The Japanese government plans to adjust the amount levied for the fixed asset tax (koteishisanzei) for both commercial and residential properties in 2021 to provide relief for people affected by the coronavirus-led economic downturn. The LDP is expected to include the tax relief measure as part of the overall tax reforms that will be implemented next year. The objective is to lower the tax burden by the amount that land prices increased prior to the start of the pandemic.
Fixed asset taxes (or property taxes) are levied every year on the owner of a property as of January 1st, at the rate of 1.4% of the value of the property as indicated in the ‘fixed asset tax book’ (koteishisan kazeidaichou) for the asset (property). This tax is paid in April, July, December and the following February. Asset values are revised every three years.
The planned tax relief measure will assess fiscal 2021 property tax based on the land value as of January 1, 2020, before the outbreak of the novel coronavirus. In cases where the FY2021 tax assessment is greater than for FY2020 due to an increase in land value, the tax payer will be allowed to pay the lower amount that was assessed in FY2020 for a period of one year. Similarly, if the FY2021 tax assessment is lower than the amount assessed in FY2020, the tax payer will be allowed to pay the lower of the two amounts.
For more information on real estate taxes in Japan, please see the Guide to Japanese Real Estate Taxes.
Source: Nikkei newspaper, December 7, 2020 (in Japanese)
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