RetireJapan

I’m sure this topic has been covered in another thread, so apologies in advance for repetition. I live and work in Japan and there are various opinions as to whether buying an investment property to rent out and benefit from tax deductions is a good idea. On the face of it, low interest rates look attractive, but on the other hand the property is likely to devalue and be worth less than original price (in this case, propety in mind would be in Yokohama, or Tokyo, not outside of main city). Any insight, advice?

2 months ago I was contacted on LinkedIn with a similar scheme, 25Mio yen for a studio in Yokohama, very easy, just put your inkan and here you go, for just 10000 yen per month and an initial cost of 100 000 yen you are now a proud owner and this is great because you will save tax and in 35 years the studio will be yours, or you can resale it after some years.

Sweet sales talk especially for busy people with money, they like to target doctors and foreign company employees.

In short, this is often bad investment, there are no profit or some losses at best. Except if the price of the investments was to increase greatly like if you bought between 2011 and 2015.

If you earn >15 Mio yen you will save tax, basically you are defering the Tax and the amount you defer will be taxed 20% instead of 30+% on your income salary. Especially the first year, then it reduces and is almost not significant after 15 years. Overall not worth the trouble in my opinion.

In a nutshell it is better to not make such investment for tax purposes only ( except for preparing inheritance etc…) and find a trust worthy real estate investment agency.

Given that there is very likely no appreciation, the investment should cashflow really well before looking at it since that is the only certain source of return.

And you'd want to compare that investment/loan against investing a similar amount in an index fund (tho likely you'd finance the rental which you arent likely to do for an index fund.