Tax system on transfer of land
1. Basic rules
| Period of possession | Within 5 years (short period) | Exceeding 5 years (long period) | |
|---|---|---|---|
| Tax items | |||
| Individual | Acquisition by transfer | 30% of gain from the transfer (+ 9% of inhabitant tax) | Taxable transfer income Separate taxation of 15% without exception (+ 5% of inhabitant tax) |
| Business income or other income | Additional tax should not be applied.* | Ordinary general taxation | |
| Corporation tax | Additional tax should not be applied.* | Additional tax should not be applied.* | |
* In the case of transferring land that was possessed for a short or long period between Jan. 1, 1998 and Dec. 31, 2008
2. Special rule on tax rate reduction, etc., in the case of transferring land, etc. for formation of high-quality residential land
Transfer for formation of high-quality residential land out of the transfers (by Dec. 31, 2008) of the land, etc. that was possessed for more than 5 years (long period), stated in the above table
* For individual
| - 15% without exception (+ 5% of inhabitant tax) |
|
- For the part of 20 million yen or less: separate taxation of 10% (+ 4% inhabitant tax) – For the part exceeding 20 million yen: separate taxation of 15% (+ 5% inhabitant tax) |
(Transfers covered by the rule)
- Transfer to an entity conducting construction project of a certain high-quality building (500 m2 or larger construction site; 150 m2 or larger building area)
- Transfer to an entity conducting a series of residential land formation (1,000 m2 or larger area within urbanization area; 3,000 m2 or larger area in unrestricted area; 5 ha or larger area within urbanization-restricted area) including public facilities, under an approval for development or land readjustment project
- Transfer to an entity conducting a series of residential land formation of 1,000 m2 or larger area (500 m2 or larger within an urbanization area in one of the three major metropolitan areas) for building residential houses under an approval for development
- Transfer to an entity conducting a series of residential land formation of 1,000 m2 or larger area (500 m2 or larger within an urbanization area in one of the three major metropolitan areas) for building residential houses under a designation of high-quality residential land by the prefectural governor, in the case of development approval not required
- Transfer to an entity conducting a construction project of 250,000 or more residential houses or 15 or more apartment houses, or an apartment house of 1,000 m2 or larger floor area, under the designation of high-quality residence
* This rule is not allowed to apply in addition to the rules on tax rate reduction, special deduction (3.) and replacement of business property.
3. Special deduction
| - In the case of transferring land, etc. for an expropriation project under the Compulsory Purchase of Land Act | Deduction of 50 million yen |
| - In the case of transferring residential property (for individuals only) | Deduction of 30 million yen |
| - In the case of transferring land, etc. for a special land readjustment project by the national or local government | Deduction of 20 million yen |
| - In the case of transferring land for a project of residential land formation by a local government or a public corporation, or transferring land, etc. for a specially designated project of residential land formation by a private corporation | Deduction of 15 million yen |
| - In the case of transferring agricultural land, etc. for consolidation of agricultural land possession | Deduction of 8 million yen |
