Points to Note When Renting a Room Owned by a Non-Resident (Overseas Owner)
In tower condominiums in Osaka City, many rooms owned by overseas residents (non-residents) are also available for rent. While the living experience is no different from that of a standard rental property, when the landlord is a non-resident, the tenant may be required to complete a tax procedure known as “withholding tax on rent.” Here, we explain the key points to know when renting a room owned by a non-resident.
What Is a “Non-Resident”?
In principle, this refers to an individual who has no address in Japan and has not continuously maintained a residence in Japan for one year or more up to the present. This includes not only foreign nationals living abroad, but also Japanese nationals on long-term assignments abroad for one year or more, as well as foreign corporations.
Cases in Which Withholding Tax on Rent Is Required
When renting real estate in Japan owned by a non-resident or foreign corporation and paying rent, the tenant is generally obligated to withhold income tax and special reconstruction income tax at a rate of 20.42% when paying the rent and remit it to the tax office (the tenant becomes the withholding agent). Corporate contracts and rentals for business use are typical examples.
Cases in Which Withholding Tax Is Not Required
When an individual rents a room from a non-resident for their own residence or that of a relative, withholding tax is not required when paying the rent. In other words, in the typical case where “an individual rents a property as their own residence,” no withholding tax procedure is required.
Points for Tenants to Note
- If you fail to remit withholding tax or remit it late in a case where withholding is required, the tenant may be subject to delinquent tax and an additional tax for non-payment
- As a general rule, the withheld tax must be remitted by the 10th day of the month following the month in which the rent was paid
- Many tax treaties also provide that rent from real estate may be taxed in the country where the property is located (Japan)
- Whether your contract is subject to withholding tax depends on the form and purpose of the contract. For details, please check the National Tax Agency’s guidance, or consult your local tax office or a tax accountant
You Can Rent with Confidence Even if the Room Is Owned by a Non-Resident
At Premium Real Estate, we support you with properties owned by overseas owners from the conclusion of the lease agreement through assistance during your tenancy (equipment malfunctions and various procedures), including communication with the management company and owner. We have established a system to ensure that residents are not inconvenienced by the owner being overseas, so please feel free to choose your property with confidence.
Frequently Asked Questions
Q. Do I need to complete any procedures if I rent the property individually as my own residence?
A. When an individual rents a property for their own residence or that of a relative, withholding tax on rent is not required. You can move in through the same process as a standard lease agreement.
Q. What happens in the case of a corporate contract (such as company housing)?
A. When a corporation rents a property owned by a non-resident, it is required to withhold and remit 20.42% of the rent at the time of payment. We will explain the procedure when you sign the contract, so please feel free to contact us if you have any questions.
Q. If the owner lives overseas, will it take longer to respond to problems during the tenancy?
A. Since the domestic management company and our company serve as your contact for day-to-day matters, we can provide support that is no different from that for a standard rental property.
Looking for a Room or Have Questions? Contact Us Here
Rental properties in tower condominiums in Osaka City can be viewed through Property Search. Please feel free to contact us with any questions about properties owned by non-resident owners.