Buying in Tokyo vs the US: costs and taxes

Japan will sell an American a freehold condo in Meguro with no permit, no quota and no visa check. The catch is the loan, and the two tax offices waiting at the end.

The short version

Americans can buy in Tokyo on the same terms as Japanese buyers, land included. There's no foreign-buyer approval for an ordinary home.
Financing is the real hurdle. Japanese banks generally prefer borrowers with permanent residency or a long, stable work history in Japan.
Holding costs are predictable: fixed asset tax of 1.4% and city planning tax of 0.3% of the assessed value, which is usually well below the price [1].
Japan taxes a sale at 15% or 30% national income tax depending on whether you held it more than five years, plus surtax and local tax; a main home gets a JPY 30 million deduction [2].
The IRS taxes your worldwide gain too, with Section 121 and the foreign tax credit to soften it [3][4].

USD conversions use the Federal Reserve H.10 rate of October 30, 2026 (JPY 157.47 per US dollar), rounded.

Can Americans buy in Tokyo?

Yes. Japan has no general restriction on foreigners owning land or buildings, and no residency requirement. You can buy in Setagaya on an engineer visa, or from Ohio without ever living here.

A few rules still touch foreign owners:

Non-resident reporting. If you buy while living outside Japan, the foreign exchange law generally requires a post-acquisition report to the Minister of Finance through the Bank of Japan. Your judicial scrivener (shiho shoshi) or agent can confirm whether it applies.
Security zones. Land near defense sites, nuclear plants and border islands falls under a separate law with monitoring and, in special zones, prior notification. An ordinary Tokyo condo is unlikely to be affected, but ask.
Registration paperwork. Japan has been adding disclosure rules for property buyers. Expect to show a passport, a residence certificate or notarized proof of address, and a seal (inkan) or signature certificate.

How the deal runs differs from a closing back home. The agent explains the property in a formal briefing on important matters (juyo jiko setsumei) before you sign; you pay a deposit; then the judicial scrivener checks the title and registers the transfer at the Legal Affairs Bureau the day you pay the balance. There's no escrow company and no title insurance in the US sense.

Know what you're buying, too. Japanese buildings, especially houses, tend to lose value as they age, and the land holds most of the value. Condos built before the 1981 seismic code deserve a hard look.

Getting a loan: Japanese bank or US lender?

In Tokyo. Japanese mortgages carry low interest rates by US standards, but access is the problem. Many banks require permanent residency; some lend to non-PR foreigners with a long employment history, a Japanese spouse or a large down payment. Expect to need group credit life insurance (danshin) and Japanese income. Our guide to permanent residency in Japan explains the fast track that helps here.

Back home. Without PR, many Americans pay cash, often by drawing on US savings or a loan against a US home. Qualifying for a US loan on foreign income takes work; see our guide to US mortgages for Americans living abroad.

The currency trap. The IRS measures a yen mortgage in dollars. If the yen weakens while you owe it and you then pay it off, you can have a taxable US currency gain even though you repaid exactly what you borrowed, and a loss on a personal home loan usually isn't deductible. Our guide to currency gains on a foreign mortgage shows how it works.

Costs side by side

Rates as of November 2026.

	Tokyo	New York City (the US example)
Can you buy?	Yes, freehold, no approval	Yes
Purchase taxes	Real estate acquisition tax 3% of assessed value for homes and land under a special rate to March 31, 2027, with residential land assessed at half [5]; plus registration and license tax and stamp tax	NY state transfer tax 0.4%, usually paid by the seller; 1% "mansion tax" paid by the buyer at USD 1 million or more [6]; plus a city transfer tax
Agent fees	Commission set by law at a maximum, typically paid by both buyer and seller	Usually paid by the seller
Closing professionals	Judicial scrivener for registration	Attorney, title insurance, recording fees
Annual property tax	Fixed asset tax 1.4% plus city planning tax 0.3% of assessed value; reductions for residential land [1]	NYC property tax; co-ops and condos also pay monthly charges
Building fees	Condo management fee and repair reserve, which often rise as the building ages	Co-op maintenance or condo common charges
Tax on selling	National income tax 15% (held over five years) or 30%, plus 2.1% surtax and local inhabitant tax; JPY 30 million deduction on a main home [2]	Federal, state and city income tax after Section 121
US tax on the gain	Yes, worldwide, in dollars [3]	Yes; Section 121 if you pass 2 of 5 years [3]

Illustration only. A JPY 80 million Tokyo condo (about USD 508,000) has no foreign surcharge and no mansion tax; the acquisition tax runs off the much lower assessed value. A USD 1.1 million co-op in Manhattan triggers the 1% mansion tax, USD 11,000, on the buyer before anything else [6]. Tokyo's real costs come later: management fees, repair reserves and the building's steady loss of value.

Tax when you sell

The Japanese side

Japan taxes a gain on land and buildings separately from your other income. The test is how long you've owned it as of January 1 of the year you sell:

More than five years: 15% national income tax.
Five years or less: 30% national income tax.
Both: plus a 2.1% reconstruction surtax on that tax, and local inhabitant tax on top [2].

Watch the date math. Buy in June 2021 and sell in March 2026, and you've only owned it four years as of January 1, 2026, so the short-term rate applies. Sell your main home and you can usually deduct up to JPY 30 million (about USD 190,500) from the gain first [2]. Our guide to Japanese taxes for Americans has more on residency status.

The US side

Uncle Sam taxes your worldwide gain, measured in dollars:

Section 121 covers a Tokyo home. Own it and live in it for at least 24 months of the 5 years before the sale, and up to USD 250,000 of gain (USD 500,000 for most joint filers) is excluded. You generally can't use it again within two years [3].
Paper losses in yen can be dollar gains, and the reverse. A weak yen can wipe out a dollar gain on a condo that rose in yen. A strong yen can create a US gain on one that sold for what you paid.
The foreign tax credit. Japanese income and inhabitant taxes on the gain go on Form 1116 against US tax on the same gain [4]. Acquisition tax and fixed asset tax aren't income taxes and don't count.
Depreciation recapture. If you rented the condo out, gain from depreciation after May 6, 1997 can't be excluded [7].

Your old home in New York

The 2-of-5-years clock keeps ticking after you move. Gone more than three years and the exclusion is usually lost, and New York can tax the gain on New York property even when you live in Tokyo. Our guide to selling your US home after moving abroad covers the timing.

Renting it out

The Japanese side. Rent from a Tokyo condo is taxable in Japan, with deductions for management fees, repair reserves, fixed asset tax, loan interest and depreciation. Short-term rentals need registration under Japan's private lodging law, and many Tokyo wards restrict them further. Leave Japan and keep renting it out, and you'll still file in Japan; tenants that are companies may also have to withhold tax.

The US side. Report the rent on Schedule E. A Tokyo condo is used predominantly outside the United States, so you must depreciate the building under the Alternative Depreciation System (ADS) over 30 years for property placed in service after 2017, not the 27.5 years a New York rental gets [8][9]. Japanese tax on the rent can be credited on Form 1116 [4].

If the rental is your place back home, our guide to rental income from a US property covers the stateside side.

Which makes sense for whom

Staying long term, with PR. Tokyo can make sense, especially in a well-run condo near a station. Hold it past the five-year line and live in it two of the five years before you sell, and both tax systems go easy on an ordinary gain.
Retiring in Japan. Buying in cash is common, but plan the estate early: Japan's inheritance tax can reach worldwide assets for long-term residents and the US taxes the estate too. See wills and estate planning across two countries.
Moving back in a few years. Renting in Tokyo is usually the no-brainer. Buildings depreciate, a sale inside five years faces the 30% rate, and the yen can swing a long way.
Buying to rent out. Possible, but run both sides: Japanese tax on the rent, US ADS depreciation and recapture at sale.

A US expat tax preparer (or a Japanese tax accountant) can check your situation before you sign. Swap notes with other buyers in our community group for Americans in Japan at /join/.

Buying in Tokyo vs back home: what Americans really pay