Buying Property in the U.S. vs. Japan: A Deep Dive

When it comes to investing in real estate as a foreign national, the United States and Japan are often seen as two of the most attractive and stable markets. Both countries allow foreign ownership and have mature property systems, but that’s where many similarities end.
If you’re considering purchasing property in Japan and weighing it against other global markets like the U.S., this guide breaks down the differences across legal frameworks, financing, taxes, and more. Understanding how these two markets compare can help you make a more informed decision, especially if Japan is your intended destination.

1. Ownership Rights: Can Foreigners Buy?

United States

Foreign nationals can purchase property in the U.S. without restriction. Whether you’re interested in a vacation home, rental apartment, or commercial property, the law treats non-residents much the same as citizens. The only exception may come in the form of co-op buildings, which often require board approval and residency status. Importantly, owning property in the U.S. does not provide any path to residency or visa status.

Japan

Japan also imposes no legal restrictions on foreign property ownership. Whether you reside in the country or not, you can fully own land and buildings. However, it’s important to understand the distinction between freehold and leasehold ownership. Freehold gives you full rights over both land and structure, while leasehold means you own the building but lease the land it’s on, commonly for 30–50 years.

Like the U.S., Japan does not grant visas or residency privileges based on property ownership. For investors planning to live in Japan, a visa must be secured separately.

Mr.LAND Insight: Many of our clients are non-residents who successfully purchase freehold properties in Japan without living here, proof that the system is open, even if you’re abroad.

2. Financing: Access to Mortgages as a Foreigner

United States

Foreigners can apply for U.S. mortgages, but terms vary significantly by lender. Expect higher down payments (typically 30–50%), additional documentation (e.g. international credit reports), and sometimes higher interest rates. Major cities and banks often have more experience working with foreign buyers and can offer structured financing, including fixed-rate or adjustable-rate loans.

Japan

Financing as a foreign national in Japan is considerably more challenging, especially for non-residents. Most Japanese banks require:

• Permanent residency or a long-term visa
• Stable income in Japan
• Japanese language ability
• A Japanese guarantor

While some exceptions exist – such as a few banks that offer loans to non-residents – the vast majority of foreign buyers purchase in cash. Individual non-residents are rarely approved for loans from Japanese banks and it is best not to count on it. International buyers sometimes secure financing from banks in their home countries or explore offshore lending.

Mr.LAND Insight: If you’re not a Japanese resident, plan for a cash purchase or international financing. We work with clients to ensure documentation and legal processes are handled smoothly, even without local bank support.

3. Investment Profile: Property Types and Returns

United States

U.S. real estate offers a wide range of investment options, from income-generating apartments in high-demand cities to suburban homes with strong appreciation potential. Markets like New York, Los Angeles, and Miami offer rental income opportunities, while lower-cost states may appeal to investors seeking long-term capital growth

Japan

Japan’s market has a unique structure: land typically retains or gains value, but buildings depreciate rapidly, especially if they’re more than 20–25 years old. This has a direct impact on investment strategy.

Urban centers like Tokyo, Osaka, and Fukuoka have stable rental demand, including from foreign tenants. Meanwhile, regional areas offer lower entry prices and high yield potential, especially if you’re targeting short-term rentals or local residential demand.

Mr.LAND Insight: In Japan, location is everything. We help clients identify areas where rental demand is consistent and property conditions are favorable, whether in Tokyo or in up-and-coming regional hubs.

4. Taxes and Ongoing Costs

United States

Foreign property owners in the U.S. are subject to:

• Federal income tax on rental income
• Capital gains tax on sale profits
• Estate tax in the event of inheritance
• FIRPTA withholding (typically 15%) when selling U.S. real estate as a non-resident

These obligations require proper planning with a tax professional familiar with U.S. real estate law and international property transactions.

Japan

In Japan, foreign property owners face:

• Annual fixed asset tax (1.4%) and city planning tax (0.3%)
• Rental income tax (~20.42%)
• Capital gains tax upon resale (varies by holding period and residency status)
• Acquisition tax, registration fees, and stamp duty during the transaction (typically 6%to 10% of purchase price)

Mr.LAND Insight: Our team walks buyers through the complete cost structure, from upfront taxes to annual fees, to ensure your budget covers the full lifecycle of the investment.

5. Purchase Process and Timeline

United States

The typical timeline for a U.S. property purchase is 30–60 days. After an offer is accepted, the buyer usually

• Conducts an inspection
• Applies for financing
• Completes title checks and insurance
• Closes with the help of an attorney or escrow agent

The process is transparent and heavily regulated, with thorough documentation and broad access to professionals.

Japan

In Japan, the process takes about 1–3 months. Key stages include:

• Submitting a purchase application
• Reviewing the Explanation of Important Matters (重要事項説明)
• Signing the contract
• Completing payment
• Registering ownership at the Legal Affairs Bureau

A judicial scrivener (司法書士) is usually required to manage registration and ensure legal compliance. It is also important to note that almost all documents are in Japanese.

Mr.LAND Insight: Language and legal support are essential. We provide bilingual contract review, licensed representation, and post-purchase assistance for overseas clients.

6. Cultural and Practical Considerations

United States

International buyers often find the U.S. real estate market familiar, with open listings and clear online platforms which are widely available. However, buyer protections and disclosure laws vary from state to state.

A key advantage is the escrow system, which provides a neutral third party to securely hold funds during the transaction. Escrow ensures that neither the buyer nor the seller has access to the money until all contractual obligations are met, offering significant financial protection throughout the process.

However, buyer protections and disclosure laws vary by state, so working with experienced professionals is essential.

Japan

In Japan, the market can feel more opaque. Listings may not be publicly advertised, negotiation is typically limited, and formality is expected. Moreover, managing a property remotely, especially as a non-resident, requires trusted partners on the ground.

Unlike the U.S., Japan does not commonly use escrow services in real estate transactions. Buyers typically transfer the full purchase price directly to the seller’s account on Closing Day. This can feel risky for international buyers unfamiliar with the local process.

Property depreciation, lack of central heating, and smaller room sizes may also surprise first-time buyers from abroad.

At Mr. LAND, we provide support to ensure safe and transparent money handling:

• We have partnered with a third party escrow service called Escrow Agent Japan (EAJ), providing additional protection similar to the U.S. system.
• We provide clear, bilingual explanations of every step of the payment process so our clients know exactly where their money is at all times.

Property depreciation, lack of central heating, and smaller room sizes may also surprise first-time buyers from abroad.

Mr.LAND Insight: Our bilingual agents bridge the gap, not only in language, but in expectations. We work to align global buyer needs with Japan’s unique real estate norms.

7. Step by Step comparison

Stage	Japan	United States
1. Property Search	Properties are often listed through agents or local sites (e.g. SUUMO, At Home). Not all listings are public. English-language listings are limited.	Public MLS systems and platforms make searching easy. Most listings are publicly available.
2. Hire Agent	Licensed agent required to explain legal disclosures. Bilingual agents are highly recommended for foreign buyers.	Optional but common. Buyer’s agent is typically paid through seller’s commission.
3. Viewing / Inspection	Viewings are arranged through agents. Some properties require appointments. Virtual viewings are possible.	Open houses are common. Private tours and virtual showings also widely available.
4. Pre-Loan Approval	Buyers seeking financing undergo pre-approval (事前審査) before offer. Non-residents typically purchase in cash.	Mortgage pre-approval is highly recommended before submitting an offer. Strengthens buyer credibility.
5. Offer Submission	Written offer (購入申込書) submitted through agent. While limited, room for negotiation.	Written offer typically includes contingencies (inspection, financing). Negotiation is standard practice.
6. Legal Disclosure	Mandatory Explanation of Important Matters (重要事項説明) provided by a licensed real estate transaction specialist before signing.	No exact equivalent. Buyer receives seller disclosures and title report. Home inspection follows.
7. Sales Contract	Signed after Explanation of Important Matters. Earnest Money Deposit of 5–10% paid. Contract is legally binding.	Purchase agreement signed after offer acceptance. Earnest money (~1–3%) is paid.
8. Due Diligence	Judicial scrivener confirms property title. Physical inspection optional but recommended.	Buyer arranges home inspection, appraisal, and title search. May renegotiate terms based on findings.
9. Financing / Final Payment	Final mortgage application submitted (if applicable). Remaining Balance and Closing costs are paid. Non-residents usually pay in full by cash or overseas loan.	Final mortgage approval obtained. Loan terms locked. Down payment and closing funds prepared.
10. Closing	Payment and legal registration handled by a judicial scrivener. Ownership is registered at the Legal Affairs Bureau.	Closing managed by attorney or escrow officer. Buyer signs documents and receives title and keys.
11. Post-Purchase	Fixed asset tax (1.4%) and city planning tax (0.3%) paid annually. Management recommended for non-residents. One time Real Estate Purchase Acquisition Tax also needs to be paid.	Annual property tax and possible HOA fees. Property management optional for absentee owners.

Why Choose Mr. LAND?

At Mr. LAND, we specialize in helping foreign nationals buy property in Japan with full confidence. From understanding the market to navigating paperwork and managing your investment, we offer a one-stop solution tailored to your needs, whether you’re living in Japan or investing from overseas.

We provide:

• Full multilingual support
• Trusted financial handling and escrow services
• Property management services for overseas owners

Looking to buy in Japan?
Contact us for a free consultation and personalized property guidance today.