Japan's Real Estate on the Rise Again, Tax Revenue Surpasses Bubble Era

【Tokyo=Kim Kyung-min Correspondent】 With Japan's real estate market regaining momentum, related tax revenue has surpassed the bubble era of the 1990s. As transactions increase and land prices rise, acquisition tax, holding tax, and inheritance tax have all increased, providing significant relief to central and local finances. However, the sharp rise in house prices has made it more difficult for the younger generation to own homes, and the debate over the burden of inheritance tax is reigniting.
According to the Japanese government and local media on the 16th, last year's total tax revenue related to Japanese real estate reached approximately 16.4 trillion yen (about 153 trillion won), marking the highest level ever. This exceeds the peak of the bubble era in 1996 (about 15.3 trillion yen) by more than 1 trillion yen.
In Japan, real estate is taxed at each stage of purchase, holding, and sale. The real estate acquisition tax paid to the prefectures during purchase increased by 3% to 454.6 billion yen (about 4.24 trillion won) in the 2024 fiscal year compared to the previous year. This is the highest figure since 2007 (484.5 billion yen) when a mini real estate bubble was in full swing. The increase in land prices has raised the assessed value of real estate, which is the basis for taxation, and the increase in the number of transactions has also contributed to the increase in tax revenue.
Administrative fee income also increased. The stamp tax included in this income category increased by 3% to 1.0442 trillion yen, recovering to a high level for the first time in six years.
The fixed asset tax paid by real estate holders to municipalities increased by 2% to 9.9556 trillion yen, marking a record high for the third consecutive year. The urban planning tax imposed on land and building owners in urban areas also increased by 2% to 1.4402 trillion yen, setting a new record.
National inheritance tax revenue was 3.5523 trillion yen, the second highest after the previous year's record high of 3.5663 trillion yen. The increase in the number of deaths due to aging is expected to be a factor in future tax revenue growth.
Real estate-related tax revenue plummeted after the bubble era of the 1990s but has been on the rise again since the Bank of Japan's quantitative easing policy in 2013. The low-interest rate policy has increased housing purchase demand across a wide range of generations, and foreign investment has also become active.
The expansion of tax revenue strengthens the financial base of the central government and local governments. However, the sharp rise in prices of mansions (condominiums) in metropolitan areas continues to make it difficult for the younger generation to purchase homes.
In the House of Councillors election to be held on the 20th of this month, parties that have pledged to regulate foreign acquisition of real estate in Japan are gaining attention. If actual regulations are introduced, it is expected to have a certain impact on real estate-related tax revenue.

km@fnnews.com Kim Kyung-min Reporter