Rental income tax for landlords
Rent, fees, deposits, expenses, depreciation, interest, vacancy, and blue returns.
Rental income is rent plus nonrefundable deposits and renewal fees, minus necessary expenses like fixed-asset tax, insurance, depreciation, repairs, and the rental portion of loan interest — loan principal is never deductible, and a blue return can add a special deduction.
Effective: 2026-01-01 to 2026-12-31
Professional review pending — treat as draft and confirm with the authorities.
Key points
- Income includes rent, nonrefundable deposits, and renewal fees.
- Deductible: fixed-asset tax, insurance, depreciation, repairs, interest.
- Loan principal is never deductible; interest may be.
- Example: ¥2.4M income − ¥1.5M expenses = ¥900,000 rental income.
What counts as income
Rental income includes rents, nonrefundable deposits (e.g., key money), renewal fees, and tenant reimbursements. A refundable security deposit is not income until it becomes nonrefundable. Necessary expenses commonly include fixed-asset tax, property insurance, depreciation, and repairs. As a worked example: ¥2.4M of rent and nonrefundable fees minus ¥1.5M of expenses is ¥900,000 of rental income.
Interest, principal, and blue returns
Qualifying loan interest is deductible but loan principal repayment is not — a frequent mistake. Capital improvements are depreciated rather than expensed. If your rental rises to the level of a business, a blue return can add a special deduction and family-employee salaries. Keep the purchase contract, land/building allocation, loan statements, and a depreciation schedule.
Who this is for
- Residential and commercial landlords
- New property investors
What this is not
- Property sales (separate capital gain)
- Loan principal is not deductible — only qualifying interest is.
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.