I initially asked about this in another thread but that became very messy and was full of inaccuracies so posting the latest information I have here. People who have undergone the same thing are welcome to share their experiences but for the sake of others who might need this info please refrain from making inaccurate/irrelevant comments.
My mother passed away in late 2022 and I sold the family home in early 2023. As a PR visa holder and the sole beneficiary, I hired a tax firm to do my inheritance tax and paid that in September of last year. But i still have to pay capital gains on the sale of the house. I finally met with the people at the tax agency and after 1.5 hours this is what i learned:
1. It’s totally possible to file the capital gains oneself, and can also do through e-tax but it definitely helps to have the NTA people show you how to do the calculations and there may be some forms to fill out at the office depending on the situation. Of course this requires Japanese ability and you have to know what to ask and be aware of, but for me it doesn’t seem worth paying ¥300,000 for an accountant to do (what i was quoted).
2. The cost basis is the amount paid by the decedent for the property, in other words you inherit the cost basis and there is no step-up. Also for foreign property, there is no automatic depreciation of the building and for calculations the land and building are considered as ‘land’ together. This was a point I had to get confirmed through 3 different people, so something to be careful about bc otherwise you can end up paying more tax than you should.
3. If you have proof of the cost basis — either contract or property records– then that is deducted from the sale price and then 15% national tax and (at a later date) 5% residence tax is applied for property held over 5 years. I also had to confirm that agent fees, necessary repairs, etc. could be deducted bc at first was told no, but then was told yes. It’s best to have this all in the closing documents for ease of explanation.
4. If you sell within 3 years of inheritance you can also deduct a portion of the inheritance taxes paid from the sale price. This is what required a form filled out at the office. For example, in my case the property amounted to 17% of the inherited assets, so 17% of the taxes paid could be deducted from the property sale price before gains tax is applied. It makes a significant difference, so not to be overlooked.
5. If you don’t have proof of the cost basis, then you are allowed to deduct 5% of the sale price along with the proportion of the inheritance tax before calculating the 15%+5% gains tax. This is something I completely misunderstood, as I thought the gains tax in such a situation would be 5% of the total sale price. Therefore, it’s very much in one’s interests to have proof of the cost basis — in my case the tax is almost double without it. For me it’s been difficult to get a hold of the needed records, but am asking a relative now.
by sakeexplorer