Under Japanese civil law, co-ownership of real estate is permitted, and each owner’s share must be officially recorded in the property registry. Even among family members, Japan’s gift tax rules are strictly applied. The ownership share must reflect the actual financial contribution made by each party.
In Japan, even between spouses or parents and children, co-ownership shares must be accurately recorded.
A misunderstanding of how taxation works for jointly owned properties can lead to unintended tax liabilities—such as unnecessary income tax or even gift tax. Understanding how Japanese tax laws apply to co-ownership is essential to avoid costly mistakes.
Japan does not allow joint income tax filing for spouses or co-owners. When a co-owned property is sold, each owner must calculate and file their capital gains separately, based on their ownership percentage.
Mr. A and Mrs. B, a married couple, jointly sold their primary residence. The sale details were:
¥210,000,000 × 2/3 – (¥120,000,000 + ¥9,000,000) × 2/3 – ¥30,000,000 = ¥24,000,000
This gain is taxed at a long-term capital gains rate of 15% (plus additional taxes such as the Reconstruction Special Income Tax and local inhabitant taxes, if applicable).
¥210,000,000 × 1/3 – (¥120,000,000 + ¥9,000,000) × 1/3 – ¥30,000,000 = ¥0
Her gain is fully offset by the special ¥30 million deduction, so no capital gains tax is due.
Each co-owner may individually apply the ¥30 million special income deduction for a primary residence sale—it is not shared among co-owners.
Eligibility for the deduction must be assessed separately for each individual owner.
(For more details, see our article on: Special ¥30 Million Deduction for the Sale of a Primary Residence)
When a jointly owned property is rented out, each co-owner must report their share of the income and expenses in proportion to their ownership.
Rental income is classified as real estate income (不動産所得). Taxable income is calculated by subtracting allowable expenses from gross rental income.
These expenses must also be divided according to each owner’s share.
Each co-owner may apply for the Blue Return Special Deduction, provided they meet the filing and bookkeeping requirements individually.
Even for family-owned properties, each person must file and report separately.
If one co-owner receives 100% of the rent, the excess portion may be treated as a gift, which could trigger gift tax liability.
Co-owned property taxation is significantly more complex than taxation for single-owner properties. Each owner’s:
To ensure compliance and avoid unnecessary taxes, we strongly recommend expert guidance from qualified tax professionals.
Contact our trusted team at:
taxconsultation@core8eight.com
