When purchasing a property in Japan, various additional costs arise beyond the purchase price. What are Fixed Asset Tax and City Planning Tax?
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Both Fixed Asset Tax and City Planning Tax share the common feature of being levied on land and buildings owned by individuals, but their purposes and tax rates differ.
Fixed Asset Tax（固定資産税）
Fixed Asset Tax is a local tax levied annually on the owners of land and buildings located in all areas, and its use is not specified.
The standard tax rate is 1.4%, though it may vary depending on the municipality.
It is calculated as “Assessed value of the land or building × 1.4%”
There are several tax reduction measures in place, allowing for exemptions or reductions in some cases.
City Planning Tax（都市計画税）
City Planning Tax is a local tax levied annually on the owners of land and buildings located in urbanized areas, and it is used for the development of urban infrastructure and city planning.
Urbanized areas include cities or areas expected to be developed within 10 years.
While the tax rate varies by municipality, the maximum rate is 0.3%.
It s calculated as “Assessed value of the land or building × 0.3%”
There are also various tax reduction measures in place, and in some cases, even land in urbanized areas may be exempt from taxation.
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