Deductible rental property expenses
Management, repairs, insurance, fixed-asset tax, interest, utilities, and personal-use allocation.
You can deduct current expenses like management fees, routine repairs, insurance, fixed-asset tax, loan interest, and landlord-paid utilities — but not loan principal, capital improvements (depreciated instead), or the personal-use portion of a mixed property.
Effective: 2026-01-01 to 2026-12-31
Professional review pending — treat as draft and confirm with the authorities.
Key points
- Current expenses: management, repairs, insurance, fixed-asset tax, interest, utilities.
- Not deductible: loan principal, capital improvements (depreciate), personal use.
- Separate current expenses from balance-sheet/capital items.
- Keep professional fees and advertising receipts too.
Current expenses
Deductible current expenses commonly include management fees, advertising, routine repairs, property insurance, fixed-asset tax, loan interest, landlord-paid utilities, and professional fees. Keep a separate schedule per property. These reduce your rental income directly in the year paid.
What is not a current expense
Separate out balance-sheet and capital items: the building and land purchase price (land is not depreciated), major improvements (depreciated), loan principal, security deposits repayable to tenants, acquisition transaction costs requiring capitalization, and any personal-use portion. Mixing these into current expenses overstates your deduction and is a common audit adjustment.
Who this is for
- Landlords preparing a return
- People organizing rental records
What this is not
- Owner-occupied home costs
- Do not deduct loan principal or capital improvements as current expenses.
Frequently asked questions
Do I need to file a tax return in Japan?
Many employees do not, because tax is settled by year-end adjustment (年末調整). You generally must file (確定申告) if you have side income over ¥200,000, two or more employers, self-employment income, sizeable investment or crypto gains, or you want to claim deductions like large medical costs or a first-year mortgage credit. Filing season is Feb 16 – Mar 15 via e-Tax. When unsure, check the NTA guidance or ask a 税理士.