Unit ownership correction rate introduced for inheritance tax valuation of condominiumsThe way a condominium's value is set for tax has changed
Residential condominium units (strata-titled property) acquired by inheritance, bequest or gift on or after January 1, 2024 (Reiwa 6) are valued using the unit ownership correction rate under the legal interpretation circular. The building portion uses the fixed asset tax assessed value, and the site use right uses the conventional value based on road prices, each multiplied by the correction rate and then added together.
- A: building age x -0.033
- Effect of age
- B: total floors index x 0.239
- Effect of floors
- C: floor of the unit x 0.018
- Higher floors add
- D: site share narrowness x -1.195
- Smaller site subtracts
- + constant
- 3.220
- Valuation divergence rate
- A + B + C + D + 3.220
Key points
- Valuation = unit ownership (fixed asset tax assessed value x correction rate) + site use right (conventional value x correction rate)
- Valuation divergence rate = A (building age x -0.033) + B (total floors index x 0.239) + C (floor of the unit x 0.018) + D (site share narrowness x -1.195) + 3.220
- Valuation level = 1 / divergence rate. If under 0.6, divergence rate x 0.6; from 0.6 to 1, no correction; over 1, the divergence rate is the correction rate
- If the valuation divergence rate is zero or less, the values of the unit ownership and the site use right are zero
- The rented-house, rented-house land and small-scale residential land special provisions are also applied based on the value from this formula
What to do in practice
- Calculate the valuation divergence rate from the building age, total floors, floor of the unit and site share
- First check whether the property falls under the exclusions (two-family houses, etc.)
The value the government sets for a condominium for tax purposes tended to be lower than the price it would really sell for. So from 2024, a new rule adds a calculation using things like the building's age and number of floors, to bring the value closer to the real one.
- ○Applies: One room in an ordinary condominium
- ○Applies: A room in a building with 3 or more floors
- ×Does not apply: A building with 2 or fewer floors above ground
- ×Does not apply: A two-family house of 3 or fewer rooms where only the family lives
Points
- It is calculated using the building's age, its number of floors, which floor the room is on, and how large the share of land is
- It covers ordinary condominiums for sale. Rooms rented to others are also used as a basis
- Small buildings used only by a family, such as two-family houses, are not covered
What the words mean
- Unit ownership
- Owning each room of a condominium as your own
- Valuation
- Deciding the value of property in order to calculate tax
- National Tax Agency (NTA): NTA: No.4667 Valuation of Residential Condominium Units
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.