What percentage of additional funds should I prepare for various fees besides the property price itself?
Hello! Seeing you ask this question feels like looking at my past self, all confused while calculating every little expense. Don't worry, it's not complicated. Let me break it down for you, and you'll get a clear idea of how much "extra" money you need to prepare.
The Bottom Line:
As a simple rule of thumb, budget for approximately 6% to 10% of the property price.
- If you're buying a new property (新築物件 / shinchiku bukken), the fees are lower, typically around 3% to 7%.
- If you're buying a pre-owned property (中古物件 / chūko bukken), the fees are higher, usually 6% to 10%, or even more.
Why are pre-owned properties more expensive? Mainly because of the hefty "brokerage fee" paid to the real estate agent.
Below, I'll break down where this money goes so you know what to expect.
The Fee Breakdown: Where Does the Money Go?
Think of these extra costs like dining at a restaurant: besides the menu price (property price), there are service charges and taxes.
1. The Major Costs (These take the biggest bite)
-
Brokerage Fee (仲介手数料 / chūkai tesūryō)
- Applies to: Only when buying a pre-owned property through an agent. Usually not required for new properties bought directly from developers.
- Calculation: Legally capped. The formula is a bit complex, but agents often charge the maximum:
(Property Price x 3% + 60,000 yen) + Consumption Tax. - Example: For a 30 million yen property: (30,000,000 x 3% + 60,000) = 960,000 yen. Add 10% consumption tax: total approx. 1,056,000 yen. See? That's already 3.5% of the price.
-
Taxes (Various payments to the government)
- Stamp Duty (印紙税 / inshizei): A "stamp" affixed to the purchase contract to validate it. Based on the property price, typically 10,000 to 30,000 yen.
- Registration License Tax (登録免許税 / tōroku menkyozei): Paid to the Legal Affairs Bureau to register the property ownership under your name. Calculated based on the government's "fixed asset assessed value" (usually lower than the purchase price). Paid together with the Judicial Scrivener fee below. Can easily run into hundreds of thousands of yen.
- Real Estate Acquisition Tax (不動産取得税 / fudōsan shutokuzei): This is a "gotcha" tax! Many people overlook it. 3 to 6 months after you buy the property, the tax office will send you a bill. Also calculated on the "fixed asset assessed value". While there are various tax breaks, you should still budget for it – roughly 0.5% to 1.5% of the purchase price.
2. If You Need a Loan (Bank-related fees)
- Loan Guarantee Fee (ローン保証料 / rōn hoshōryō): The bank requires a guarantee company to insure your loan (in case you default). This fee goes to the guarantor. Can be paid upfront or rolled into monthly payments. Upfront cost is approx. 2% of the loan amount.
- Bank Handling Fee (事務手数料 / jimu tesūryō): The bank's processing fee for setting up the loan. Ranges from tens of thousands of yen to a small percentage of the loan, depending on the bank.
- Fire Insurance Premium (火災保険料 / kasai hokenryō): Mandatory if you have a mortgage. Usually purchased for 5 or 10 years upfront. Costs approx. 100,000 to 300,000 yen, depending on the building structure and coverage. Highly recommended to add earthquake insurance.
3. Other Miscellaneous Fees
-
Judicial Scrivener Fee (司法書士報酬 / shihō shoshi hōshū)
- Fee for the professional who handles the legal paperwork for property registration. Typically around 100,000 yen.
-
Adjustment for Fixed Asset Tax / City Planning Tax (固定資産税・都市計画税の精算金 / koteishisanzei・toshi keikakuzei no seisan-kin)
- These are annual taxes paid by the owner. If you buy mid-year, you must reimburse the seller for the portion of the annual tax covering the period from your purchase date to year-end.
-
Adjustment for Management / Repair Reserve Fund Fees (管理費・修繕積立金の精算金 / kanrihi・shūzen tsumitatekin no seisan-kin)
- Applies only to condominiums (マンション). Similar to the tax adjustment above, you must reimburse the seller for the portion of the monthly management and repair reserve fees covering the days after you take ownership.
A Realistic Example for Clarity!
Suppose you're buying a pre-owned apartment for 30 million yen and need a loan.
Here's a rough estimate of the extra fees you'll need:
| Fee Item | Estimated Amount (Yen) | Notes |
|---|---|---|
| Brokerage Fee | ~ 1,056,000 | (30,000,000 x 3% + 60,000) x 1.1 |
| Reg. License Tax + Scrivener Fee | ~ 400,000 - 500,000 | Ownership registration + professional fee |
| Stamp Duty | 10,000 | For the contract |
| Loan-Related Fees | ~ 600,000 - 700,000 | Guarantee fee + Bank handling fee |
| Fire/Earthquake Insurance | ~ 150,000 | 10-year policy, mandatory |
| Real Estate Acquisition Tax | ~ 200,000 - 300,000 | Paid months later, but budget for it |
| Tax/Management Fee Adjustment | ~ 50,000 - 100,000 | Depends on purchase month |
| TOTAL | ~ 2,466,000 - 2,816,000 yen |
See? For a 30 million yen property, the extra fees come to around 2.5 million yen, which is about 8.3% of the price. This fits perfectly within the "6% to 10%" range we mentioned at the start.
Final Advice for You:
- Ask for an Itemized List: When talking to the agent, don't hesitate to say, "Please give me an estimate of the various fees" (諸費用の見積書をください / shohi-yō no mitsumorisho o kudasai). A reliable agent will provide a detailed breakdown, much more accurate than guessing.
- Budget Extra "Liquid Cash": Besides these mandatory fees, moving costs, new furniture/appliances, and simple cleaning or renovations also cost money. So, prepare an extra few hundred thousand yen beyond the fee budget to make things much smoother.
Hope this helps! Buying property in Japan is a big step, and getting the finances clear is the first step to success. Best of luck with your purchase!