Housing Loan Tax Deduction (First-Year Tax Return)
If you took out a housing loan to buy or build your home, 0.7% of your outstanding loan balance at year-end can be deducted from your income tax. The first year requires a tax return. From year 2, salaried employees hand the certificates sent by the tax office and their lender to their employer and claim it through the year-end adjustment. Freelancers, the self-employed, and those with rental income must keep filing a tax return.
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Steps
In January–February of the year after purchase, your lender will mail you the year-end loan balance certificate
Obtain a certificate of registered matters from the Legal Affairs Bureau (online application available)
In the e-Tax filing corner, select 'Housing Loan Special Tax Credit' and enter the required details
File your tax return with the tax office for your area. A return filed to claim the housing loan credit counts as a refund claim, so it is not tied to the filing period — you can submit it any time from January 1 of the following year, for five years
Submit your tax return between February 16 and March 15. If you are also claiming something that requires filing by the statutory deadline — such as the blue-return special deduction of 550,000 or 650,000 yen — you must meet that date even when the return is a refund claim
From year 2, salaried employees give their employer two documents for the year-end adjustment: the special deduction certificate and application form sent by the tax office, and the year-end loan balance certificate from their lender. Freelancers, the self-employed, and those with rental income must keep claiming through a tax return
Important notes
The deduction period depends on the type of home and the year you moved in (13 years at most). For an 'other' home - one that is neither a certified home, a ZEH-level energy-saving home, nor an energy-standard-compliant home - occupied between 2024 and 2030, the period is in principle 0 years. Only homes that received building confirmation by December 31, 2023 or were built by June 30, 2024 qualify, for 10 years with a maximum credit of 140,000 yen a year (for a special small home — 40 to under 50 square metres with building confirmation received by December 31, 2023 — only the building-confirmation route qualifies)
The deduction is not available in any year your total income exceeds ¥20 million
The home must have a floor area of at least 50 square metres, judged by the figure on the certificate of registered matters, with at least half of it used solely as your own residence. Homes of 40 to under 50 square metres also qualify, but only if your total income is 10 million yen or less
Conditions differ for pre-owned homes and renovations — check the NTA website for details
Don't forget the year-end adjustment procedure from year 2 onward — your employer will ask for the balance certificate each October–November
You must move in within 6 months of the home being built or acquired and still be living there on December 31 of each year you claim. The loan must be repayable over 10 years or more, and loans from relatives or friends do not qualify
You cannot claim the credit if any of the following applies: (1) during the six years made up of the year you moved in, the two years before it and the three years after it, you claimed a capital gains measure on a former home, such as the long-term capital gains special measure or the 30-million-yen special deduction; (2) you bought the home from a relative who shares your household finances, or from another party in a special relationship with you, both at the time of purchase and afterwards; or (3) you acquired the home by gift. If you own two or more homes, only the one regarded as your main residence qualifies
For homes occupied between 2024 and 2030, the deduction period and the annual cap on the credit (0.7% of the year-end loan balance) are as follows. Certified long-term quality homes and certified low-carbon homes: 13 years, 315,000 yen. ZEH-level energy-saving homes: 13 years, 245,000 yen. Energy-standard-compliant homes: 13 years and 210,000 yen if occupied in 2024 or 2025, 13 years and 140,000 yen if occupied in 2026 or 2027, and 0 years if occupied from 2028 to 2030 (homes that received building confirmation by December 31, 2027 or were built by June 30, 2028 qualify for 10 years with a cap of 140,000 yen)
If you move into a certified or energy-efficient home between 2024 and 2030 and you are an 'eligible individual' — under 40 with a spouse, 40 or over with a spouse under 40, or supporting a dependent relative under 19 — the caps above are raised to 350,000, 315,000, 280,000 and 210,000 yen respectively. Where every spouse or dependent relative you rely on for this is a non-resident of Japan, you must also submit documents proving your relationship to your spouse, or documents proving your relationship to one of the dependent relatives together with proof of remittances to them (anything already submitted or presented for withholding or the year-end adjustment does not need to be sent again)