Buying in Japan10 min read

Japan Home-Loan Tax Credit in 2026: What Existing-Home Buyers Can Claim

From 2026, qualifying existing homes can receive a 0.7% home-loan tax credit for 10 or 13 years, with higher borrowing limits for energy-efficient used housing and a new route for some 40–50 m² homes; the buyer still has to satisfy residence, income, loan-term and property requirements.

By Engawa Editorial TeamPublished August 22, 2026Last reviewed August 22, 2026

Buyer reviewing Japan's 2026 home-loan tax credit rules for an existing home — The 2026 mortgage-tax reform changes the economics of some owner-occupied existing homes. Illustration from the Engawa Journal.

Japan extended its home-loan tax credit (住宅ローン減税) for another five years and changed the treatment of homes occupied from January 1, 2026. For existing-home buyers, the useful change is that qualifying energy-efficient used homes can receive higher eligible loan-balance caps and a 13-year credit period, while some smaller 40–50 m² existing homes can now qualify under the relaxed floor-area rule.

The credit is generally 0.7% of the eligible year-end loan balance, subject to the property's category, the statutory borrowing cap, your actual Japanese income-tax liability and the other eligibility rules. It is not a closing-cost rebate and it is not automatically available to an overseas investor who never uses the property as a qualifying main residence.

The 2026 existing-home rules at a glance

For a qualifying existing home occupied in 2026, the Ministry of Finance's 2026 tax-reform outline sets these standard categories:

Certified existing home or ZEH-level energy-efficient existing home: eligible year-end loan-balance cap ¥35 million, credit rate 0.7%, credit period 13 years.
Energy-efficiency-standard existing home: cap ¥20 million, rate 0.7%, period 13 years.
Other qualifying existing home: cap ¥20 million, rate 0.7%, period 10 years.

There are enhanced borrowing caps for certain child-rearing households and younger married couples, so use the current Ministry of Land, Infrastructure, Transport and Tourism table when that status applies rather than assuming the standard cap above.

The important buyer takeaway is that energy performance can now change the tax-credit value of a used home, not just its utility bills or comfort.

A simple worked example

Assume you buy a qualifying existing ZEH-level home, move in during 2026 and have an eligible year-end loan balance of ¥30 million.

Because ¥30 million is below the standard ¥35 million cap for this category, the maximum credit before considering your actual tax liability would start at:

¥30,000,000 × 0.7% = ¥210,000 for that year.

If the same home had a ¥40 million eligible year-end balance, the standard cap would limit the base to ¥35 million, so the starting maximum would be:

¥35,000,000 × 0.7% = ¥245,000.

That does not mean every buyer automatically receives those amounts. The credit is an income-tax credit, so the usable amount depends on the statutory rules and your tax position.

Why a 40–50 m² apartment may now qualify

One of the most practical 2026 changes is the floor-area rule.

MLIT says the reform extends the 40 m² minimum route to existing homes as well as new homes. That can matter for compact urban apartments that previously fell below the usual 50 m² threshold.

But the relaxed rule is not universal. MLIT states that buyers with total income above ¥10 million, and buyers using the enhanced borrowing cap for child-rearing/young-couple households, generally remain subject to the 50 m² threshold.

So a 43 m² apartment is not automatically eligible just because the reform mentions 40 m². Check both the registered floor area and the buyer-side income/status conditions.

The main-residence requirement matters for overseas buyers

The phrase "foreign buyer" does not determine eligibility by itself. The more useful question is whether the acquisition satisfies the main-home tax-credit requirements.

The National Tax Agency's current guidance for homes occupied in 2026 says the property must be used as the taxpayer's home, and the buyer generally must move in within six months after acquisition and continue using it as a residence through the relevant period.

That means an overseas buyer purchasing a Japanese apartment purely as a rental or second-home investment should not budget the home-loan tax credit as if it were a standard acquisition subsidy.

For broader overseas-buyer ownership rules, see Engawa's guide to whether foreigners can buy property in Japan.

Other buyer conditions to check before relying on the credit

The tax credit has several buyer and financing conditions. Current NTA and MLIT guidance includes requirements such as:

the home is principally used as your residence;
you move in within six months after acquisition;
the qualifying loan is generally repayable over 10 years or more;
total income generally does not exceed ¥20 million;
at least half of the floor area is used for residential purposes when the property combines home and business use;
the home satisfies the applicable existing-home and seismic-performance requirements;
the acquisition is not from certain related parties under disqualifying circumstances.

These are not details to leave until after closing. If the tax credit materially changes your affordability calculation, confirm eligibility before making the purchase decision.

Energy-efficient existing homes deserve a document check

The 2026 reform rewards some higher-performing existing homes, but the tax category has to be supportable with the required evidence.

Do not infer "ZEH-level" or "energy-efficiency-standard" from an agent's marketing copy alone. Ask what certificate or official documentation will be available for the tax filing and whether the property falls into the statutory category used by the 2026 credit.

For an older home, especially an akiya, also separate tax-credit eligibility from the question of whether renovation work requires building confirmation. Engawa's akiya renovation and 2025 building-confirmation guide covers that different compliance issue.

First-year filing: this is not automatic at closing

The National Tax Agency says that for the first year, the taxpayer generally claims the credit through an income-tax return with the required supporting information or documents.

For qualifying salaried employees, later years can generally be handled through the year-end adjustment system.

That is another reason not to treat the credit like a seller concession or acquisition-tax discount: it is realized through your Japanese tax filing process after the purchase and occupancy conditions are met.

A buyer decision checklist

Before including the home-loan credit in your purchase model, confirm these seven points:

Occupancy year: will you begin using the home as your residence in 2026?
Property category: certified, ZEH-level, energy-efficiency-standard or other qualifying existing home?
Registered floor area: is it at least 50 m², or can you validly use the relaxed 40 m² rule?
Loan term: does the financing meet the 10-year repayment requirement?
Income test: are you within the applicable income ceiling, including the stricter rule for the 40–50 m² route?
Existing-home evidence: do you have the required seismic/quality/energy documentation for the category claimed?
Tax filing: can you complete the first-year Japanese return and supply the required supporting information?

If you are comparing total cash needed at purchase, keep the future income-tax credit separate from immediate transaction costs. Engawa's Japan closing-cost calculator is designed for the latter.

FAQ

What is Japan's home-loan tax credit rate in 2026?

For qualifying homes occupied in 2026, the credit rate is generally 0.7% of the eligible year-end loan balance, subject to the applicable borrowing cap, tax liability and other statutory requirements. The credit period depends on the property category: qualifying energy-efficient existing homes can receive 13 years, while other qualifying existing homes generally receive 10 years.

Can a used home in Japan qualify for the mortgage tax credit in 2026?

Yes. Existing homes remain eligible when the buyer and property meet the statutory conditions. From 2026, qualifying certified or ZEH-level existing homes have a ¥35 million standard loan-balance cap for 13 years, energy-efficiency-standard existing homes have a ¥20 million cap for 13 years, and other qualifying existing homes generally use a ¥20 million cap for 10 years.

Can a 40 m² apartment qualify for Japan's home-loan tax credit in 2026?

Potentially. The 2026 reform extends the relaxed 40 m² floor-area threshold to existing homes, but the relaxed rule has income and other limitations. Buyers with total income above ¥10 million and buyers using the child-rearing/young-couple enhanced borrowing limit generally need at least 50 m².

Can a non-resident overseas investor claim Japan's home-loan tax credit?

Do not assume so. This is a tax credit for a qualifying main home, with requirements including moving in within six months and continuing to use the property as the taxpayer's residence. An overseas investment property that is not the buyer's qualifying residence does not satisfy that core use requirement.

Do I claim the Japanese home-loan tax credit automatically at closing?

No. The National Tax Agency says the first year generally requires an income-tax return with the required supporting documents. Eligible salaried employees can generally use year-end adjustment procedures from the second year onward.

Sources

Sources checked 22 August 2026. This article is a general explanation of the 2026 housing-loan tax credit, not tax or financial advice. Eligibility depends on the buyer, loan, occupancy, property classification and supporting documents; verify your specific case with the National Tax Agency, the competent tax office or a qualified Japanese tax professional before relying on the credit.

Frequently asked questions

What is Japan's home-loan tax credit rate in 2026?

Can a used home in Japan qualify for the mortgage tax credit in 2026?

Can a 40 m² apartment qualify for Japan's home-loan tax credit in 2026?

Can a non-resident overseas investor claim Japan's home-loan tax credit?

Do I claim the Japanese home-loan tax credit automatically at closing?

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