An heir living abroad — how to sell an inherited, tenanted apartment

In short: when an heir living abroad sells a tenanted apartment (an owner-change property) they inherited, three conditions overlap — inheritance, tenanted, and non-resident seller. The key points are three: (1) an owner-change sale carries the lease, the deposit and the tenant over to the buyer as they are (transfer of the lessor's position, Civil Code Art. 605-2; the deposit is assumed by the transferee); (2) even when you mean to sell, inheritance registration is done first (Real Property Registration Act Art. 76-2, in force 1 April 2024); and (3) where the seller is a non-resident, the buyer withholds 10.21% of the sale price (Income Tax Act Arts. 212 and 213), which is later settled by a tax return. The specific tax, registration and division judgments are left to a tax accountant, a judicial scrivener and other qualified professionals.

Living abroad — in Taiwan, China and elsewhere — you inherit a tenanted Japanese sectional apartment (an owner-change property) and want to sell it. This article is for such heirs, and for the agents and local professionals who assist them: the practice of selling while tenanted, set out in order from the Civil Code, the Land and Building Lease Act, the Income Tax Act and the Real Property Registration Act, and from National Tax Agency material. Selling a vacant property as an overseas owner in general is at when an overseas owner sells Japanese real estate; the withholding on rent while you keep holding is a different topic. This article narrows to where the three conditions — "inheritance × tenanted (owner change) × non-resident seller" — overlap. Valuation, brokerage and the sale contract are handled by us (Yotsuba Real Estate Co., Ltd.); registration, tax and disputes are referred to their respective qualified professionals.

What differs between selling while tenanted (owner change) and selling vacant?

Owner change is a way of selling in which the tenant stays living there and the lessor's (owner's) position itself is carried over to the buyer. The buyer segment, the price and the procedure all differ from selling vacant.

Point	Owner change (tenanted)	Selling vacant
Buyer segment	Investors (who look at yield)	End-users (to live in) + investors
What is carried over	The lease, the tenant, the deposit	None (vacant at delivery)
Viewing	Restricted, as the tenant is present	Free to view
How price is seen	Rent income and yield	Nearby sale examples
Vacating	Not needed (the tenant stays)	Vacating required by delivery

A tenanted property can be sold without stopping the tenant's life — that is its merit. On the other hand, interior viewing is restricted and the price is seen through rent and yield. The judgment itself of whether to "sell, rent or keep" an inherited property is at selling or keeping the inherited family home. The whole picture of inherited real estate is at inheritance and real estate consultation.

When an heir living abroad sells, what comes first?

Before the sale contract, you get the property into a saleable state. Since ownership cannot be passed to a buyer while it is in the deceased's name, inheritance registration comes first.

Order	What to do	Who
1	Estate-division agreement (decide who acquires this property)	Heirs / drafting = administrative scrivener
2	Inheritance registration (move title from the deceased to the heir)	Judicial scrivener
3	Confirm the lease, deposit and tenant status	Licensed real estate agent
4	Valuation, brokerage, finding a buyer	Licensed real estate agent
5	Sale contract, settlement (ownership-transfer registration)	Licensed real estate agent / judicial scrivener

Inheritance registration has been mandatory since 1 April 2024 (Reiwa 6). Article 76-2 of the Real Property Registration Act requires the application within three years of learning that you have acquired real estate by inheritance, and neglecting it without good reason is subject to an administrative fine of up to ¥100,000 (Art. 164(1)). It is not that "you can skip registration because you are selling"; registration is needed precisely in order to sell. An heir living abroad must prepare a signature certificate (certificate of signature) in place of a Japanese seal certificate at the Japanese embassy/consulate abroad, and gathering documents takes time. Obtaining the local signature certificate and authentication is a matter for the local authorities / overseas mission. Valuation and site confirmation can proceed even from abroad, so they run in parallel with registration and the agreement.

What happens with notice to the tenant and the handover of the deposit?

Where the tenant has met the requirement of perfection (delivery of the building; Art. 31 of the Land and Building Lease Act), when a tenanted building is sold, the lessor's position transfers to the buyer (transferee) as a matter of course (Civil Code Art. 605-2(1)). Neither the tenant's consent nor, in principle, notice is a requirement of the transfer of position. In practice, however, the buyer gives notice to the tenant, since the rent-payment destination and contact change.

Point	What happens	Basis
Lessor's position	Transfers to the buyer (new owner) as a matter of course	Civil Code Art. 605-2(1)
Rent claim against the tenant	The buyer cannot assert it against the tenant without ownership-transfer registration	Civil Code Art. 605-2(3)
Deposit	The buyer (transferee) assumes the deposit-refund obligation	Civil Code Art. 605-2(4)
Notice	Not a requirement of the transfer, but done in practice for the change of payment destination, etc.	Practice

Because the buyer assumes the deposit, it is customary at settlement to carry the deposit-equivalent from the seller to the buyer (settle it out of the price). The lease, any tenant arrears, and the deposit amount are confirmed before signing. The practice of carrying over and settling the deposit in an owner-change property is set out in detail at how the deposit is carried over in an owner-change property.

What is the 10.21% withheld from the sale proceeds?

Where the seller is a non-resident (an heir living abroad), the sale price of land and buildings in Japan is subject to withholding. Article 161(1) of the Income Tax Act treats the price of domestic real estate as domestic-source income; Art. 212(1) places the withholding obligation on the payer (the buyer), and Art. 213 sets the rate. The rate is 10.21% (income tax 10% + special reconstruction income tax 0.21%). The buyer withholds and pays it by the 10th of the month following payment (National Tax Agency Tax Answer No. 2879).

Point	Content
Who withholds	The buyer (the payer of the price)
Rate	10.21% (income tax 10% + special reconstruction income tax 0.21%)
Exception (no withholding)	The buyer is an individual, acquires for their own or a relative's residence, and the price is ¥100 million or less (Income Tax Act Enforcement Order Art. 281-3)
For a tenanted investment property	The buyer is often an investor or corporation, not "residential," so withholding usually applies
Settlement	The non-resident seller files a Japanese tax return and settles against the actual capital-gains tax (refund if over-withheld)

Withholding is a "prepayment of tax," not the final amount. The actual capital-gains tax is computed by carrying over the acquisition cost and date from the deceased (Income Tax Act Art. 60) and settled by a tax return. To file as a non-resident, it is usual to appoint and register a tax agent (nozei kanrinin); this filing and settlement are the field of a tax accountant. In an owner-change property the buyer is often not residential, so plan your funds on the premise that the 10.21% withholding actually occurs. This is a different topic from the monthly withholding on rent if you keep holding — do not confuse them. Whether someone is a non-resident, and its relation to the delivery date, is at what decides whether you are a non-resident.

Whom do you ask for registration, the tax return and the division agreement (separate engagement)?

When the three conditions (inheritance, tenanted, non-resident) overlap, the roles span business entities.

What to do	Who
Valuation, brokerage, sale contract, handover of the lease	Licensed real estate agent (Yotsuba Real Estate Co., Ltd.)
Drafting the estate-division agreement	Administrative scrivener (Yotsuba Administrative Scrivener Office)
Inheritance registration / ownership-transfer registration	Judicial scrivener
Non-resident tax return / withholding settlement / tax agent	Tax accountant
A dispute over the estate division	Lawyer
Local signature certificate / authentication	Local authorities / overseas mission

What we (the real estate agent) handle is the valuation, brokerage and sale contract, and the handover of the lease and deposit. Inheritance registration and ownership-transfer registration go to a judicial scrivener, the non-resident tax return and withholding settlement to a tax accountant, the estate-division agreement to an administrative scrivener, and, where there is a dispute over division, to a lawyer.

Who should you consult?

Valuation, brokerage and the sale contract of the real estate are handled by Yotsuba Real Estate Co., Ltd. (licensed real estate agent, Tokyo Governor (1) No. 113304). Preparation of documents such as the estate-division agreement is handled by Yotsuba Administrative Scrivener Office. Inheritance registration and ownership-transfer registration are handled by a judicial scrivener, the non-resident tax return and withholding settlement by a tax accountant, and, where there is a dispute over division, by a lawyer — each within its exclusive field. The local signature certificate and authentication are matters for the local authorities / overseas mission.

These are independent business entities. You engage each directly. We neither pay nor accept referral fees or introduction commissions. Labour matters go to a certified social insurance labour consultant (Yotsuba Labour and Social Security Attorney Office), engaged by you directly. Consultation is free of charge.

Frequently asked questions

Q. Can I sell while a tenant is in place? Is the tenant's consent needed?
A. You can sell. If the tenant has taken delivery of the building and met the requirement of perfection (Land and Building Lease Act Art. 31), the lessor's position transfers to the buyer as a matter of course on the sale (Civil Code Art. 605-2(1)). The tenant's consent is not, in principle, required. In practice, though, the buyer notifies the tenant because the rent-payment destination changes.

Q. Who ends up refunding the deposit?
A. The buyer (new owner) assumes the deposit-refund obligation (Civil Code Art. 605-2(4)). So it is customary at settlement to carry the deposit-equivalent from the seller to the buyer (settle it out of the price). Any arrears and the deposit amount are confirmed before signing.

Q. Is the 10.21% withholding always taken? Can it be recovered?
A. For a tenanted investment property, the buyer is often an investor or corporation and not "residential," so 10.21% is usually withheld (Income Tax Act Arts. 212 and 213). This is a prepayment of tax; the actual capital-gains tax is settled by a tax return, with a refund if over-withheld. A non-resident's filing usually requires appointing a tax agent; confirm the settlement with a tax accountant.

Q. May I put the sale in motion first and leave the inheritance registration for later?
A. Valuation and finding a buyer can run in parallel, but since ownership cannot be passed to a buyer while it is in the deceased's name, registration is needed by settlement. Inheritance registration has been mandatory since 1 April 2024, with application required within three years of learning of the acquisition (Real Property Registration Act Art. 76-2). An heir living abroad needs time to arrange a signature certificate and the like, so consult a judicial scrivener and administrative scrivener early.

Sources (primary)

• e-Gov "Income Tax Act" — Act No. 33 of 1965. Art. 161(1) (price of domestic land etc. is domestic-source income); Art. 212(1) (the payer's withholding obligation on payments to a non-resident); Art. 213 (rate); Art. 60 (carry-over of acquisition cost and date for assets acquired by inheritance, etc.). Adding the 0.21% special reconstruction income tax, the rate is 10.21%. Accessed 3 September 2026.
• e-Gov "Order for Enforcement of the Income Tax Act" — Cabinet Order No. 96 of 1965. Art. 281-3 (no withholding where the buyer is an individual acquiring for their own or a relative's residence and the price is ¥100 million or less). Accessed 3 September 2026.
• National Tax Agency Tax Answer No. 2879 "When you buy land etc. from a non-resident" — rate 10.21%, the ¥100 million / residential exception, payment by the 10th of the following month. Accessed 3 September 2026.
• e-Gov "Civil Code" — Act No. 89 of 1896. Art. 605-2 (transfer of the lessor's position — para. 1 automatic transfer where a perfected tenant exists; para. 3 cannot assert against the tenant without ownership-transfer registration; para. 4 assumption of the deposit-refund obligation). The revised Civil Code came into force on 1 April 2020 (Reiwa 2). Accessed 3 September 2026.
• e-Gov "Land and Building Lease Act" — Act No. 90 of 1991. Art. 31 (a building lease is perfected upon delivery). Accessed 3 September 2026.
• e-Gov "Real Property Registration Act" — Act No. 123 of 2004. Art. 76-2 (duty to apply for the ownership-transfer registration on inheritance — within three years of learning of the acquisition; in force from 1 April 2024 (Reiwa 6)); Art. 164 (administrative fine of up to ¥100,000 for neglecting it without good reason). Accessed 3 September 2026.

Whether withholding applies, the rate, the settlement by tax return, the computation of acquisition cost and whether any special provisions apply vary with the property, the buyer and each person's circumstances. This article does not assess any individual case. Confirm the tax and filing with a tax accountant, the legal judgment of shares and division with a lawyer or other qualified professional, and registration with a judicial scrivener.

This article is general information. It does not judge or guarantee the feasibility of any particular inheritance/sale or any tax amount. Valuation and brokerage and the sale contract are undertaken by Yotsuba Real Estate Co., Ltd. (licensed real estate agent); preparation of the estate-division agreement and other documents by Yotsuba Administrative Scrivener Office — independent business entities, engaged separately and directly. Inheritance registration and ownership-transfer registration go to a judicial scrivener, tax to a tax accountant, disputes to a lawyer, each engaged directly. We neither pay nor accept referral fees.

About the author

Joji Uramatsu — licensed real estate transaction specialist (Tokyo Governor registration No. 293544) and administrative scrivener (registration No. 25087022). Representative Director, Yotsuba Real Estate Co., Ltd. (licensed real estate agent, Tokyo Governor (1) No. 113304); principal, Yotsuba Administrative Scrivener Office. Kohinata, Bunkyo, Tokyo, about five minutes' walk from Myogadani station. Property and paperwork are put on the same table. Full profile: author page.