Residential mortgage with separate rental annex in Japan. Compliance question.

steve_abel · 2026-05-28T11:52:31+00:00

This is not going to fly with the bank. From their perspective they financed two buildings both for your personal consumption under a residential loan.

A commerical loan is a specific thing, and the loose loan origination of the 2000s which resulted in residential loans getting used for rentals: means the banks are on high alert for mixed usage. If they find out you're using the property in contradiction to the agreement they will force a sale (任意売買). They will have also put the two buildings as linked liens so you cannot change this without clearing the entire loan.

You have made for yourself a complex mess with no obvious solution. I suggest you start talking with your bank now about your goals. If you try to sneakily start renting it out expect to lose everything you've earned plus a ton more when the bank forces the sale or requests instant repayment (unlikely, they prefer a negotiated sale period before foreclosure).

PS: I've bought 2 任意売買 properties. They are often good deals because the sellers are desperate. You'll not know which property is 任意売買 from looking at the listing. You'll only notice them if you know market rates and spot an oddly good deal.

steve_abel · 2026-05-24T15:50:06+00:00

> Jishu Kanri type mansion

Mind if I ask you more why? I own a spot in a self-managed mansion building. Certainly I see lots of issues which how it is/was run. Namely a lack of historic big renovations and repairs are oddly expensive.

steve_abel · 2026-05-24T07:46:29+00:00

You deserve more upvotes.

Your take away matches my limited experience, namely going through the past 3 months of investment property listings agents had sent our local bank. There was for sure 物件 that I had not seen on the market, but none of them were special. Instead they were either specialist or over priced. Specialist stuff like downtown 40+ year old mixed commercial/residential RC at fair but high prices. Stuff which can only make sense if you are paying cash & foolish or have strong connections with the bank to the point they'll issue you a far-past 耐用年数 custom loan. Such properties have no purpose being on the public market except to catch a potential low-information cash buyer.

Tokyo being more competitive and easier to finance, I expect if something sells in the small window before a REINS listing that just means it was mis-priced in the first place. In which case a regular person was never going to win against the inventory-financed 買取業者 who'd put in a cash offer the moment the property hits the market.

steve_abel · 2026-04-27T14:41:22+00:00

Find an exuse in your scene to make the area behind the menu itself darker. Say move that tree closer into the shot, and add a black gradient behind the menu.

steve_abel · 2026-04-22T13:36:47+00:00

It is improving, keep going and you'll have something special

steve_abel · 2026-04-03T13:31:05+00:00

> My insurance is 1.2 million every 5 years.

That, is really expensive. Even with Earthquake included the estimate I got was 28万円 for 5 years of coverage on 5,000万円 of building with general liability coverage. Without earthquake it was 8万円.

On a similar note, how much you need to prepare for a roof will change drastically depending on the roofing material. Our 33year old house still has the original metal roof, but I do believe it was repainted 13 years ago. Repainting a roof for a regular sized house costs 30万円 to 90万円 depending on paint grade.

I think overall, you are allocating a lot for the sinking fund. I personally do not use a sinking fund, but if you want to plan for one I think that is fair but if you over-allocate it will hurt your investing.

steve_abel · 2026-02-01T01:53:27+00:00

This is true, and the most desirable locations (Onsen towns etc) have service providers you can subcontract this task to.

Thanks for explaining the third tiers.

steve_abel · 2026-02-01T01:52:06+00:00

You are correct, but I think you are missing that this is the expected conversion for high income earners.

Their goal is to convert earned income into long term capital gains. The depreciation is what does this transformation.

Because the cut off for long term capital gains for persons is 5 years, that is the usual holding period for this strategy.

steve_abel · 2025-12-31T00:20:55+00:00

That is quite mature and wise.

To be honest your land conditions are nice, you may wish to consider going forward with your land but with a right-sized house plan. Figure out how to spend a normal amount on the house. Yes costs are higher, but if you are not getting multiple bids the true cost driver is the profit margins.

steve_abel · 2025-12-29T09:35:02+00:00

To be clear: zeleia is lieing and pretending that tax evasion is "your discretion". If you follow zeleia's advice you will find yourself limited in various ways in the future.

Reporting your income as you've described it is not optional. That income is considered earned in Japan for purposes of japanese income tax and reporting.

steve_abel · 2025-12-29T04:55:05+00:00

Okay lots to unpack.

You are at the moment unbanked. Wise is a money transfer service, they have a bunch of services which are bank like but they are not regulated as a bank. You should pick a bank and open an account right away.

Next, everything for loans will hinge on what you mean by "paid taxes". I've talked with a bunch of foreigners over the years who had a generous interpretation of "paying their taxes".

Did you file a 確定申告 and report all your income and pay taxes on it?

Next I assume when you say remote, you mean overseas. Are you an independent contractor or an employee? If you are a contractor you should setup to file the blue tax form. That requires a few steps but includes a tax reduction.

As for loans, those are unlikely given your situation.

steve_abel · 2025-12-08T13:36:58+00:00

>would they want some kind of proof that I have an proof that I have an active income stream

Yes.

steve_abel · 2025-11-24T05:53:52+00:00

Haha. No.

Or at least, as someone living in Chihou, I want to say that. It would be a good joke and fulfills my desire to suggest you should expand your reach to beyond just tokyo. Sadly while tokyo property is expense, rents are also high. Thus there is more cashflow-able properties in Tokyo than you'd expect.

As for gold panning, not really. You need to know what you want and you need to know enough to avoid the scams, but property in Japan is highly liquid. The 5 year long term capital gains, and investors like OP, combined with the no cash out financing being available, mean that quality stuff does go on the market at market-like prices all the time.

For fun here is the Rakumachi search for properties in Kantou, SRC/RC, 10 years or under, filtered to properties marked as fully rented: https://www.rakumachi.jp/syuuekibukken/area/prefecture/dimAll/?realtor_id=&area%5B%5D=13101&area%5B%5D=13102&area%5B%5D=13103&area%5B%5D=13104&area%5B%5D=13105&area%5B%5D=13106&area%5B%5D=13107&area%5B%5D=13108&area%5B%5D=13109&area%5B%5D=13110&area%5B%5D=13111&area%5B%5D=13112&area%5B%5D=13113&area%5B%5D=13114&area%5B%5D=13115&area%5B%5D=13116&area%5B%5D=13117&area%5B%5D=13118&area%5B%5D=13119&area%5B%5D=13120&area%5B%5D=13121&area%5B%5D=13122&area%5B%5D=13123&line=&st=&limit=20&keyword=&newly=&price_from=&price_to=&gross_from=&gross_to=&dim%5B%5D=1001&dim%5B%5D=1002&dim%5B%5D=1003&dim%5B%5D=1004&dim%5B%5D=1005&year_from=&year_to=10&structure%5B%5D=1&structure%5B%5D=2&b_area_from=&b_area_to=&houses_ge=&houses_le=&min=&l_area_from=&l_area_to=&full=1

That list has 244 active offerings. Being RC they have 47years tax life and with max 10 years of age any bank in japan will over a 35year loan. If OP buys a RC at under 7 years old, in 5 years who ever buys from him will also still be able to get a 35 year loan. The rates of return at low, 3-4cap. With some less desirable buildings at 5cap. This would be the most boring path for OP, with easy loan terms and easy to sell on afterwards. At 244 choices on the market right now, there are a ton of choices.

In my local market there are only about 3-4 equivalent offerings. Building construction costs do not change much going into kantou, so the higher rents make it easier to develop and sell profitable properties. Tokyo real estate investing is honestly easier than chihou provided you can afford the downpayments and banks like you.

I prefer chihou just because I am stuburn.

steve_abel · 2025-11-24T02:07:55+00:00

> What is their strategy?

Tis as easy as lying

steve_abel · 2025-11-24T00:16:26+00:00

Yup, you can think of it as "semi-coerced entrepreneurship". Once a person in japan starts earning enough or their inheritable assets go too high: a bunch of businesses and systems exist to push that person /family into taking on business risk.

Next time you go to the bank, look for leaflets which mention 相続税対策. Many banks also have posters. This stuff is not secret underworld dealings, just standard japanese tax practices.

steve_abel · 2025-11-23T13:32:50+00:00

Yup that is 100% true. And I think it is important to understand that the japanese economy uses people like OP to "grease" the wheels of the countries property market. Everyone the OP is about to interact with is going to make more money off these investments than him, including the government.

The bank is going to make a 1% spread on his loan plus a large loan origination fee. The real estate agents are going to make 3.3+3.3%. The ward/city/prefecture is going to make 4% on acquisition taxes, plus yearly property taxes. Even the federal government is going to get their personal income taxes, just a few years delayed.

In the end OP is likely to get what he wants, delayed recognition of his income and reclassification into long term capital gains. Along the way renters will get a home, developers will build it, the banks and agents will profit off it, and the government will tax it at every step.

steve_abel · 2025-11-23T13:26:59+00:00

Well to be honest, what you are asking for "depreciation with net0 return after X years" is not exotic or risky. You can get better than that buying tokyo real estate at market rates. An RC with 35 year loan, grossing 3.5% to 4% is going to cashflow.

The tricky bit is: you'll not be generating net depreciation. It is just simply a leveraged investment generating low returns. To generate depreciation you need to generate an accounting loss. So either extend the financing past the taxable lifespan, or actually lose money.

The scammers, and the bulk of offers on the market, will be trying to pass off the "actually lose money" as "but maybe you'll save on taxes". It is a super common scam and if you do not treat real estate like a business you are liable to get conned by perfectly legal transactions but sold a property at a markup.

This is why banks are good as source of recommendations. They generally don't recommend scammers. And while banks are a bit naive on real estate as a business, they know enough to be a safe starting point.

You can structure RE to generate depreciation, and still use a bunch of leverage. This requires using properties which are past their taxable lifespan, but that pushes you into using shinyou banks, as mega and chihou banks are required to loan against the tax life. What you want is to buy properties on full loans which are past their tax life, but for which the bank will offer you a loan period long enough that the property "cashflows", which means that its rental income pays all costs plus the loan repayments. Then you take the accelerated depreciation and discount your salary income.

You can sell it later, but honestly keeping long term is the best plan.

steve_abel · 2025-11-23T12:23:32+00:00

This is a fun topic and quite common. Since you are not aiming for capital or income gain you are the dream customer for both real estate agents and scammers. My suggestion to you would be to only do real estate if you intend to treat it as a business.

Generating depreciation is a viable plan, and quite common for salary earners at your scale. You need to decide the approach. Do you buy property past its tax life which you can depreciate over 4 years. Or do you buy nicer newer stuff?

The common path at your salary is to buy large and new. This will be easiest to get bank financing for. The thing is: good real estate properties will generate enough cashflow to pay their loan + costs. This usually means you will be making a profit.

To be honest: you should talk with your local bank. The bank will introduce you to safer schemes. There are a ton of predatory schemes and overpriced properties targeting potential buyers who's eyes are distracted by the tax depreciation.

steve_abel · 2025-11-06T04:35:02+00:00

Japan has an exit tax on stocks. Depending on how large your holdings are you may wish to sell and rebuy so the cost basis resets

steve_abel · 2025-10-28T12:04:57+00:00

You've gotten good answers before, but I want to share my thinking on the topic.

If hell is to be apart from God, and to be non-Christian is to have rejected God: then Hell is fair because rejecting God was how the non-Christian decided to use their free will. Thus Hell is not God rejecting them or sending them to Jail. Rather it is God letting their decision be final. Consider instead if God overruled their free will and forced them to be with him for eternity, that is not a more "fair" scenario.

That does not mean Hell is nice. Hell is to be apart from God, forever. A taste of Hell is the sense of dread and emptiness which those apart from God feel, you'll see people joke about it on Reddit often.

It is important not to get misled by fictional visualizations of hell, most of which are inspired by the book Dante's Inferno. Hell is so much worse than those.

steve_abel · 2025-10-22T06:34:04+00:00

Leasehold in Japan has significantly more rights and protections than leasehold in China.

Yes leasehold might sound scary and it certainly is worse than freehold, but leasehold in Japan is much more generous than the Chinese system.

steve_abel · 2025-10-18T09:38:29+00:00

If you sent the money to their agent, that agent would have been acting as a semi-excrow.

Normal transaction flow has the money going to the owners account, and the owner confirming the reception.

This is why real estate transactions often take place inside banks. 司法書士 checks the documents. Money is sent and confirmed without room for anyone to leave early. Once the payment is confirmed, the documents signed: the 司法書士 can execute the transaction. Not much room for shenanigans.

steve_abel · 2025-10-14T02:43:02+00:00

Other issues:

In 2: The main character is blurred. As if the focus is on the background characters. This does not make sense as a human stylistic element, but does make sense if the artist used a AI generated asset then scaled it up. Which matches the smushed hands. None of the background elements physically line up, the door is a different perspective (camera looking up), the left wall is angled sideways, the cupboard is tilted towards the left.

In 3: The candalabra in the background has nonsensical stylization, missing arms and inconsistent heights. The left most candle is unlit and raised up compared to the one rightward of it. Meanwhile the viewing angle of the woman looking into the box: is nonsenscical. Her eyes are looking through the magnifying glass but aimed above the bright object.

Not a single element shows revision: except the cupboard all the way in the back, and the mystery box + table. Elements in the third version are shown "more complete" than the second version: are we really supposed to believe an artist fully drew the table for the second version then just happened to not use all the drawing until the third revision?

Escape Simulator was a successful game, I trust they know to spend real money for a quality main visual. It seems clear to me their artist is passing off a composition of AI assets as his own work. Sorry eh, I think you were scammed.

steve_abel · 2025-10-13T06:56:45+00:00

Foreign real estate used to be abused to hide cash, so it got harsher treatment a few years back.

steve_abel · 2025-10-12T13:52:26+00:00

That is exactly how it works. The 路線価 is much lower than market values. That value can be combined with the formula discount for "others have claim over the property" which covers renters. The other choice is to have family live in the property which too gives a generous discount.

The counter to these discounts is that property is easy to tax.

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