Frequently Asked Questions

Can overseas residents buy property in Japan? Do I need a visa?
What finance is available?
What is the title to the Niseko Powerhouse apartments?
How does the sales process work?
Are the apartments sold furnished?
Can I let my property during the summer?
What taxes should I be aware of?
How does depreciation workf?

Can overseas residents buy property in Japan? Do I need a visa?

Overseas nationals can legally buy land in Japan without restriction and permanent resident status is not required. Most overseas buyers in Niseko have bought their homes on a short-term visitor’s visa.

What finance is available?

Japanese yen finance at interest rates at low yen finance rates are available to investors who qualify.

The Commonwealth Bank of Australia, Tokyo branch, is providing financing to purchase existing property, buy off-the-plan”, refinance an existing loan, or unlock the value in their existing property in selected areas of Japan.

HSBC Premier in Tokyo also offers investment loans secured against Japanese title for up to 70% of the value of the property.

It is also possible to finance Japanese property by borrowing in yen secured against existing real estate in your home country using your own bank. Banks known to provide yen finance include ANZ, Citibank, NAB and Westpac. Yen interest rates, which are based on Japanese domestic rates, may be as low as 2% for front-end loaded finance or 4% for standard lending.

Lending against term deposits is also available. Citibank, provides yen finance against 80% of the value of term deposits in any currency. It’s NZ$ term deposits, for example, yield 6.5% while lending cost on yen loans are 2.53% (at at 12/8/2008).

Our sales team can provide contact details to specialist lending officers in Australian and Hong Kong banks.

What is the title to the Niseko Powerhouse apartments?

The apartments are sold with strata title.

The Niseko Powerhouse resort consists of a hotel and apartments. The resort operates as follows:

Management association: The resort complex will be controlled by a management association to be formed under Japan’s Kanri Kumiai (hotel operating) regulations. The association is similar to a body corporate; each apartment has set voting rights and contributions towards association costs based on the total floor area of the units.

Management board: The management association will elect a board. The board will be responsible for appointing an association manager to undertake the day-to-day running of the association and oversee the resort management contract.

Resort management contract: The management association will enter into a resort management contract with a management company to maintain, operate and manage the resort on behalf of the members. The interim manager is the owner of the Powerhouse Hotel.

Resort management contact term: The resort management contract will have a three-year term with right of renewal.

Apartments available to rent: Apartments will be constantly available for rent by the resort manager, except for days allocated to the apartment owner. The management company will receive a commission on all rentals.

Owners’ use: Owners’ may use apartments for up to five weeks (35 days) in any year. Apartments may be used for up to two weeks (14 days) between 16 December and 31 March and for up to three weeks (21 days) between 1 April and 15 December. A charge will be made for laundry and cleaning during periods of owners’ use.

Pooled rental: Rents on all apartments will be pooled and expenses deducted. Total rental net of expenses will be divided between apartments based on a formula that takes into account rack rentals for the different apartments. The Powerhouse Hotel will operate as a separate business and will be excluded from the rental pool but will pay its share of the management association expenses.

How does the sales process work?

The process of buying property in Japan and Hokkaido is similar to Western countries. One major difference is that real estate agents in Japan often handle many of the functions performed by lawyers (such as requisitions on title and contract preparation) and all real estate companies must be licensed by the Japanese government to buy and sell property. RidgeRunner is a certified real estate agent (Governor of Hokkaido, Region 1, Shiribeshi, 324).

The sales process for the Niseko Powerhouse works as follows:

1. Prospective buyers reserve units by filling in an application form available on request here and transfering a refundable application fee of ¥400,000.
2. A full sales package containing contracts, management association and resort management contract is sent to the applicant for review.
3. Up until formal contracts are signed, both sides are free to withdraw from the process and application fees, less bank charges, will be refunded.

Are the apartments sold furnished?

Apartments will be finished to resort standard with all furnishings, fittings and inclusions suitable for rental.

Can I let my property during the summer?

Far more tourists visit the Niseko-Mt Youtei area during the spring to autumn periods than in winter so the Niseko Powerhouse is designed to be let in all four seasons. The design includes heating systems that can double as air conditioning and including features such as balconies, terraces and patios. We recommend you spend some time in Niseko outside the winter months to ensure you make the most of your investment.

What taxes should I be aware of?

The property manager for Niseko Powerhouse will assist in preparing your taxes and will act as your tax agent where required by law.

The following is an overview of the taxes related to buying, selling and letting property in Japan. Please consult your financial professional for full details.

Real Estate Acquisition Tax and Stamp Duty

A one-off, Real Estate Acquisition Tax is levied at 3.5% on the sale of non-residential properties or 3% for residential properties, based on government valuation, which is taken from registered council records, not the purchase price. The tax is paid after the sale is completed.

Government valuations tend to lag market valuations – by as much as 50% in some parts of the Niseko-Mt Youtei area at the time this document was prepared. Stamp duties are also levied on property sales contacts but they are small and the maximum duty is likely to be ¥200,000.

Fixed asset tax

Annual fixed asset (property) taxes are levied in Japan at a rate of 1.4% and are based on the size and the type of construction, also using government valuations. The first fixed asset tax instalment after buying a property is calculated from the date of settlement until 31 December of the same year.

Under current Japanese law a local agent or resident must be nominated to collect fixed asset taxes. The Niseko Powerhouse Property management companies offer administration of Japanese taxes. RidgeRunner will help you select a property management company.

Consumption tax

Consumption tax Japan’s goods and services tax, is included in the sales price of the Niseko Powerhouse apartments at the rate of 5%

Capital gains tax

Non-residents who you sell property within five years of purchase and are taxed on capital gains at 39%. After five years this rate drops to 20%.

Taxation of rent and personal income

Non-residents who earn rent on properties are required to file an annual income tax return. Taxes can be offset by accelerated depreciation expenses in the first five years on new properties, interest payments. Annual travel to Hokkaido to inspect your property as part of a holiday can be claimed as a deduction. The effective tax rate will generally be 10% or less for owners who own properties in their own names, rather than through companies.

Annual travel expenses to Hokkaido to your inspect property as part of your holiday can be used to offset income tax.

Withholding taxes

On some occasions a 10% withholding tax when properties are sold and payments are made from Japan to on overseas bank account. Rental payments made to non-resident of Japan may be subject to a withholding tax, however this maybe offset against the income tax accrued and is refundable if no income tax is payable in Japan.

Japan has tax treaties with most industrialised nations that prevent double taxation of income earned in Japan.

How does depreciation work?

The furnishings in Niseko Powerhouse apartments can be depreciated over five years at 20% per annum. The apartment can be depreciated over a 39 year period at 2.6% per annum.