Consulting Services for Processing your Inheritance in Okinawa, Japan
Consulting Services for Processing your Inheritance in Okinawa, Japan
Receiving an overseas inheritance can be a long and complicated process for families or relatives living in different countries. The distance apart requires additional time to deliver legal documents and the language barriers also delay important decisions that need to be made among families. A-step-by-step process must be taken to ensure the inheritance is valid, all heirs are identified, required taxes are paid and the inheritance is legally transferred and recorded. Please feel free to contact us regarding any concerns you may have regarding property value, selling your properties, Japanese taxes and any other matter regarding inheritance processing in Okinawa.
Inheriting in Japan
In Japan, inheritance begins upon the death of an individual, and the surviving heirs will not only inherit his/her assets but also his/her liabilities as well. Legally, heirs are allowed to make a decision within 3 months. They can either “accept the assets and liabilities”, “disclaim them,” or “accept them conditionally.” In case the heirs decide to “accept”, they will inherit all the assets as well as liabilities without any restrictions.
Who are the heirs/inheritors according to Japanese Law?
According to the law, an heir is an individual who receives rights, claims and obligations upon a death or disappearance of an ancestor. A legal heir is the spouse, a lineal ascendant (parent, grandparent), a lineal descendant (child, grandchild) and a sibling of the deceased. Besides the spouse and relationship by adoption, the heir is limited to a person related to the deceased by blood.
Since leaving a last will and testament is not a common practice in Japan, most of the people die intestate. Therefore, the surviving heirs have to prepare a legal document called an “Estate Division Agreement” to proceed with the inheritance process.
What is the Estate Division Agreement?
An Estate Division Agreement is a document that reflects the decision of the heirs regarding the division of the estate of the ancestor or decedent. It needs to be signed and affixed with seals of all the heirs.
The agreement should state the following:
- State who will inherit what part of the decedent’s estate;
- State immovable properties as they appear in the registration records;
- State the process of how new assets or liabilities will be handled should they be found after the agreement is signed and sealed by each heir;
- Signed and affixed with a seal of each heir. Each heir is given a copy of this agreement.
Inheritance Tax in Japan
The Japanese civil code stipulates who and how much a person is allowed to inherit. Inheritance tax determines the tax rate for the inherited estate. There are 3 objectives for the inheritance tax.
- To prevent excessive concentration of wealth and help its redistribution in the society
- Impose a tax on unearned income or effortless gains
- Review the alleviation of the burden incurred by tax benefits the decedent received in life
- Q1. Currently, my father is receiving a rental income from a land in Okinawa. In the future, we would like to change ownership and be able to receive that income. However, we are not Japanese citizens and are living in another country. Could you advise on this?
- A1. If your father is the owner of that piece of land, please check if he has the title certificate of the property at hand. If he doesn’t have the title certificate with him, the owner of the land can be identified by the address at the property registration office. In case of multiple ownerships, a transfer or sale agreement becomes necessary to settle it. We recommend you to find out the current situation of the land ownership and then decide what to do with. Since you are living outside Japan, we can inquire on your behalf at the registration office for a fee.
- Q2. I got from my father a land title certificate under the name of my uncle (my father’s brother). My uncle passed away 3 years ago without marrying. I want to know the current situation of that land; if anyone is using it, and if respective property tax is being paid, and etc.
- A2. If you can provide us the address and the name of the land owner, we can obtain the above information on your behalf. Information on the current situation of the land can be obtained at the property registration office, and property tax can be checked at relevant municipal offices.
- Q3. There is a piece of land under my father’s name in Okinawa. I would like to know what options I might have for effective property management.
- A3. The value of the property depends on the location and the degree of development done in the surrounding area. We work with reliable real estate agents to provide land appraisal services and proposals for property management options.
- Q4. Since I live in South America, I want to know if it is possible to assign a local to manage (pay tax, collect rents, etc.) my property in Okinawa.
- A4. In Japan, there is a position called a tax manager. Tax managers are entrusted with administrative duties for managing properties such as collecting rents, paying the respective tax, filing for tax returns and other administrative works related to managing properties. Most of the commissioned property tax manager positions are entrusted to licensed tax accounts and administrative scriveners.
- Q5. I want to sell a piece of land that I own in Okinawa. Can you assist me with this process by appraising the land, finding a buyer and selling the land?
- A5. Most real estate agents provide land appraisal services free of charge, however, in case a transaction agreement is concluded an average of 5% (as of 2018) commission fee is charged. If you wish to place a land appraisal request to our partner real estate agent, please fill in the below inquiry form.
- Q6. I want to know about taxes on rents or when buying and selling properties.
- A6. In case of rents, the owner shall declare the income for the period January-December of the year and file a report at the nearest tax office. After calculations, the tax office will inform the amount of tax to be paid. In the case of a sale, 20% of the sale price shall be paid as revenue tax. In the case of purchase, 5% of the fixed property tax shall be paid as real estate acquisition tax.
- Q7. I have a piece of land jointly owned in Okinawa and I want to sell my share of it. What should I do?
- A7. An agreement from all owners is needed when you plan to sell a share of a jointly owned land. Furthermore, selling a share of a jointly owned land to a stranger is not popular in Japan because management and decision-making may become difficult among owners. It is best to work with a real estate agent that you trust if you wish to sell your share. If you need assistance or have any questions, please do not hesitate to contact us.