What are the specific items included in the initial costs (shohiyō) when buying a house in Japan? (e.g., agent fees, taxes, registration fees, insurance, etc.)

Hello! When buying a house in Japan, besides the property price itself, there is indeed a significant amount of "initial costs" (known in Japanese as 諸費用 - shohiyō). This money cannot be included in your loan and needs to be prepared in cash.

Many first-time buyers are surprised by these costs, so understanding them in advance is crucial. Generally, these fees amount to about 6% to 10% of the total property price.

For example: If you buy a house for 30 million JPY, you'll need to prepare approximately 1.8 to 3 million JPY for initial costs.

Below, I’ll break down exactly where this money goes, explained in simple terms.

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Detailed Breakdown of Initial Costs (諸費用) for Buying Property in Japan

These costs can be divided into several categories: fees paid to agents, to the government (taxes), to professionals, and to banks/insurance companies.

1. Agency Fee (仲介手数料 - Chūkai Tesūryō)

This is the biggest chunk of the initial costs. If you buy a pre-owned property or some new properties through a real estate agent, this fee is unavoidable.

• How is it calculated? Japanese law sets a maximum limit, and agents typically charge up to this limit. The formula is a bit complex, but you can simplify it as: (Property Price × 3% + 60,000 JPY) + Consumption Tax This formula applies to properties over 4 million JPY, which covers most purchases.

• Example: For a 30 million JPY property (tax-exclusive price): (30,000,000 × 3% + 60,000) = 960,000 JPY 960,000 + Consumption Tax (10%) = 1,056,000 JPY

2. Taxes

Buying property is a big deal, and taxes to the government are unavoidable. The main ones are:

• a. Stamp Duty (印紙税 - Inshi-zei)

  • What is it? A tax paid by attaching revenue stamps (収入印紙) to the property sales contract to make it legally valid.
  • Cost: Depends on the contract amount. Higher property prices mean higher duty. Typically 10,000～30,000 JPY.

• b. Registration License Tax (登録免許税 - Tōroku Menkyo-zei)

  • What is it? Tax paid when registering the transfer of ownership (title registration) at the Legal Affairs Bureau. If you have a loan, tax is also due for registering the bank's mortgage (security interest).
  • Cost: Based on the government-assessed value (固定資産税評価額) of the property, not your purchase price (usually lower). Tax rates are preferential, ranging from approx. 0.1% to 2% of the assessed value. Calculated and paid on your behalf by the Judicial Scrivener (see below).

• c. Real Estate Acquisition Tax (不動産取得税 - Fudōsan Shutoku-zei)

  • What is it? A tax levied for "acquiring" real estate.
  • Crucial Note! This tax is NOT paid on the purchase day. The tax bill arrives 3-6 months after you buy the property. Many people forget to budget for this after paying initial costs, so set aside money in advance!
  • Cost: The rate is 3% to 4% of the assessed value. However, significant reductions (軽減措置) apply for owner-occupied properties, often resulting in much lower payments, sometimes even zero.

3. Professional Fees (司法書士への報酬 - Shihō Shoshi e no Hōshū)

• What is it? The registration process mentioned above is highly specialized. You need a legal professional called a Judicial Scrivener (司法書士) to handle the title transfer and mortgage registration on your behalf. This is their fee.
• Cost: Typically 100,000～150,000 JPY, depending on complexity.

4. Insurance

• a. Fire Insurance (火災保険料 - Kasai Hoken-ryō)

  • What is it? Mandatory if you have a mortgage. It protects the bank's collateral (your property) in case of fire.
  • Cost: Depends on coverage amount, location, and building structure (wooden vs. reinforced concrete). Usually purchased as a 5 or 10-year policy, costing tens of thousands to several hundred thousand JPY.
  • Tip: Standard fire insurance in Japan generally excludes earthquake damage. You need to add Earthquake Insurance (地震保険) separately. Strongly recommended!

• b. Group Credit Life Insurance (団体信用生命保険 - Dantai Shin'yō Seimei Hoken)

  • What is it? Often called "Dantai Shinsei" (団信). A life insurance policy where, if the borrower (you) dies or becomes severely disabled during the loan term, the insurer pays off the remaining mortgage, protecting your family from debt.
  • Cost: For most Japanese bank mortgages, the premium is already included in your loan interest rate, so you usually don't pay a separate cash premium upfront.

5. Loan-Related Fees (ローン関連費用 - Loan Kanren Hiyō)

If you're getting a mortgage, the bank charges fees.

• Loan Processing Fee (ローン事務手数料): The bank's administrative fee for handling your loan. Can be a flat fee (e.g., 30,000, 50,000 JPY) or a percentage of the loan amount (e.g., 2.2%).
• Loan Guarantee Fee (ローン保証料): Fee paid to a Guarantee Company that acts as your guarantor for the loan. Can be paid upfront (hundreds of thousands JPY) or added to the loan interest.

6. Other Miscellaneous Fees

• Property Tax Adjustment (固定資産税の清算金)
  • What is it? Japanese property taxes (Fixed Asset Tax and City Planning Tax) are paid annually by the owner as of January 1st. If you buy mid-year, the seller has already paid the full year's tax. You must reimburse the seller for the portion covering the period from your ownership start date to December 31st, calculated pro-rata.
  • Think of it as: Splitting the annual property tax bill with the seller.

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Summary (Quick Reference Checklist)

Adding all these up gives you the extra cash needed on top of your down payment (頭金). While it looks complex, your agent and judicial scrivener will provide a detailed breakdown and estimate, so don't worry about calculating it yourself.

Hope this list helps you budget better! Best wishes for finding your ideal home in Japan!