• 2021.05.28
  • corporate tax
  • establishment of company
  • income tax
  • Japan business manager visa
  • Japan property
  • Japan Property Investment

Property Investment by establishing a company

Property Investment by establishing a company

In property investment, there are methods in which the investor himself/herself carries as a private business and a method of establishing a corporation and doing so as a “corporation”. Tax on personal income If the income exceeds 9 million yen for an individual, the total tax rate reaches 43%, which will exceed the effective tax rate of the corporation.
For this reason, it is said in general that it is better to set up a company when the income exceeds 9 million yen.

Hereafter the rates of National Income Tax,
Taxable Income Tax Rate in Japan:
Less than 1.95 million yen   5% of taxable income
1.95 to 3.3 million yen        10% of taxable income minus 97,500 yen
3.3 to 6.95 million yen        20% of taxable income minus 427,500 yen
6.95 to 9 million yen           23% of taxable income minus 636,000 yen
9 to 18 million yen              33% of taxable income minus 1,536,000 yen
18 to 40 million yen            40% of taxable income minus 2,796,000 yen
More than 40 million yen    45% of taxable income minus 4,796,000 yen

Tax on company’s’ taxable income amount of small and medium-sized companies with capital size of 100 million yen or less or no investment company
Taxable income Tax Rate:
Amount 8 million yen or less    15%
Exceed over 8 million yen        23.2%
In addition to the above, corporate inhabitant tax, local corporate tax, corporate business tax will be imposed.
Transfer income (capital gain) tax when selling property
In the case of an individual, the profit at the time of sale is separate taxation, and the property transfer tax is about 20% for long-term transfer and about 40% for short-term transfer.
Short-term transfer is for a owned period not more than 5 years, and long-term is over 5 years.
On the other hand, in the case of a company, the income at the time of sale is also taxed as corporate tax.
If you look at this point simply, if you have a lot of income, it is more advantageous to Incorporated, and if you hold it for more than 5 years before selling, the individual will be more advantageous.

But in fact it depends on various cases, so simulation will be highly advisable.
There are some other good points of incorporating.
The tax rate on high income is suppressed.
For individuals, the tax rate will also increase if the income increases due to the progressive taxation system. If you expect high property income, you may reduce the tax rate by making it a company business.

You can make an income diversification.
In rental management, which can spread income, it is allowed to pay compensation by each person as an officer, and it is available to distribute the income of one person by treating expenses.

The expenses can be recorded.
Expenses such as travel allowances, automobile purchase and maintenance expenses, etc. can be recorded as operating expenses easily rather than individuals.

There is no choice to set up a company and continue business for the application of a business manager visa, though it is selectable to establish a company in advance or after investing in property.

It will be finally your choice which you go, so I am happy to work on it to help you.

For individual property please see another page.
https://www.facebook.com/Investment-Japan-Masaki-Tanzawa-102847875346510

Masaki Tanzawa
AER NEXT LLC.
7F, KeioShinjuku321 Bldg., 3-2-1, Shinjuku, Shinjuku -ku, Tokyo, JAPAN 160-0022
TEL +81-3-5341-4611
FAX +81-3-5341-4623
License: Tokyo(1)105965
Email: tanzawa@ablife.jp
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