What happens to the tax if you cannot find the contract from when you bought? — The wall at 5% of the sale price

5% of the sale price becomes the acquisition cost (National Tax Agency, No.3258; Act on Special Measures Concerning Taxation, Article 31-4, and the circular 31-4-1). Sell for JPY 50 million and the acquisition cost is JPY 2.5 million. Even if you actually bought at JPY 40 million, the difference of JPY 37.5 million is taxed if you cannot prove it. So look for the contract first.

This page deals only with the case where the contract of sale from when you bought cannot be found. The sale process as a whole is set out in our feature on selling property before leaving Japan, and the tax rates and withholding at source in A guide to selling Japanese real estate for overseas owners.

Last updated: 6 October 2026

What does "acquisition cost" mean?

Capital gains are calculated as follows.

Capital gains = the sale price − the acquisition cost − transfer expenses (− special deductions)

The acquisition cost is the amount it took to acquire the property.

Category	What goes into the acquisition cost
Land	The purchase price when it was bought, purchase commission and the like, added together
Building	The purchase price and the like added together, less the depreciation equivalent for the period of ownership

(National Tax Agency, Taxanswer No.3258)

The larger the acquisition cost, the smaller the capital gains and the smaller the tax. The contract is the document that proves that acquisition cost.

What happens if the contract cannot be found?

An amount equivalent to 5% of the sale price may be taken as the acquisition cost.

The National Tax Agency explains it as follows.

Where the land and building sold have been handed down through the family, or were bought a long time ago, so that the acquisition cost is not known, an amount equivalent to 5 per cent of the sale price may be taken as the acquisition cost.
Where the actual acquisition cost falls below an amount equivalent to 5 per cent of the sale price, that amount equivalent to 5 per cent of the sale price may likewise be taken as the acquisition cost.

This is what is called the deemed acquisition cost (5% of the sale price). Read as "they will even allow 5%", or read as "95% falls to be taxed", it leaves an entirely different impression.

Look at it in money.

Assumption	With the contract	Without the contract
Sale price	JPY 50 million	JPY 50 million
Acquisition cost	JPY 40 million (actual)	JPY 2.5 million (5%)
Transfer expenses (assumed)	JPY 2 million	JPY 2 million
Capital gains	JPY 8 million	JPY 45.5 million
Income tax (long-term, non-resident, 15.315%)	about JPY 1.22 million	about JPY 6.97 million
Difference	—	about JPY 5.75 million

※ These figures are a hypothetical calculation for the purposes of explanation. The result changes with any special deduction or relief applied, with whether local inhabitant tax arises, and with depreciation on the building. Confirm the actual tax with a licensed tax accountant (zeirishi).

A single contract moves millions of yen. In the order of things to look for as you prepare to leave, it may perfectly well come before the title deeds and the seal registration certificate.

Where should you look for the contract?

There is a pattern to where they turn up.

Where to look	What comes out
The file of documents you were given when you bought	The contract of sale, the explanation of important matters, receipts, the development brochure
Your copies of final tax returns (for the years you claimed the housing loan tax credit)	A copy of the contract of sale is sometimes attached
The bank that gave you the home loan	The loan agreement and the mortgage agreement (the amount borrowed is a clue to the purchase price)
The estate agency that acted on the purchase	A copy of the contract is sometimes kept on file
The certificate of registered matters (Section B)	The secured claim amount on the mortgage can be seen
Passbooks and transfer records	The record of payment to the seller

The second and third rows in particular. Even where the contract itself is gone, there is often something left that leads you to it.

If the contract really will not turn up, is 5% all there is?

Here we put it carefully.

In practice, methods of estimating the purchase price are sometimes attempted — using the Urban Land Price Index published by the Japan Real Estate Institute (a general incorporated foundation), using the price shown in the brochure or the newspaper advertisement from when the development was first sold, or estimating from the amount of the loan.

These are not, however, always accepted. Among the decisions of the National Tax Tribunal and the court judgments there are both cases where they were accepted and cases where they were not. The conclusion divides according to the type of property, the nature of the materials and the reasonableness of the estimate.

This page therefore does not say "this method will get you through". All that can be written is the following.

#	What can be said
1	5% (the deemed acquisition cost) is the floor, and it is available at any time
2	Where materials proving the actual figure emerge, that route is in most cases the more favourable one
3	Whether a method based on estimation is accepted depends on the case. The judgement of a licensed tax accountant is needed
4	Once you have filed, there is no time to gather the materials again. That is where the point of acting before you leave lies

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Individual judgements are made by a licensed tax accountant. What we help with is the part that is gathering materials — obtaining the certificate of registered matters, making enquiries of the agency that acted and of the bank.

What if the property was acquired by inheritance?

You take over the acquisition cost of the person who died. In other words, what you are looking for is the contract from when your father or your mother bought it.

Further, where inheritance tax has been paid, the special relief for the acquisition cost where inherited property is transferred (the addition of inheritance tax to the acquisition cost) may be available. One of the requirements is that the sale takes place in the period from the day after the day on which the inheritance commenced until the day on which three years pass from the day after the deadline for filing the inheritance tax return (National Tax Agency, Taxanswer No.3267).

Sales of inherited property are covered in Inherited property.

What should you do before you leave?

When	What to do
Today	Look for the whole file of documents from when you bought. You cannot look for them once you have left Japan
Days 2–3	If they are not found, make enquiries of your tax return copies, the bank and the agency that acted
At the same time	Obtain the certificate of registered matters (Section B) and check the secured claim amount on the mortgage (we obtain this)
Before completion	Take the materials you have gathered to a licensed tax accountant. Establish first whether the actual figure can be used or whether it will be 5%
—	Because the net proceeds you can expect change, this also feeds into the decision whether to sell at all

On this point, "think about the tax after the sale" is too late. Know the likely tax before you decide what the sale proceeds are for.

What this article is based on

Point	Source
The calculation of capital gains (the amount of revenue less the acquisition cost less transfer expenses), and what the acquisition cost consists of (for land, the purchase price, purchase commission and the like; for a building, less the depreciation equivalent)	Income Tax Act (Act No. 33 of Showa 40 (1965)), Articles 33 and 38; National Tax Agency, Taxanswer No.3258, "Where the acquisition cost is not known" (based on the laws and regulations in force as at 1 April Reiwa 7 (2025))
That where the acquisition cost is not known an amount equivalent to 5% of the sale price may be taken as the acquisition cost, and the same where the actual acquisition cost falls below that amount	Act on Special Measures Concerning Taxation, Article 31-4, and the circular on that Act, 31-4-1; National Tax Agency, Taxanswer No.3258
The special relief for the acquisition cost where inherited property is transferred (a transfer by the day on which three years pass from the day after the deadline for filing the inheritance tax return)	National Tax Agency, Taxanswer No.3267
The income tax rate on the long-term capital gains of a non-resident (15.315%)	Income Tax Act, Articles 161, 164 and 165 and others; Act on Special Measures for Securing Financial Resources for Reconstruction, Article 28
Withholding at source (10.21%) when buying property from a non-resident	Income Tax Act, Article 161, paragraph 1, item 5 and Article 212, paragraph 1; National Tax Agency, Taxanswer No.2879

This page provides general information only. The calculations in the text are hypothetical figures for the purposes of explanation, and the result changes with any special deduction or relief applied, with depreciation on the building, and with whether local inhabitant tax arises. Individual tax judgements — including the determination of the acquisition cost and whether a method based on estimation is accepted — are made by a licensed tax accountant.

Real estate brokerage is handled by Yotsuba Real Estate Co., Ltd. (Real Estate Brokerage Business Licence, Governor of Tokyo (1) No. 113304), and the preparation of documents for licence and permit applications by Yotsuba Administrative Scrivener Office (gyosei-shoshi), under a separate contract in each case. For tax matters we introduce you to a licensed tax accountant and for registrations to a judicial scrivener (shiho-shoshi), and you contract with each of them directly. We receive no referral fee.

About the author Joji Uramatsu | Representative Director of Yotsuba Real Estate Co., Ltd. and its full-time Real Estate Transaction Specialist (takken-shi). Administrative scrivener. Former China Bureau Chief of the Mainichi Shimbun, with 34 years as a journalist; posted to China, Taiwan and Thailand in that role. Passed the Certified Social Insurance and Labour Consultant examination (practice scheduled to open September 2026).

Related links

• Feature: selling your property before you leave Japan
• At what point is non-resident status determined?
• A guide to selling Japanese real estate for overseas owners
• Inherited property
• Contact us