreigners living here.
My beef is with CGT. Why should I inherit the house at the value of when it was bought and not when it was given to me? It wasn't my house when it was bought, it was my parents! They alone benefited from it, and the gradual increase in value over the years had they sold it. So why not inherit the value at time of death when the house is passed on, instead of the value all those years ago?
OK, it's a philosophical argument and a bit pointless because the law in Japan is set and probably won't change. So how to avoid it? The only practical ways I know of are:
a) don't sell the house until many years later when you might not be living in Japan
b) persuade your parents to sell it before they die
Neither of these are appealing. Is there another way I wonder?
Re: Assets in UK and Japan writing a will
Posted: Wed Aug 28, 2024 8:47 am
by Kiro
Would this be a viable 3rd option?
c) Get your parents to write in their will that house goes to your siblings, and you get cash equivalent to your share.
Re: Assets in UK and Japan writing a will
Posted: Wed Aug 28, 2024 10:31 am
by northSaver
Kiro wrote: ↑Wed Aug 28, 2024 8:47 am
Would this be a viable 3rd option?
c) Get your parents to write in their will that house goes to your siblings, and you get cash equivalent to your share.
It's good to hear from you Kiro. I hope things are going well in the Middle East. Thanks for your suggestion. However, I believe that the money received from my siblings would be subject to gift tax, which is almost the same as CGT for properties owned more than 5 years. So I don't think it would help much, sorry.
Re: Assets in UK and Japan writing a will
Posted: Wed Aug 28, 2024 11:36 am
by TokyoSurvivor
"My beef is with CGT. Why should I inherit the house at the value of when it was bought and not when it was given to me? It wasn't my house when it was bought, it was my parents! They alone benefited from it, and the gradual increase in value over the years had they sold it. So why not inherit the value at time of death when the house is passed on, instead of the value all those years ago?"
Agreed.
To me it's clear overreach for the Japanese tax man to claim income from previous generations that invested in a house in another country, are not Japanes residents and likely never even set foot in Japan their whole lives.
Not to mention, the Japanese taxman will already have claimed IHT for the property if you live in Japan.
I wonder how many people this catches out?
Re: Assets in UK and Japan writing a will
Posted: Wed Aug 28, 2024 12:21 pm
by Wales4rugbyWC23
TokyoSurvivor wrote: ↑Wed Aug 28, 2024 11:36 am
"My beef is with CGT. Why should I inherit the house at the value of when it was bought and not when it was given to me? It wasn't my house when it was bought, it was my parents! They alone benefited from it, and the gradual increase in value over the years had they sold it. So why not inherit the value at time of death when the house is passed on, instead of the value all those years ago?"
Agreed.
To me it's clear overreach for the Japanese tax man to claim income from previous generations that invested in a house in another country, are not Japanes residents and likely never even set foot in Japan their whole lives.
Not to mention, the Japanese taxman will already have claimed IHT for the property if you live in Japan.
I wonder how many people this catches out?
Inheriting and then selling property in your home country opens a real can of worms with the Japanese tax office, not worth going through. Buying property on the other hand in your home country can be very tax efficient with the Japanese tax office.
Re: Assets in UK and Japan writing a will
Posted: Wed Aug 28, 2024 12:58 pm
by TokyoSurvivor
I would like to read about some real cases, both good and bad, just to get an idea of the options.
I feel this is a law designed to catch Japanese citizens that try to avoid CGT, but foreigners are getting swept up as well.
Makes you also wonder how much money is not being brought back into Japan because of this. It must be preventing foreigners that live here from selling property and bringing the money into Japan to spend.
Re: Assets in UK and Japan writing a will
Posted: Wed Aug 28, 2024 1:37 pm
by adamu
northSaver wrote: ↑Wed Aug 28, 2024 10:31 am
Kiro wrote: ↑Wed Aug 28, 2024 8:47 am
Would this be a viable 3rd option?
c) Get your parents to write in their will that house goes to your siblings, and you get cash equivalent to your share.
It's good to hear from you Kiro. I hope things are going well in the Middle East.
Thinking of kuma, maybe?
Re: Assets in UK and Japan writing a will
Posted: Wed Aug 28, 2024 2:13 pm
by Kiro
I was gonna say… I’m definitely not in the Middle East so you must be thinking of somebody else ^^;
As for the option C, i was not thinking of it as a gift from a sibling, but more as a repartition of assets based on a will.
One gets the cash, the others get the house.
That’s IF there is cash as part of the inheritance. If it’s only a house to be divided, then obviously this wouldn’t work.
Re: Assets in UK and Japan writing a will
Posted: Wed Aug 28, 2024 2:44 pm
by northSaver
adamu wrote: ↑Wed Aug 28, 2024 1:37 pm
Thinking of kuma, maybe?
Yes, you're right! Sorry, I should've realised by the number of posts
Kiro wrote: ↑Wed Aug 28, 2024 2:13 pm
As for the option C, i was not thinking of it as a gift from a sibling, but more as a repartition of assets based on a will.
One gets the cash, the others get the house.
That’s IF there is cash as part of the inheritance. If it’s only a house to be divided, then obviously this wouldn’t work.
Ah, I see. Yes, if there's enough cash available then this could indeed be a workaround. Thanks!
Re: Assets in UK and Japan writing a will
Posted: Thu Aug 29, 2024 5:03 am
by eyeswideshut
northSaver wrote: ↑Wed Aug 28, 2024 6:12 am
captainspoke wrote: ↑Wed Aug 28, 2024 5:34 am
One note is that
the wiki here talks about inheritance--excellent to have as a reference point. (and that's the main page, inheritance tax is in the second block on the left)
Yes, that wiki article is nicely written and explains IHT clearly. I have no qualms with IHT in Japan, and agree that it is generous for foreigners living here.
My beef is with CGT. Why should I inherit the house at the value of when it was bought and not when it was given to me? It wasn't my house when it was bought, it was my parents! They alone benefited from it, and the gradual increase in value over the years had they sold it. So why not inherit the value at time of death when the house is passed on, instead of the value all those years ago?
OK, it's a philosophical argument and a bit pointless because the law in Japan is set and probably won't change. So how to avoid it? The only practical ways I know of are:
a) don't sell the house until many years later when you might not be living in Japan
b) persuade your parents to sell it before they die
Neither of these are appealing. Is there another way I wonder?
Wait - so the situation is that you inherit a house, pay IHT on it to the Japan tax office. Then, if you sell it, you are liable for CGT on the entire increase in value from the time your parents bought it? How is that not double taxation? How on earth would they ever figure out the gain? If that is the case then I perhaps you could have the estate liquidate the property and inherit the proceeds of the sale in cash. Would that avoid the CGT or does Japan not acknowledge probate for tax purposes?