Selling an inherited vacant house: up to JPY 30 million deducted from capital gainsA tax break for selling an old family home that has been left empty
If an heir sells a house the deceased lived in (generally built on or before May 31, 1981) or the land after the house is demolished, up to JPY 30 million can be deducted from the capital gain. For transfers on or after January 1, 2024 (Reiwa 6), the limit is JPY 20 million if there are three or more heirs. The sale must take place by December 31 of the year in which the third anniversary of the date of death falls.
Key points
- The transfer must take place between April 1, 2016 (Heisei 28) and December 31, 2027 (Reiwa 9)
- The house must have been built on or before May 31, 1981, must not be registered as a sectional-ownership building, and no one other than the deceased may have been living there immediately before the death
- The sale price must be JPY 100 million or less (judged together with sales by other heirs)
- The maximum deduction is JPY 30 million; for transfers on or after January 1, 2024 (Reiwa 6) it is JPY 20 million if three or more heirs acquired the property
- Attach to the tax return filing (kakutei shinkoku) the breakdown statement of capital gains, a certified copy of the registry, the "certificate of confirmation of the deceased's residential house" issued by the municipal mayor, and other documents
What to do in practice
- Check the year the house was built and how it was occupied just before the death, using the property registry, resident records and similar documents
- Work backward from the sale deadline (December 31 of the year in which three years have passed since the death) and obtain the certificate of confirmation from the municipality
If you inherit an old house where a parent lived alone before passing away and then sell it, you can subtract up to JPY 30 million from your profit when your tax is calculated. But you have to follow several rules, such as the age of the house and when you sell.
- ○Applies: The house was built on or before May 31, 1981
- ○Applies: Just before death, only the deceased lived there
- ○Applies: The sale price is JPY 100 million or less
- ×Does not apply: You sell to family (parent and child, spouses, etc.)
Points
- The house must have been built before May 31, 1981
- Just before the person died, they were the only one living in that house
- You must sell it by December 31 of the year when three years have passed since the death, and the price must be JPY 100 million or less
What the words mean
- Capital gain
- The amount you earn as profit from selling land or a house.
- Special deduction
- An amount you are specially allowed to subtract when calculating tax.
- National Tax Agency (NTA): NTA: No. 3306 Special rule for selling a deceased person's residential property (vacant house)
This article summarizes and explains materials published by government agencies and is not advice on any individual case. Rules can change, so for actual procedures and decisions always check the latest original materials and consult professionals such as tax accountants or labor and social security attorneys. English, Simplified Chinese and Traditional Chinese versions are translations prepared from the Japanese articles for convenience. If anything differs, the Japanese text and the original source take precedence.