Proposed revision to taxes to encourage removal of abandoned homes

Collapse houseThe Japanese government is considering a revision to the fixed asset tax code in order to encourage the removal of dilapidated and abandoned homes.

Currently, the annual fixed asset tax on land is reduced to a sixth of its original level if there is an existing house on the land. This reduction was introduced in 1973 when Japan was going through a period of rapid growth as a means to encourage the conversion of agricultural land into housing. The reduction also applies to empty houses, so demolishing a house would mean a higher tax bill. 

A survey in 2013 found that there were over 8,200,000 vacant homes across Japan, comprising 13.5% of all housing stock. Not all vacant homes are abandoned. This number includes houses used as vacation homes as well as homes that are empty due to being listed for sale or for rent.

Both national and local governments are concerned about abandoned homes as they may be subject to arson attempts and can pose a threat to the immediate neighbourhood. Forcible demolitions without the owner’s consent require both money and valuable time spent in court.

The proposed revision could mean that the reduction will still apply after the house has been demolished, provided that the local government deemed the property to be dangerous. Owners that have already demolished their property may also be eligible for an extended period of tax reductions.

The revision could be enacted from 2015.

Source: The Nikkei Shimbun, August 2, 2014.

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