Are there any Tax Benefits.Used home.

[Bubblegun]

Are there any tax benefits if we purchase a used home?


Thank you in advance.

Thanks for reading my question. With so many used homes out there, It’s a shame there are no tax benefits to buying a used home .
Oh well!

[Moneymatters]

If you finance the home with a mortgage there is income tax relief for.
Wooden house, up to 20 years old.
Manshon. Up to 25 years old.

https://japanpropertycentral.com/real-e ... deduction/
This is the 1% of outstanding loan balance waived off your annual income tax bill for the a number of years.(Currently up to 13 years it seems..)
Note all the other conditions.

Clearly each property will have a very official construction completed date.
So don't believe what is says on the Real Estate Agent's shop window.

So as I follow that. Let's say you buy a house that is 19 years old with a loan.
You'll get that income tax relief for just 1(one) year.
Unless someone wants to correct me. As is frequently the case..

Also, for the Property tax calculation you'll benefit from the depreciated assessed value of the house portion.
(But obviously you don't benefit from the initial property tax discounts afforded to new houses.)

https://vs-group.jp/real-estate/propert ... lculation/
Scroll down there for what's actually rather a simple and commonsense explanation with an easy to understand example.
(My dissapointment is immeasurable and my day is ruined.)

[Bubblegun]

If you finance the home with a mortgage there is income tax relief for.
Wooden house, up to 20 years old.
Manshon. Up to 25 years old.

https://japanpropertycentral.com/real-e ... deduction/
This is the 1% of outstanding loan balance waived off your annual income tax bill for the a number of years.(Currently up to 13 years it seems..)
Note all the other conditions.

Clearly each property will have a very official construction completed date.
So don't believe what is says on the Real Estate Agent's shop window.

So as I follow that. Let's say you buy a house that is 19 years old with a loan.
You'll get that income tax relief for just 1(one) year.
Unless someone wants to correct me. As is frequently the case..

Also, for the Property tax calculation you'll benefit from the depreciated assessed value of the house portion.
(But obviously you don't benefit from the initial property tax discounts afforded to new houses.)

https://vs-group.jp/real-estate/propert ... lculation/
Scroll down there for what's actually rather a simple and commonsense explanation with an easy to understand example.
(My dissapointment is immeasurable and my day is ruined.)

Thank you for that, such a complicated system over here.
I think the wife is considering an older but larger place out of the city, near her parents which I'm ok with.
Sadly although she is great at getting bargains and haggling, she isn't interested I these tax things.

Thanks for that. I'll let her know.

[akiaji]

Important bit here:
10% consumption tax rate must apply to the sale price. Consumption tax does not apply in all transactions. Unsure if it applies? Ask your real estate agent. If the consumption tax rate does not apply, the maximum annual deduction is capped at 200,000 Yen/year.

Consumption tax will apply when buying the home new and/or from a (real estate) company.

If you buy the house used, good chance you are buying it from the previous (individual) owner, so no 10% consumption tax and limited tax relief.

[captainspoke]

Private home sales, without a realtor, direct person to person -- no consumption tax. Involve a realtor and I think there will be tax.

**

Apart from tax benefits, used/old houses here can be a real bargain--I think this is where the real value is. If you want, budget in some money to do some reforming on purchase, or just do part of it (eg, a good kitchen) and then the other parts later.

We bought used, without having this awareness at the time. In retrospect, having done so put us ahead financially, even tho we've spent money on it in various ways over the years.

[onionchutney]

Re-igniting this old post:

Does anyone know of any tax benefits/benefits in general for purchasing an old house with cash (no loan at all).

Thanks in advance

[Tkydon]

Re-igniting this old post:

Does anyone know of any tax benefits/benefits in general for purchasing an old house with cash (no loan at all).

Thanks in advance

No, I don't think there are any.

You can't offset taxes if you don't have a Tax Credit against an Expense... The Expense in this case being the Interest on the loan...

You can't claim a tax credit against the Interest on the (non-existent) loan, and you cannot claim Depreciation Expense on your primary residence (Only on Rental Properties).

Why would you pay cash, effectively giving yourself a 0.xx% return on your money, when you can invest that money at a far higher return and pay the interest on the loan... And take advantage of the Tax Benefits?

https://www.youtube.com/watch?v=w3z0vVEVT_s

This is an example of Good Debt, as opposed to Bad Debt.

(Jokingly:) The tax benefit would the the foregone opportunity to pay the capital gains taxes that would have had to have been paid on the other possible (opportunity cost) investments that you could have made if you had invested that money, but will be offset by the Capital Gains Tax liable on the property when you come to sell it, if it had appreciated in value

On a much more serious note:

Make Tax advantaged investments through Kokumin Nenkin Pension Paymnents, iDECO, NISA, etc. for the whole family... and Low Cost Mutual Funds... (Gift Taxes don't kick in until more than Y1.1M per person per year...)


On a much MUCH more serious note:

If you pay the money 100% for the property, and you die, your family gets the house free and clear...
BUT, if you take out a loan to pay for the house, your family gets the Cash / Investments, AND the Life Insurance Policy on the Mortgage pays off 100% of the outstanding balance, so they get the house free and clear AS WELL!

And the they may have to pay inheritance taxes, but that's a different story...

[Tkydon]

Important bit here:
10% consumption tax rate must apply to the sale price. Consumption tax does not apply in all transactions. Unsure if it applies? Ask your real estate agent. If the consumption tax rate does not apply, the maximum annual deduction is capped at 200,000 Yen/year.

Consumption tax will apply when buying the home new and/or from a (real estate) company.

If you buy the house used, good chance you are buying it from the previous (individual) owner, so no 10% consumption tax and limited tax relief.

Consumption Tax applies if you buy the property new, or from a company that has bought, owned, refurbished and sold the property to you.

Consumption Tax does not apply if you buy the property from a private seller, even through a realtor, but you will have to pay consumption tax on the realtor's fees...

[mighty58]

If you include renovation costs for an older property in your mortgage, that part of the loan is eligible for the 1% deduction.

It's also important to remember that, although you are seemingly "missing out" on tax benefits, you will often more than make up for it in the reduced purchase price vis-a-vis a comparable newer place, even factoring in depreciation. The tax benefit is there primarily to stimulate the housing market for new builds, which benefits the house makers and the construction industry, and it incentivizes the destruction of often perfectly sound older structures.