How Foreigners Can Buy Property in Japan: A Legal and Financial Guide

Over the last few years, international families and investors have become more interested in buying a second home or an investment property in Japan. With the country’s relatively affordable real estate market and the weakened yen, Japan has become an attractive choice for those looking to invest in an international market or for those who just want to own property in Japan. But for many foreigners, navigating the legal and financial landscape can seem daunting. This guide will walk you through the essential steps, from securing financing to understanding tax implications, and highlight some tips by Tsuyoshi Hikichi, Managing Director of IREA Tokyo and Axios Management, on how to make the process seamless.

Invest in Japan

Japan is a prime destination for foreign real estate since its property market has great stability and value, offering a compelling alternative to more volatile markets compared to other developed nations. Japan also has no legal restrictions on foreign ownership, meaning there are no citizenship or residency restrictions and enables non-residents to purchase land just as a Japanese citizen could. 

The weak yen has also made Japanese property the most affordable it’s been in several years, allowing foreign buyers to get more for their money. But outside the financial benefits, Japan also offers a high quality of life, is steeped in cultural heritage and has a safe environment. 

Securing a Home Loan as a Foreigner

Securing a loan is one of the most difficult challenges for most non-Japanese residents. Japanese banks are known to have conservative lending practices and tedious processes, especially with their countless documents in Japanese. Factors such as having a permanent residency (PR) visa, a Japanese spouse or fluency in the Japanese language are crucial when applying for loans.

“If you don’t have a PR visa, banks will think you won’t live in Japan in the long-term,” Tsuyoshi said. “So why would they need to give a 35-year mortgage? They are worried they might lose contact with you if you don’t have a Japanese spouse or working place in Japan.” 

However, there are a few banks that are more accommodating to foreigners:

• SBI Shinsei Bank (housing loan)
• SMBC Prestia (housing loan)
• Shinsei Investment & Finance (notable for investment loans)

These institutions offer more flexible terms compared to others. The challenge for non-residents is that getting a loan often requires setting up a legal entity in Japan, which adds to operating costs such as accounting, making a larger-scale investment more financially sensible. However, according to Tsuyoshi, IREA Tokyo has a good connection with Shinsei investment and finance and can help people set up a new entity in Japan. IREA bridges any big gaps and assists with documentation and communication.

Corporate vs. Individual Ownership

Primarily related to taxes and long-term asset management, buying as an individual or through a company has a list of varying benefits.

A corporate structure is often more beneficial for high-income earners. According to Tsuyoshi, if your rental income exceeds 20 million yen per year, buying through a company can be more advantageous due to a different tax rate structure. A company also offers greater flexibility for inheritance planning by appointing your spouse or child as a director or shareholder, ensuring a smooth transfer of ownership. 

It makes the properties easier to manage within the family while avoiding complex inheritance procedures. Additionally, you can pay a salary to a family member appointed as a director, which can help optimize the family’s gross income and avoid high individual tax rates.

Individual Investment

• Ideal for smaller-scale personal or second-home purchases
• Simpler tax filing and transaction process
• Lower initial setup complexity

Corporate Investment

• Better suited for large-scale portfolios or high rental income scenarios
• Offers tax advantages, including reduced inheritance complications:
  • You can appoint family members as company directors or shareholders
  • Compensation structures (such as salaries) can optimize household tax exposure
• Streamlines succession planning and estate transition

Legal and Financial Checklist

Legal Requirements: For both Japanese residents and foreigners, the legal requirements for purchasing real estate are exactly the same. However, Tsuyoshi highlights that since “the tax office worries overseas owners might escape from tax liability, they will need to provide an emergency contact when they register for a real estate ownership.” This reassures tax authorities that the property owner remains accountable and reachable.

Initial Budget: While some housing loans might offer full financing, it is always wise to prepare a down payment. For a housing loan, you should aim for 10% to 20% of the property’s price, while the down payment could be higher for an investment property, typically ranging from 20% to 50%.

There are several types of tax options to consider during and after the purchase:

• Acquisition Tax: A one-time tax paid when you purchase the property.
• Capital Gains Tax: The tax on profits from selling a property. For overseas owners, the rate is about 30% if you sell before five years and 15% if you sell after five years.
• Fixed Asset Tax: A yearly tax on the property.
• Income Tax: A progressive tax rate on any rental income you earn.

How IREA Tokyo Can Help

Navigating the complexities of the Japanese real estate market is much easier with the right partner. IREA Tokyo can help you find the right house and location for your second home or investment property as they specialize in assisting foreign investors with a comprehensive, end-to-end service. Some of the services they offer include:

• In‑depth property search across prime Tokyo locales
• Financing guidance, including introductions to foreigner-friendly banks
• Full support setting up Japanese entities for corporate investment
• Tax and legal advice—from acquisition to inheritance planning
• Bilingual assistance throughout the loan process and documentation
• Post-purchase support such as property management and rental facilitation

IREA Tokyo also has a strong connection with Shinsei Investment and Finance, which can be a significant advantage in securing a loan. They also assist in establishing a legal entity in Japan for those who choose to buy through a company. Beyond the purchase, their affiliated company, Axios Management, offers ongoing support, handling everything from tax management and utility bills to finding tenants for your rental property. They can help you with all the details, ensuring a smooth process and a successful investment.

By blending local market expertise with global client needs, IREA Tokyo ensures a seamless, secure acquisition process—empowering you to enter Japan’s real estate with confidence.