Many non-Japanese residents in Japan live in rental housing. Number of those, who can afford to buy a house and live there, is however increasing these days.
Housing loan tax credit (formally aka Special Tax Credit for Housing Loans) is applicable to any residents regardless of nationality: a non-Japanese resident meeting its qualification can apply. It should be well known already to the world talents living in Japan for some time. But for newcomers to the country, let me introduce its outline in this post.
- Credit Amount and Duration: One percent, 1%, of outstanding balance of housing loan at year end or JPY 400,000, whichever is lower, is deducted from income tax (and also from residential tax up to a certain amount in case income tax amount is less than the credit). This credit continues for maximum 10 years.
- The upper limit (JPY 400,000) and the duration (10 years) apply to most of housing loans, which are however larger and/or longer for certain special cases.
- The 10 year duration is extended to 13 years for loan of housing where an applicant starts living during the period from October 1st 2019 until December 31st 2020. This policy is intended to offset the increase of consumption tax to 10% in October 2019. The credit amount in Year 11th until 13th are slightly different, though.
- Out of scope: A person with annual income of JPY 30,000,000 or more is not eligible to apply this credit.
- Process: For the first year, it has to be applied as a part of ‘Final Tax Return’ (“Kakutei-Shinkoku” in Japanese). For subsequent years, it can be applied at year-end tax adjustment (“Nenmatsu-Chousei” in Japanese).
There is no reason for not applying for this credit, as the amount is large. If you pay housing loan back, or if you plan to take out a loan to buy a house, I recommend to see if your loan is qualified for the credit.
For more details, please visit the following links of National Tax Agency (NTA) and/or get advice from a tax office or a tax accountant.
- Link: National Tax Agency When you own a house 1/2 When you own a house 2/2 (Japanese)
- Link: Real Estate Japan How to claim tax deductions and cash back benefits for home buyers in Japan: 2019 incentives explained