Inheritance of a house located outside Japan

[robster]

Thanks a lot for your answers. I guess I was assuming only Spanish law, where my parents are from. In Spain, regions are independent in terms of inheritance tax, so when inheriting a house, the tax is always payed where the house is located, regardless where the heir is located (and of course the heir is exempt to pay that tax where he is located). Then I guess I extrapolated the Japan case as it was another Spanish region. It is very strange for me to think that I have to pay inheritance tax in Japan for a house which is located outside Japan, especially when I would be exempt to pay that tax in that place. If that is the case, I guess I should check with a tax advisor because this may happen in the future and probably there are ways to prepare.

Anyone knows of any tax advisor who understands about Japanese laws and is not extremely expensive?

Thank you!

If　you　can　speak　Japanese,　you　can　just　call　the　tax　office,　explain　the　situation　as　a　hypothetical, and get reliable advice, for free. I have just come off the phone after asking clarification about the calculation for exemption for inheritance tax. Took 5 mins, very easy.

[Tkydon]

By the way, I am asking ChatGPT about all this, and I just found out that there is the same exempt of 30M JPY from parents if they make a gift. All this time, I was assuming that the exempt amount was the typical 1.1M JPY, but apparently if it comes from your parents, it is 30M JPY. Can you confirm this?

There is the System called 'The Early-Inheritance Tax System' or 'The Unified Gift/Inheritance Tax System'
https://retirewiki.jp/wiki/Inheritance_ ... d_tax_code

which allows parents or grandparents to gift a tax-free total of up to 25 million yen to children or grandchildren, with the understanding that the value of the gift(s) be included in the calculations of the total value of the donor's estate at the time of death.

The Gift will tax free at the time of the gift, and then be taxed at the time of death of the donor based on the value at the time of the gift.

From next year, the donor will also be able to make gifts in subsequent years.

[northSaver]

There is the System called 'The Early-Inheritance Tax System' or 'The Unified Gift/Inheritance Tax System' ...

Am I right in thinking that in the case of an early-donated house you'll still have to pay CGT when it is gifted to you? In other words, the early-inheritance system only concerns IHT? Thanks.

Edit: Sorry, I meant when you subsequently sell it. I realise that you don't pay CGT when you receive it, only when you sell it. And I know that the cost basis for the Japanese CGT in that situation is the value of the house when the donor acquired it, not the value when it was gifted to you.

[Tkydon]

There is the System called 'The Early-Inheritance Tax System' or 'The Unified Gift/Inheritance Tax System' ...

Am I right in thinking that in the case of an early-donated house you'll still have to pay CGT when it is gifted to you? In other words, the early-inheritance system only concerns IHT? Thanks.

Edit: Sorry, I meant when you subsequently sell it. I realise that you don't pay CGT when you receive it, only when you sell it. And I know that the cost basis for the Japanese CGT in that situation is the value of the house when the donor acquired it, not the value when it was gifted to you.

If I remember correctly,

If the house is worth less than Y25M at the time it is gifted under the Early Inheritance System, then it will be tax free at the time of the Gift.
It will be included in the Estate of the donor on the donor's death at the value at the time of the Gift, and Inheritance Tax imposed on the death of the donor on the value at the time of the Gift.
When the property is sold, it will incur Capital Gains Tax on the Gain from the original purchase price when the donor acquired the property.

If the property is worth more than Y25M at the time it is gifted under the Early Inheritance System, then Gift Tax will be levied on the excess over Y25M at the time of the Gift.
Y25M will then be included in the Estate of the donor on the donor's death, and Inheritance Tax imposed on the death of the donor on the on the Y25M.
When the property is sold, it will incur Capital Gains Tax on the Gain from the original purchase price when the donor acquired the property.


I may be wrong.