The fixed asset tax payment notice that arrives every April to June. "Why this amount?" "It feels higher than my neighbor's." "It suddenly went up?" This article answers the questions any homeowner has. At the core of the mechanism are the special provision that reduces the assessed value of residential land to one-sixth for up to 200 m², and the reduction that halves the tax on a newly built building for three years (five years for condominiums). "It went up in years 4 to 6" simply means this reduction has ended. Here we summarize how the calculation works, and the cases where the tax gets cheaper or can be reclaimed.
① Basic formula: fixed asset tax = tax base × 1.4% (standard rate) + city planning tax of up to 0.3% if in an urbanization promotion area.
② Land: if a house stands on it, the residential land special provision applies — assessed value × 1/6 for up to 200 m² (1/3 for the portion above). Clearing the lot to bare land makes it jump to about six times because this special provision is removed.
③ Building: the tax is 1/2 for three years from new construction (five years for fire-resistant condominiums of three or more stories) (up to the equivalent of 120 m²)[Ministry of Land, Infrastructure, Transport and Tourism (in Japanese)]. The real cause of "it went up in year 4 (year 6)" is the end of this.
④ The assessed value is reassessed every three years (the most recent was FY Reiwa 6; the next is FY Reiwa 9).
⑤ Room to reduce it: renovation tax reductions (earthquake resistance, energy saving, barrier-free), checking for missed application of special provisions, and the inspection/review request. Refunds due to over-collection from errors in land and house assessments actually happen every year.
How the calculation works (a model case)
- Land: ¥30 million × 1/6 (small-scale residential land) = tax base ¥5 million → × 1.4% = ¥70,000
- Building: ¥12 million × 1.4% = ¥168,000 → with the new-construction reduction × 1/2 = ¥84,000 (for the first three years)
- Total about ¥154,000/year (+ about ¥25,000 city planning tax if in an urbanization promotion area)
- From year 4: with the building reduction ended, it becomes about ¥238,000/year. This is what "it suddenly went up" means
* The assessed value is not the purchase price but the amount the local government calculates under the Fixed Asset Valuation Standards (a building is roughly 50–60% of the construction cost; land is around 70% of the publicly posted price). The building assessment falls over the years.
Two big reductions (applied automatically, but check them)
| Reduction | Content | Note |
|---|---|---|
| Residential land special provision | Residential site of 200 m² or less = assessed value 1/6 (city planning tax 1/3) / the portion above 200 m² = 1/3 (2/3 for the same) | The special provision is removed for a store-combined use, demolition of the house, or a "specified vacant house" recommendation (Taxes on vacant houses) |
| New housing reduction | For three years after new construction (five years for fire-resistant buildings of three or more stories), tax is 1/2 (up to 120 m² of residential floor area). Long-term quality housing gets five years (seven for the same) | The application deadline is extended by five years under the FY Reiwa 8 tax reform (with a review of the floor-area requirement)[MLIT — FY Reiwa 8 reform outline] |
Cases where the tax gets cheaper or can be reclaimed
- Renovation tax reduction: if you carry out earthquake-resistance, energy-saving, or barrier-free renovation, there is a system under which the next fiscal year's fixed asset tax is reduced by 1/3 to 1/2 (declare to the local government within three months of the work; there are requirements and deadlines)[Ministry of Land, Infrastructure, Transport and Tourism (in Japanese)].
- Checking for missed application: errors such as a newly built house whose land is still assessed as bare land, or a two-household house that has not obtained the special provision for the number of units (200 m² × 2), do occur in reality, and there are many cases of refunds for over-collection (up to the past 5 years, or 10–20 years under the local government's guidelines). Check the "small-scale residential land" entry on the tax statement of your payment notice.
- Inspection and review request: around April each year, there is an "inspection" period when you can compare your own assessed value with other land and houses. If you object to the assessment, you can file a review request with the Fixed Asset Valuation Review Committee (in reassessment years, etc.).
- Tax exemption threshold: within the same municipality, if the tax base is under ¥300,000 for land and ¥200,000 for houses, it is not taxed at all.
- Payment supports cashless payment (eL-QR). You can choose four installments a year or a lump sum (for deadlines, see the tax calendar).
Common questions (the "why?" series)
- "The building got old but the tax doesn't fall": the building assessment has a floor (about 20% of the reconstruction price), so it does not reach zero. Also, since reassessment is every three years, in between it is in principle left unchanged.
- "Is it the same for the upper and lower floors of a tower condominium?": tower condominiums built from 2017 onward are apportioned and adjusted by floor (the higher the floor, the slightly higher the tax).
- "Does it go up if I rent it out?": even a rental home keeps the residential land special provision as long as it is a "residence." If you convert it to an office or store, the special provision is removed.
- "I sold it on January 1 but a bill came": fixed asset tax is levied on the owner as of January 1 for the full year. On a sale, it is a business custom to settle it on a daily-proration basis by the delivery date.
FAQ
What happens to the tax if I demolish the house and make it bare land?
Because the residential land special provision (1/6) is removed, the land's fixed asset tax rises by up to about six times from the next fiscal year (in practice it varies with burden adjustment, etc.). In certain cases during rebuilding the special provision continues as relief, so check with the local government before demolition.
Summary
- Fixed asset tax (property tax) is the taxable base multiplied by 1.4% (the standard rate). In urbanization promotion areas, city planning tax adds up to 0.3%.
- For residential land up to 200 square meters, the assessed value is reduced to one-sixth. Clearing the land removes this special reduction, raising the tax to roughly six times as much.
- Newly built homes get a 50% tax reduction for three years (five years for fire-resistant condominiums of three or more stories). The increase in the fourth year is simply this reduction ending.
- Assessed values are reassessed every three years; the next reassessment is in FY2027 (Reiwa 9).
- Check the "small-scale residential land" entry on the tax statement to spot missed applications. The public inspection period around April lets you compare your property with others.
Data sources
- New housing reduction measure (1/2 / 3 years / 5 years / 120 m²) and renovation tax reduction: Ministry of Land, Infrastructure, Transport and Tourism — Measure to reduce the tax on new housing (in Japanese) / extension (FY Reiwa 8 reform): Ministry of Land, Infrastructure, Transport and Tourism — FY Reiwa 8 tax reform outline (in Japanese)
- Residential land special provision (1/6 / 1/3), tax rate 1.4%, tax exemption threshold: Local Tax Act Article 349-3-2 and others / explanations by each local government (e.g., Osaka City (in Japanese), Yokohama City (in Japanese))
* The tax rate (1.4% is the standard rate and may differ by local government), the requirements for reductions, and the inspection schedule differ by local government. This article is general information; for your specific tax amount, please confirm with the municipality where you live.
