RetireJapan

Hi all,
I'm sure I read something on this before and a few friends have mentioned it to my wife but with the current situation my house sale here in the UK is dragging on as is my visa application and this raises a question on tax and timing. As it stands we may be able to get to Japan on 14th April but my house sale is unlikely to be complete by then. It is our current and only home and main dwelling owned since 2004. Are there any tax implications if the completion happens after our entry into Japan? For further context the home is in my name and the proceeds will go into a joint UK account. I am a UK citizen, my wife Japanese and we haven't lived in Japan since 1997 with no property there.

Thanks for any help.

I looked this up a few years back as we sold our home in Edinburgh the same year as moving to Japan and I am somewhat paranoid. Firstly, our situation was different to yours as we sold in February and moved to Japan in June, and it seems one is not liable until becoming resident here. But secondly, selling your primary residence entitles you to a 30 million yen deduction on any capital gain. See halfway down this link.

https://japanpropertycentral.com/real-e ... gains-tax/

So unless your house has increased in value since 2004 by £200,000 or so (more if you deduct relevant buying, selling and repair costs from the gain), you should be fine.

Second thought, if possible you might want to have the proceeds put into an account in your name only. I don’t believe the Japanese NTA would make an issue out of it, but theoretically it could be interpreted as a gift to your wife, thus attracting gift tax. Money trail would be clearer if it’s your property sale to your account. Told you I was paranoid...

Thanks for the info. Well first things first it certainly has gained in value over £200,000, just over £300,000 actually. With repairs, interest payments, selling fees etc I could probably get it down to nearer £200,000 if not below perhaps. Of course this would be divided by two for the two if us if that helps.

I'd got advice elsewhere (EDIT: It was actually from you! ) that money in a joint account is treated as 50/50 but I am also paranoid at least for my wife's share as I assume she'll be a "tax resident" as soon as she arrives back in Japan although neither of us have lived there for 23 years. I assume I wouldn't be despite living there for 3 years from 1994-1997. On a separate note - at what point is someone a resident? On entry with intention to stay?

Lastly from that site it does state that "When you sell the property, the disposal date can be either the day the contract of sale is signed with the buyer, or the day the property is handed over to the buyer" - we have done the former but are unlikely to do the latter. So we may be OK.

If the house is solely in your name would the gain not be treated as wholly yours?

You will be a non permanent tax resident until you have spent 5 of the last 10 years in Japan. This means most overseas income is not taxable unless you send it to Japan in the same year you get it. Not sure about that kind of capital gain though, maybe someone else will chime in. I have heard about becoming a permanent tax resident immediately if your intention is to stay in Japan permanently. Good luck to any country trying to prove that one...

Yes I've always felt that because the house is in my name only I could, in theory, keep it as such for the bank also. This then raised questions about Japanese gift tax and the like ie some of this money would end up being spent by my wife and half of it is hers anyway. For this reason I felt that then putting it into a joint account in the UK wasn't the best idea despite the interest being taxed at a lower rate (in the UK) due to my wife's lower salary. It was all so much easier when I moved to Japan in 1994!