Japanese Property investment for cash flow and tax benefit
Minato Asset Management Co., Ltd
Cash flow investment
Japanese Market Feature – (Construction environment)
1.
Earthquake happens periodically
2.
Humidity is high compared to European and North America
3.
Land is narrow and population is high
Therefore,
1.
Wood property has been built, but the percentage of the wood property is not high for apartments and condos. (You can not build 3 floor apartments with wood in Japan.)
2.
Steel Structured property or Reinforced Concrete structure is popular compared to other foreign countries such as United States.
Cash flow investment
1.
Japanese Market Feature – (Bank’s view)
Japanese Banks usually calculate residual durable period of structure based on the tax base.
2.
Wood
-
25 years
Steel
-
35 years
RC and SRC
-
47 years
Japanese Banks care about earthquake the most, and they are reluctant to execute loan bigger than 100 million yen for a wood structured property. (Because earthquake insurance covers up to 50 million yen. So, if the land is 100 million yen and structure is 100 million, then they hesitate to do this over their earthquake insurance part. )
*However, some banks are aggressive on the wood structure property such as Suruga Bank. (They have different standard internally.)
Cash flow investment
Japanese Market Feature – Target Years and Yield
For cash flow investment, we recognize each type of property have different time horizon and different expected yield for investment target.
Wood
-
10 years before built (1998 built)
higher than 9% target
Steel
-
20 years before built (1988 built)
higher than 8.5% target
RC and SRC
-
25 years before built (1983 built)
higher than 8% target
If the wood property is built 20 years before, then normally major banks can lend money for only 5 years. (You can borrow a small amount of money. Usually cash flow should be matched to the payment or more…) But if the wood property is 10 years old, then major bank can lend you up to 15 years. Because cash flow is positive.
Cash flow investment
In case of Suruga Bank
In case of Suruga Bank, they have different standard for loan tenor for structuring.
Wood
-
20 years before built (1988 built)
higher than 9% target
Steel
-
30 years before built (1978 built)
higher than 8.5% target
RC and SRC
-
35 years before built (1973 built)
higher than 8% target
Even a wood apartment which built 20 years ago, they can execute loan depending on the property and the credit status of the buyer.
Tax Effective investment
Follow-ups We can introduce tax adviser, Ms. Miyuki Iizuka, specializing in asset tax, can help you to find out best solution based on your needs.
Our legal officer can help you with an permanent visa or spouse visa issue for real estate purchaser. You can receive better finance conditions from various banks.
Legal officer for real estate and visa
Sales person for Japanese real estate
Mitsuru Motoyama
Hirokazu Mukai
090-3470-0653
090-4123-1025
www.realestate-minato.com
Japanese Property tax and Income tax for property buyers
Express Tax http://www.expresstax.co.jp
About Express Tax
Name of the office:
Iiduka Miyuki Tax advice office
Company Name
Iiduka CPTA Consulting Firm / Express Tax &Co., Ltd.
Address
7F, Akasaka Tokyu Plaza, 2-14-3, Nagata-cho, Chiyoda-ku, Tokyo
Telephone
03(3461)8441
1. Consultations about application of property (real estates, securities, stocks of our own publications) 2. Planning and treatment of tax payments of inheritances and donations 3. Measure and practice about succession of owners of corporations and real estates Sale, re-buy, arrangement, application of real estates 4. Send of news about tax information (Express information) 5. Hold of the latest tax seminar (office sponsors) and Express' management property seminar 6. Writing, lecture, information sending
Index １． Tax on Property ① For purchases of property ② For holding property ③ For rent of property ④ For transfer (sale) of property ２．
Filing i.e. reporting and payment of tax
３．
Resident and non-resident
４．System of tax administrator.
５．System of withholding of tax on behalf of non-resident.（Advance Tax payment）
６．Amount which cannot be set off income
７．Use of property administrator.
