Rental property depreciation
Land vs building, component allocation, useful lives, and missing documents.
You depreciate the building (and certain components) over statutory useful lives but never the land, so you must split the purchase price between land and building — and reconstructing that split for an old property with missing documents needs care or a professional.
Effective: 2026-01-01 to 2026-12-31
Professional review pending — treat as draft and confirm with the authorities.
Key points
- Depreciate the building; never depreciate land.
- Split the purchase price between land and building.
- Useful life depends on structure (e.g., wood vs reinforced concrete).
- Missing purchase documents make basis reconstruction hard.
Splitting land and building
Because land is not depreciated, only the building portion of your purchase generates depreciation. Split the price using the contract, the assessed values, or another reasonable method, then depreciate the building over the useful life for its structure. Fixtures and equipment can have their own, shorter lives.
Old properties and records
For a used building, you also account for prior depreciation, and for a very old property with a missing purchase contract or no land/building allocation, reconstructing the basis is difficult and error-prone. This is a common point to involve a professional, because an incorrect basis flows through to both annual depreciation and the eventual sale calculation.
Who this is for
- Landlords computing depreciation
- Buyers of used property
What this is not
- Land-only holdings (no depreciation)
- An incorrect land/building split distorts both annual depreciation and the future sale gain.
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.