
Real Estate
Real Estate - Those living in the US, those hoping to return to Japan, international tax, tax planning

When is the best time to sell your home in the U.S.?
The timing of your U.S. home sale can have a significant impact on your tax obligations in Japan.
If the sale is completed prior to returning to Japan
Since all tax procedures are completed in the U.S., there is no need to file a separate return in Japan.This is generally the simplest and safest approach.
If the sale is completed after your return to Japan
You will need to handle tax procedures in both the U.S. and Japan.
You May Qualify for the ¥30 Million Home Sale Deduction
In Japan, if you sell a home you previously resided in and realize a profit, you may be eligible for a special deduction of up to ¥30 million which can exempt that profit from taxation. However, you will need documentation, such as utility bills, to prove actual residency in that home.
Potentially Lower Tax Rates
If you have owned the home for more than five years as of January 1 of the sale year, the combined tax rate (income tax + inhabitant tax) may be slightly lower, typically around 20.315% (15% income tax + 5% inhabitant tax).
Deduct U.S. Taxes Paid
You can utilize a system called the Foreign Tax Credit to deduct U.S. taxes paid from your Japanese tax liability.
Be Aware of Calculation Differences Between the U.S. and Japan
Certain U.S. tax rules, such as “step-up in basis” under community property laws, may not be recognized or applicable for tax calculations in Japan.
Point
When you sell your U.S. home after returning to Japan, your capital gain must also take into account exchange rate fluctuations between the purchase and sale dates. As a result, the gain calculated in Japanese Yen may exceed the gain in U.S. Dollars, potentially increasing your tax liability in Japan.
Contact
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