Japan's mortgage tax deduction for foreigners: what the 2026 rewrite changed

Does your visa decide whether you get the deduction?

Japan's mortgage tax deduction — jutaku kariirekin to tokubetsu kojo (住宅借入金等特別控除), usually shortened to jutaku loan kojo (住宅ローン控除) — is Article 41 of the Special Taxation Measures Act. It takes 0.7% of your year-end loan balance straight off your income tax bill, for ten years, or thirteen for certified housing.

English articles on this subject almost all begin by telling you that you need permanent residency. That is a statement about banks, and for one loan product it is exactly right. It is not a statement about the deduction. Article 41(1) opens like this:

The subject is 個人 — an individual. The words 居住者 (resident) and 非居住者 (non-resident) do not appear in Article 41 at all. 国内において ("within the country") attaches to the house, not to you: the property must be in Japan.

That is not an accident of drafting. Until 31 March 2016 the article did say resident. The National Tax Agency's own Q&A on this deduction states that where the handover of the house takes place on or after 1 April 2016, the deduction is available "whether the claimant is a resident or a non-resident", and that before that date a person who took handover while a non-resident could not claim it.

One consequence follows from the wording and needs saying plainly, because it is where the good news stops. Article 41(1) deducts the amount from the income tax payable by that person for that year. A deduction is subtraction. If you owe little or no Japanese income tax in a given year, there is little or nothing for it to be subtracted from. Whether that describes you is a question about your own tax position, and answering it for you is something we are not permitted to do — that is work for a zeirishi (税理士) (licensed tax accountant) or your local tax office.

What changed on 1 April 2026

If you are reading anything else in English about this deduction, check its date. Article 41 was rebuilt by Act No. 12 of 2026, and the rewrite took effect on 1 April 2026. Supplementary Article 41 of that act applies the new text to anyone who moves into the home on or after 1 January 2026, with the old text preserved for earlier occupancy.

Three things changed that matter to readers:

• ■The deadline was extended by five years. Article 41(1) now runs to 31 December 2030. Guides written before spring 2026 will tell you the scheme ends at the end of 2025.
• ■A new 40 m² route opened for pre-owned homes. The current Article 41(17) covers 特例既存住宅 — a small pre-owned home. Those words appear nowhere in the version of Article 41 that was in force in 2025. This is new, and it is aimed squarely at the compact city-centre flat.
• ■Many paragraph numbers moved. The 40 m² rule for certified housing used to be paragraph 21; it is now paragraph 18. Some did not move — paragraphs 1, 35 and 36 kept their numbers — so a citation can look right and still point at the wrong text. This is why we cite the statute rather than a summary of it — including the National Tax Agency's own circular on floor area, which at the time of writing still refers to the Enforcement Order's old paragraph 30 where the current text has paragraph 31.

Seven conditions, and none of them is your visa

Article 41(1), with Article 26 of the Enforcement Order, sets out conditions that all have to hold at once. None of them mentions nationality.

• ■The house is in Japan. 国内において, in the opening line.
• ■You move in within six months of the date of construction, acquisition or completion of the renovation. The statute says 六月以内 and it is a hard edge, not a guideline.
• ■You occupy it between 1 January 2017 and 31 December 2030.
• ■Floor area of 50 m² or more (Enforcement Order Art.26(1)), with the 40 m² exceptions below.
• ■At least half the floor area is your home. If you run a business from part of it, the residential part must still be at least 二分の一. And if you own more than one home, only your main one counts.
• ■Total income of ¥20,000,000 or less — gokei shotoku kingaku (合計所得金額), as defined in Article 2(1)(xxx) of the Income Tax Act. This is tested year by year: the statute says "for a year in which…", so a single high year costs you that year's deduction, not the whole entitlement.
• ■A repayment period of ten years or more. Article 41(1)(i) to (iv). Two traps sit here. Refinancing or paying down to leave under ten years remaining can end the deduction; and a loan from your employer at no interest or at a markedly low rate is excluded outright by Article 41(20).

One more, in Article 41(36), is procedural: the deduction applies only if you claim it in a tax return, with the calculation statement and the register extract — the toki jiko shomeisho (登記事項証明書) — attached. Nobody applies it for you in the first year. Article 41(37) does leave the tax office room to allow it where it finds there were unavoidable circumstances, but that is relief after the fact, not a reason to skip the return.

The 40 m² rules are three different rules

Every guide that mentions the 40 m² relaxation describes it as one rule with one income limit. In the current statute it is three separate paragraphs, and their conditions are not the same. If you are buying a compact flat, this table decides whether you get anything at all.

Read the first row again. For a new build, the 40 m² route is effectively closed: the building confirmation had to be obtained by the end of 2023. For a pre-owned flat it is open, and the paragraph that opens it is new in 2026. The old paragraph 21, covering certified housing, carried a deadline of 31 December 2025; the current paragraph 18 does not.

Note also that the income ceiling for all three is ¥10,000,000, not the ¥20,000,000 that applies at 50 m² and above. Choosing the smaller flat cuts your income cap in half.

How the floor area is measured, and why your brochure is wrong

The statute gives a number and no method. The method is in the National Tax Agency's circular, and it produces three results that surprise people.

A house is measured to the centre of its walls

Circular 41-10: the floor area is the horizontal projected area enclosed by the centre lines of the walls and other partitions, which is the figure shown in the property register.

A flat is measured to the inside face — so it shrinks

Circular 41-11: for a unit in a block, the area is the one enclosed by the inside lines of the walls, excluding corridors, stairwells, lift shafts, shared toilets and washrooms, and the roof. Developers' brochures usually quote the centre-line figure, which is a few per cent larger. At the 50 m² boundary that difference decides the deduction, and it is the same trap we set out in our guide to property tax and purchase costs, where two different taxes use two different floor-area thresholds.

Co-ownership does not divide the number

Circular 41-12 is the one people get wrong in both directions. The test is applied to the whole of the property you are measuring — including any part not used as a residence, and without reducing it to your share. Buying half of a 90 m² house with your spouse does not give you 45 m² for this test. You are at 90 m².

Note the unit of measurement, because it is easy to overshoot here: for a flat, "the whole" means your entire owned unit, not the entire block. The circular says so expressly. So two spouses owning a 70 m² flat between them are tested at 70 m², not at 35 m² each and not at the size of the building.

The energy rule that takes the deduction to zero

This is the single most expensive thing on this page, and among the English-language guides we read while preparing this article, we did not find it stated correctly. The date is one problem. The bigger one is the mechanism.

Article 41(24):

同項の規定は、適用しない — paragraph 1 shall not apply. The deduction is not reduced, not capped, not tapered. Article 41(1) is switched off and the answer is zero.

It bites when three things are true at once: the home is newly built (or newly built and never lived in), it does not meet the energy standard, and you move in on or after 1 January 2024. Article 26(43) of the Enforcement Order then gives two ways out, and only two:

• ■the building confirmation — kenchiku kakunin (建築確認) — under Article 6(1) of the Building Standards Act was obtained on or before 31 December 2023, or
• ■the house was built on or before 30 June 2024.

Both are dates you can check on documents rather than take on trust, and both are dates a seller of an unsold 2024 new build has every reason not to raise. The register extract gives you the construction date; the building confirmation is a separate document the seller holds.

This applies only to new builds. A pre-owned home is not caught by Article 41(24).

Pre-owned homes and the 1982 line

For a home that has been lived in, Article 26(3) of the Enforcement Order adds one more test, and it has two alternative routes:

• ■the house was built on or after 1 January 1982, or
• ■it is certified as meeting the taishin kijun (耐震基準) (earthquake resistance standard) referred to in Article 41(1).

The first route is the cheap one. Under Article 18-21(1)(i)(a) of the Enforcement Rules, the register extract on its own proves it — you are reading a date off a document you should be getting anyway. The second route needs a separate engineer's certificate, which costs money and takes time.

If the property fails both, Article 41(35) leaves a door open: apply for earthquake retrofitting by the date of acquisition and have the work bring the house up to standard by the day you move in — which, remember, is at most six months later. You are working against two deadlines at once, and there is little room between them.

The same 1982 date appears in the purchase-cost taxes, which is why we treat it as one of the few dates worth memorising about Japanese property.

Flat 35: the one place where your status is the rule

Everything above is tax law, and tax law does not ask about your visa. Lending is different, and there is one product where the requirement is published rather than a matter of practice.

Flat 35 (フラット35) is the long-term fixed-rate loan backed by the Japan Housing Finance Agency. Its published eligibility conditions state that applicants are 日本国籍の方、 永住許可を受けている方または特別永住者の方 — Japanese nationals, holders of permanent residence permission, or special permanent residents. The same page carries a warning that is worth reading twice:

If it emerges that you did not hold that status, the loan becomes repayable in full, at once. This is not a penalty clause buried in a contract; it is on the public eligibility page.

The trade-off nobody sets out

Here is the part that changes how you plan. The same page states that Flat 35 can be used even if the borrower does not join the group credit life insurance — dantai shin'yo seimei hoken (団体信用生命保険), universally shortened to danshin (団信) — for health or other reasons.

Group credit life insurance pays off the mortgage if the borrower dies. Because it is insurance, it is underwritten on your health, and a health history you cannot change is a gate that no amount of income solves. So the two main gates run in opposite directions:

• ■Flat 35 requires permanent residence or special permanent residence, but does not require you to pass the health screening.
• ■Where a lender makes the insurance a condition of the loan, health becomes decisive — and that is exactly the case where Flat 35's willingness to lend without it matters, if you hold the status it asks for.

We have deliberately not written "private banks require danshin" as a blanket rule. That is a claim about many institutions' current practice, and we have not read all of them. What we can point to is the one published rule, and the fact that it does not work the way the visa requirement does. Ask each lender the two questions separately: what status do you require, and is the group credit life insurance a condition.

The mortgage registration discount has its own conditions

Registering the mortgage is taxed separately from the deduction, and people assume the reduced rate is automatic. It is not.

The standard rate is 0.4% of the loan amount — Appended Table 1, item 1(5) of the Registration and Licence Tax Act. Article 75 of the Special Taxation Measures Act cuts it to 0.1% until 31 March 2027, but only where all of the following hold:

• ■you occupy the house yourself — 当該個人の居住の用に供した場合;
• ■the registration is made within one year of construction or acquisition;
• ■the floor area is 50 m² or more (Article 41 of the Enforcement Order — note there is no 40 m² route here); and
• ■you obtain a certificate from the mayor of the municipality or the ward head, which is a step somebody has to actually take.

On a ¥30,000,000 loan the difference between the two rates is ¥90,000. Our purchase cost calculator works this figure out along with the broker's commission cap, stamp duty and acquisition tax.

What to ask, and what we cannot tell you

Take these to the seller, the agency, and a tax professional. Each one maps to a provision above.

• ■What floor area is on the register extract? Not the brochure. For a flat, expect it to be smaller.
• ■For a new build: when was the building confirmation obtained, and does the home meet the energy standard? If the answers are "2024 or later" and "no", Article 41(24) may take the deduction to zero.
• ■For a pre-owned home: what is the construction date? Before 1 January 1982 and you are into certificate territory.
• ■Can I realistically move in within six months of handover?
• ■Is my repayment period ten years or more, and will refinancing later shorten it below that?
• ■To the lender: what residence status do you require, and is group credit life insurance a condition? Two questions, not one.
• ■To the lender: will the mortgage be registered within a year, and who obtains the municipal certificate?

What we cannot do is tell you how much you personally would get back, whether a particular lender will approve you, or whether a particular property is a good buy. The first is tax advice, the second is a lending decision that belongs to the lender, and the third is brokerage. We are none of those three things. Everything on this page is the general rule, with the source next to it so you can check our work.

Sources

Every statutory provision below was read as in force on 4 August 2026 using e-Gov's point-in-time service, which is important here: a summary written before April 2026 will have the paragraph numbers wrong even where it has the substance right.