RetireJapan

ClearAsMud wrote: ↑Tue May 23, 2023 11:46 pm Yes, this is the akiya special deduction I mentioned, but be sure to note that this particular special deduction only applies to sales made by the end of 2023, and the property cannot have been rented out or used for commercial purposes in the meantime.

Thanks for pointing this out. I guess it's called an akiya deduction because it is trying to prevent akiya, and not make existing ones easier to sell. My interpretation of akiya is a building that's been empty for a long time, not one that's just become empty due to the owner's death. Though akiya literally means "empty building", so it could be either I suppose.

It's a shame that this deduction will expire at the end of this year. I wonder if they'll ever renew it, or create something else in its place? I guess we'll just have to see what the laws are at the time, and act accordingly. Yes, seeking professional help will probably be necessary.

Thanks again for all your help on this matter.

northSaver wrote: ↑Wed May 24, 2023 12:41 am It's a shame that this deduction will expire at the end of this year. I wonder if they'll ever renew it, or create something else in its place? I guess we'll just have to see what the laws are at the time, and act accordingly. Yes, seeking professional help will probably be necessary.

Just a quick update to this discussion. According to this article I think the special deduction of 3000 man for capital gains tax paid on an inherited property (also known as the akiya deduction) has been extended for another four years, until the end of 2027.

Whether this applies to foreign property or not is still unclear. For instance, do we have to prove that the building is earthquake resistant if it's located in a country that doesn't experience earthquakes, such as the UK? I think professional help will definitely be required for the application and related paperwork.

northSaver wrote: ↑Mon May 22, 2023 6:18 am This issue of capital gains tax on an inherited overseas property is a bit worrying for sure. I wonder how many foreigners living in Japan know about it and actually pay it? If they don't pay it (accidentally or otherwise) then how would the NTA find out? Maybe if and when the money was transferred to Japan and you had to state where it came from? It seems like it was a law designed for Japanese houses that depreciate over time, and are valued separately to the land they're on. I think it would be very difficult to separate a British property into house price and land price, especially at a date many decades ago when it was first bought!

"These days, countries in the OECD systematically exchange financial information. All the financial institutions with which you have an account abroad (banks and brokers) will send the balance of all these accounts to the Japanese tax authorities as of December 31st each year (it used to be occasional but is now systematic). If they notice a significant increase in the balance of your accounts, they may ask you where it came from.

There is also the case of people with foreign assets above 50 million (which I assume is quite common these days with the recent real asset bubble and the collapse of the JPY). In this case, you have to fill out a report listing all your foreign assets, including real estate. If you do it properly as required by the law and mention some real estate one year and not the following one, they will know you sold it.

Basically, assume that the Japanese National Tax Agency knows everything about your foreign assets. They probably started using big data to leverage all the information they receive from abroad.

VG1 wrote: ↑Sun Sep 17, 2023 2:05 pm...
Basically, assume that the Japanese National Tax Agency knows everything about your foreign assets. They probably started using big data to leverage all the information they receive from abroad.

Yes. And know that this is their full time job, they're typically on the knowledgeable/expert side of any accounting challenge, and that by 'they' it means it's not just one person but instead a team of such people that will be checking on your submissions (and checking each other's work) and signing off on anything.