I have been reading recently that it is more difficult for people in their retirement age to rent an accommodation as compared
to younger blokes. Being 64 and planning to retire in Japan, I am considering selling my property in Australia and purchase the one I am currently renting in Japan which I am confortable in, but feel insecure as landlord etc, may change. Obviously having property in Australia wins in financial benefits (rental income good, and capital growth also), but now peace of mind is at stake. Anyone in similar situation, comments on protecting rental rights in Japan or about the burden of having the property here?
Renting for retirees vs buying
Re: Renting for retirees vs buying
Landlords tend to prefer not to rent to older tenants, in case there is a death in the property.
Landlords are obliged to notify the next two rounds of potential tenants that a death occurred in the property, and Japanese, being very superstitious in that regard, do not like to rent such properties, so they are usually found at a significant discount to equivalent properties in the area, perhaps as much as 20%.
This significantly affects the profitability of the property, which explains why landlords would prefer not to rent to 'higher risk' seniors.
How long have you lived there?
Do you think or know that your landlord is looking to sell? And what is his financial situation?
Banks might consider loan duration up to age 75, or maybe even longer if you have strong passive income.
Landlords are obliged to notify the next two rounds of potential tenants that a death occurred in the property, and Japanese, being very superstitious in that regard, do not like to rent such properties, so they are usually found at a significant discount to equivalent properties in the area, perhaps as much as 20%.
This significantly affects the profitability of the property, which explains why landlords would prefer not to rent to 'higher risk' seniors.
How long have you lived there?
Do you think or know that your landlord is looking to sell? And what is his financial situation?
Banks might consider loan duration up to age 75, or maybe even longer if you have strong passive income.
:
:
This Guide to Japanese Taxes, English and Japanese Tai-Yaku 対訳, is now a little dated:
https://zaik.jp/books/472-4
The Publisher is not planning to publish an update for '23 Tax Season.
:
This Guide to Japanese Taxes, English and Japanese Tai-Yaku 対訳, is now a little dated:
https://zaik.jp/books/472-4
The Publisher is not planning to publish an update for '23 Tax Season.
Re: Renting for retirees vs buying
@tkydon
Thank you.
Lived here nearly two years. Landlord might consider to sell, as half of units in the building are not rented (3 out of 6). Loan is something I am also contemplating.
Thank you.
Lived here nearly two years. Landlord might consider to sell, as half of units in the building are not rented (3 out of 6). Loan is something I am also contemplating.
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captainspoke
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Re: Renting for retirees vs buying
One challenge with renting as a retiree might be a guarantor, esp these days of low contact/interaction with others.
Re: Renting for retirees vs buying
Have you considered the tax implications of owning foreign property as they are considerable.
If you have only lived in Japan for a couple of years then you are not yet a tax resident here. So you have a brief window of opportunity for your property - but I am not a qualified tax accountant so check things with a pro first.
Selling off your Oz property soon could mean that you get to keep any or most capital gain, depending on whether it was your primary residence or whether you bought before the investment property became subject to capital gains tax. But after becoming a tax resident here, you will not escape capital gains tax at this end even if you owe nothing in Oz. That could be a lot of money involved.
Keeping your Oz property will provide income but after becoming a tax resident here, you will have to pay Oz tax from your very first dollar of income. No more enjoying that tax free threshold! (Currently $18,200.) Plus you will have to keep your records in order to declare that income in both countries, every year. Since you pay tax on that income to Oz you will probably not have to pay additional national income tax here because of the foreign tax credit system. But it will boost your income total so you can definitely expect higher Kenmin/Shiminzei taxes, and both Kenko hoken and Kaigo hoken contributions.
If I were you, I would sell off before becoming a Japanese tax resident to avoid paying capital gains tax here, minimize future local tax and insurance contributions in Japan, and to avoid the troublesome record keeping and tax declarations. Furthermore, Japanese property is officially valued far lower than market value for inheritance purposes. That is not the case in Oz, so you would have a larger amount of inheritance tax owing on foreign property.
If you have only lived in Japan for a couple of years then you are not yet a tax resident here. So you have a brief window of opportunity for your property - but I am not a qualified tax accountant so check things with a pro first.
Selling off your Oz property soon could mean that you get to keep any or most capital gain, depending on whether it was your primary residence or whether you bought before the investment property became subject to capital gains tax. But after becoming a tax resident here, you will not escape capital gains tax at this end even if you owe nothing in Oz. That could be a lot of money involved.
Keeping your Oz property will provide income but after becoming a tax resident here, you will have to pay Oz tax from your very first dollar of income. No more enjoying that tax free threshold! (Currently $18,200.) Plus you will have to keep your records in order to declare that income in both countries, every year. Since you pay tax on that income to Oz you will probably not have to pay additional national income tax here because of the foreign tax credit system. But it will boost your income total so you can definitely expect higher Kenmin/Shiminzei taxes, and both Kenko hoken and Kaigo hoken contributions.
If I were you, I would sell off before becoming a Japanese tax resident to avoid paying capital gains tax here, minimize future local tax and insurance contributions in Japan, and to avoid the troublesome record keeping and tax declarations. Furthermore, Japanese property is officially valued far lower than market value for inheritance purposes. That is not the case in Oz, so you would have a larger amount of inheritance tax owing on foreign property.
Re: Renting for retirees vs buying
Thanks Tokyo
I will be 5 years next year . 2 years just in current property in Japan. As non Aus tax resident in Aus CGT will already be high in Aus ( no 50% threshold), so I don’t see how it can be worse after 5 years . Or am I missing something?
I will be 5 years next year . 2 years just in current property in Japan. As non Aus tax resident in Aus CGT will already be high in Aus ( no 50% threshold), so I don’t see how it can be worse after 5 years . Or am I missing something?
Re: Renting for retirees vs buying
Not sure. Was the Oz property ever your legal residence? If so, then CGT would not apply to that period at least. Also, property purchased before 1985 is exempt from Australian CGT, even investment property. But once you become a tax resident here, there’s no CGT exemption of any kind that I know of.Thanks Tokyo
I will be 5 years next year . 2 years just in current property in Japan. As non Aus tax resident in Aus CGT will already be high in Aus ( no 50% threshold), so I don’t see how it can be worse after 5 years . Or am I missing something?
As to your original question, I am not aware of any real difference between Japan and Australia regarding owning a property, other than the lower likelihood of capital gain in Japan you noted, and the stigma of death someone else mentioned.
Re: Renting for retirees vs buying
Thanks Tokyo
I will have to pay CGT in Aus, this is for sure.
What outweighs selling it before 5 TH anniversary is stable rental income and average annual value increase of 9%. Will talk with local accountants in the know of dual taxation (if found (:) , then decide . Selling adter 5 years or so seems more lucrative even I will have to support the government (S) with my final retirement money .
I will have to pay CGT in Aus, this is for sure.
What outweighs selling it before 5 TH anniversary is stable rental income and average annual value increase of 9%. Will talk with local accountants in the know of dual taxation (if found (:) , then decide . Selling adter 5 years or so seems more lucrative even I will have to support the government (S) with my final retirement money .