Special Rule for Small Lots of Residential and Business Land: 80% Reduction for Residences up to 330 Square MetersIn inheritance tax, the land under a home or shop is valued lower
The special rule for small lots of residential and business land reduces the valuation of inherited business and residential land up to a maximum area for each category. The reduction is 80% up to 330 square meters for specified residential land, 80% up to 400 square meters for specified business land, and 50% up to 200 square meters for land for rental business. The NTA's explanation is based on the laws and regulations as of April 1, 2026 (Reiwa 8).
Key points
- Reduction rate and maximum area: specified business and specified family company business land is 400 square meters at 80%, specified residential land is 330 square meters at 80%, and land for rental business is 200 square meters at 50%
- If there is no land for rental business, business land (400 square meters) and residential land (330 square meters) can be combined, for a maximum of 730 square meters
- If land for rental business is included, the converted total area of each category must be within 200 square meters
- The inheritance tax return must state that the rule is applied, with attachments such as the calculation statement and a copy of the estate division agreement. If there are several heirs, all of them must agree on which land to apply it to
- In principle, the estate division must be completed by the filing deadline. Land acquired through a gift under the settlement-at-time-of-inheritance taxation system is not eligible
What to do in practice
- For each piece of land, sort out the category and area, and consider which land to apply the rule to
- Work out the outlook for the estate division, and check what applies if it cannot be done by the filing deadline
The land under the house where a person who died lived, or the land used for their shop or work, is the foundation of the family's life after they take it over. So up to a certain size, there is a system that values the land much lower when calculating tax.
- Value of the land
- JPY 30 million
- Minus the 80% reduction
- JPY 24 million
- Value used in the calculation
- JPY 6 million
Points
- For the land under the house they lived in, up to 330 square meters is valued at 80% off
- For land for shops or factories, up to 400 square meters is 80% off. For land rented to others, up to 200 square meters is 50% off
- To use it, you must hand in the filing documents, and the whole family must agree on which land to use it for
What the words mean
- Residential land (takuchi)
- Land with a house or building on it
- Reduction
- Making the value used in the calculation lower
- National Tax Agency (NTA): NTA: No. 4124 Special Rule on the Value of Residential and Business Land Inherited (Small Residential Land Special Rule)
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.