Selling an Inherited Vacant Home with the 30-Million-Yen Deduction: Counting Back from 31 December of Year Three

The ¥30 million special deduction for inherited vacant properties comes with a deadline: December 31st of the year in which three years have passed since the inheritance commenced. However, when working backward, the first constraint that takes effect is not tax law, but rather how you use the property—specifically, never renting it out or living in it after inheriting it. If you cross this line, the special exception cannot be applied even if you sell within the deadline.

First: By When Should You Sell?

Item	Details
Sale deadline	December 31st of the year in which three years have passed since the inheritance commenced
System application period	Transfers made from April 1, 2016 through December 31, 2027
Deduction amount	Maximum ¥30 million
Deduction amount (3+ heirs)	Maximum ¥20 million (for transfers after January 1, 2024)
Sale proceeds	¥100 million or less

For example, if the inheritance commenced in March 2024 (Reiwa 6), three years will have passed in March 2027 (Reiwa 9). The deadline is December 31st of that year—December 31, 2027 (Reiwa 9). This happens to coincide with the system's overall application deadline, but these are two separate deadlines.

Care is needed in determining whether the sale proceeds are ¥100 million or less. The proceeds from sales by other heirs and proceeds from divided sales must be combined in this calculation. If you sell the remaining portion after using the special exception and the combined total exceeds ¥100 million, you must file an amended return and pay additional taxes within four months of that sale. You cannot assume you are safe simply because your own share is under ¥100 million.

As a Real Estate Professional: Where I First Step In

I frequently receive this consultation from people who inherited vacant properties:

"I haven't decided whether to sell yet. It seems wasteful to leave it empty, so I'm thinking of renting it out for now."

This decision eliminates the ¥30 million deduction.

One of the requirements for this special exception is that the property has not been used "for business purposes, rental purposes, or residential purposes from the time of inheritance until the time of sale." Rent it out for even one month, or have any heir live in it, and the exception is gone. If you demolish the building and then sell the land, the same condition applies both through the time of demolition and through the time of sale.

Common Actions	Impact on ¥30 Million Deduction
Rent it out temporarily	Cannot be used
An heir moves in	Cannot be used
Lease it as a parking lot or storage facility	Cannot be used
Convert the demolished site into a building/structure lot	Cannot be used
Maintain it as a vacant property	Deduction is preserved

When you are still deciding between selling or keeping the property, the one decision you must firmly make upfront is not to rent it out. It is natural to want to avoid ongoing maintenance costs during this period of indecision, but if you rent it out, the financial difference will come back to haunt you later.

As for the dilemma of whether to sell or keep the inherited family home itself, I wrote about it in Should I Sell or Keep My Inherited Family Home?

What Changed in 2024?

This is where actual practice shifted significantly.

Before the amendment, the seller (heir) had to either complete seismic reinforcement or demolish the building by the time of transfer. In other words, you had to front demolition costs without knowing if the property would sell.

After the amendment (for transfers on or after January 1, 2024), the buyer can now satisfy seismic standards by February 15th of the year following the year in which the transfer occurs, or the property qualifies if the building was entirely demolished.

	Before Amendment	After Amendment
Who performs seismic reinforcement/demolition	Seller	Seller or buyer
Deadline	By time of transfer	By February 15th of the year following the transfer year
Seller's advance demolition costs	Required	Can be avoided

However, this also means the structure of the sales contract becomes critical. If the buyer fails to complete the work or demolition within the deadline, the special exception cannot be used. How you address this in the contract directly impacts the final tax bill. This is where the design expertise of the agent handling the transaction matters.

What Are the Building Requirements?

Requirement	Details
Construction date	Built on or before May 31, 1981
Building type	Not a condominium with separate registered title (condominiums do not qualify)
Occupancy before inheritance	No one other than the deceased was living in it immediately before inheritance commenced
If the deceased was in a nursing home	May qualify if admitted due to certification of need for care or other specified circumstances and certain conditions are met
Sale to	Not to a person with a special relationship such as a parent-child or spouse
Other exceptions	Not simultaneously using other deductions such as the acquisition cost special exception for inherited assets

The case where a parent was in a nursing home has nuanced requirements. The circumstances I discussed in What Happens to My Home If My Parent Enters a Nursing Facility? directly correspond to the tax requirements. If this may apply to you, confirm with a tax professional at an early stage.

How Should You Structure the Backward-Planned Schedule?

The deadline is December 31st, but multiple tasks must be completed to meet it.

Sequence	Task	Who Handles It
First	Heir investigation, collection of family registry records, creation of estate division agreement	Administrative scrivener
Next	Registration of inheritance (property must be registered in an heir's name to be sold)	Judicial scrivener
Prior	Application for certificate of confirmation for deceased's residential building	Municipal office (where property is located)
Prior	Investigation of seismic standards compliance certificate (if used; investigation must be completed within 2 years before transfer date)	Architect, etc.
Sales	Sales marketing	Real estate broker
Contract	Sales and purchase agreement	Seller, buyer, real estate broker
Deadline	Transfer (delivery)	Seller, buyer

In reality, the top two items consume the most time. When there are multiple heirs, distant relationships, or overseas residence, the estate division agreement alone can take six months to a year. It is not uncommon for us to receive consultations where people think "we have three years," but then only a few months remain for actual sales activity.

Year-end settlements become congested. Do not plan with a settlement scheduled for December 31st itself.

Who Should You Consult?

Issue	Specialist	Yotsuha's Role
Whether the exception applies, how much the tax changes, tax filing	Tax professional	We will refer you to our partner tax professional
Feasibility of sale, pricing, contract conditions with buyer	Real estate broker	Yotsuha Real Estate Co., Ltd. handles this
Heir investigation, family registry collection, estate division agreement	Administrative scrivener	Yotsuha Administrative Scrivener Office handles this
Registration of inheritance	Judicial scrivener	We will refer you to our partner judicial scrivener
Disputes between heirs	Attorney	We will refer you to our partner attorney

Tax calculations are the domain of a tax professional. What we provide is the design of a sales schedule working backward from the deadline and guidance on how to handle the property so as not to forfeit the special exception.

Yotsuha Real Estate Co., Ltd. and Yotsuha Administrative Scrivener Office are independent business entities that handle matters under separate contracts and separate billing.

Related Pages

• Selling or Utilizing a Vacant Property in Bunkyo-ku
• For Those Who Have Inherited Real Estate in Bunkyo-ku
• What Happens When You Abandon a Vacant Property (Property Tax on Held Assets)

Sources for This Article

Law/Source	Relevant Provision	Notes
Special Measures Law	Article 35 (Special deduction of capital gains for residential properties of the deceased)	Application period: transfers from April 1, 2016 through December 31, 2027
Special Measures Law Enforcement Order	Articles 20-3, 23	―
Special Measures Law Enforcement Rules	Article 18-2	―
Income Tax Law	Article 33 (Capital gains)	―
National Tax Agency Tax Answer No. 3306 "Special Exception When Selling a Deceased's Residential Property (Vacant Home)"	General requirements and submission documents	Current laws and ordinances as of April 1, 2025. Referenced: July 28, 2026
National Tax Agency Tax Answer No. 3307 "Deceased's Residential Building When the Deceased Was in a Nursing Home, etc."	Treatment when deceased was in nursing home	Referenced: July 28, 2026

This article provides general information and does not constitute individual tax advice. Determination of whether the exception applies, calculation of tax, and tax filing are functions of a tax professional. For individual cases, you must consult with a tax professional.