Re: UK Pension summary - National Insurance Credits?
Posted: Tue Sep 10, 2024 6:01 am
Given the very favourable tax treatment of property when purchasing in Japan, where everything bar the kitchen sink is deductible including stamp duty and depreciation, it is not surprising the Japanese tax office try to clobber you when you sell the property.TokyoSurvivor wrote: ↑Tue Sep 10, 2024 1:06 amI've looked into this a bit and basically for inherited real estate, you pay the CGT on anything over what was originally paid for it. In a lot of cases, this is what your parents paid for the house. Obviously if that was from before the housing boom of the 1980s (as in my case), that is a very large amount subject to Japanese CGT. This alone makes it a serious consideration to move back to the UK, cut financial ties with Japan (and what ever else is required), then sell the house.Wales4rugbyWC23 wrote: ↑Mon Sep 09, 2024 10:17 pmYes, I have heard this on the grapevine, too. It makes it very difficult with property inheritances (huge Japanese capital gains tax liabilities) in the UK given the huge increases in house prices over the last few decades.RetireJapan wrote: ↑Mon Sep 09, 2024 1:04 pm
It isn't sadly. Bit of a shock for a lot of people. You inherit the capital gains tax liability on the original purchase price, although I think you are allowed to deduct some of the inheritance tax paid from it if you sell within a couple of years.
Just as an example, if you inherited a house today originally purchase for 40,000 GBP, but now with a value of 750,000 GBP (and then sold it for 750,000), there would be zero CGT to pay in the UK.
Capital Gains Tax in Japan however would be around £132,487 (or approx 24,500,000 JPY).
This is based on a 710,000 GBP capital gain and a June 1st 1980 GBP/JPY exchange rate when originally purchased.
At least that's what I understand. Please let me know if I'm wrong!