Housing Loan Deduction in Japan: A Complete Guide
What is the Housing Loan Deduction?
Housing loan deduction (住宅ローン控除 - jūtaku rōn kōjo) is a tax benefit that allows homeowners to deduct 0.7% of their outstanding mortgage balance from their income tax, subject to certain maximums based on the type of housing. The system encourages energy-efficient and sustainable housing through higher maximum eligible loan amounts.
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Basic Eligibility Requirements
To qualify for the housing loan deduction, you must meet these basic conditions:
- Residency Status: Must be a resident of Japan with a valid residence status
- Income Limit: Annual income must not exceed ¥20,000,000 plus employment income deduction
- Occupancy: Must live in the house as primary residence
- Loan Period: Maximum 13 years for loans started after 2021, 10 years for older loans
Housing Categories and Maximum Eligible Loan Amounts (2025)
| Housing Type | Japanese Name | Maximum Eligible Loan Amount | Deduction Rate | Maximum Annual Deduction |
|---|---|---|---|---|
| Basic House (No Certification) | - | ¥0 | 0% | ¥0 |
| Energy Saving Standards Compliant | 省エネ基準適合住宅 | ¥30,000,000 | 0.7% | ¥210,000 |
| Zero Energy House (ZEH) | ZEH水準省エネ住宅 | ¥35,000,000 | 0.7% | ¥245,000 |
| Low Carbon Housing | 低炭素住宅 | ¥45,000,000 | 0.7% | ¥315,000 |
| Long-life Quality Housing | 長期優良住宅 | ¥45,000,000 | 0.7% | ¥315,000 |
How the Deduction is Calculated:
- Annual deduction = 0.7% × (Smallest of: Outstanding loan balance, Maximum eligible loan amount)
- The deduction cannot exceed your annual income tax amount
Certification Requirements
Each housing category requires specific certifications. When you buy or build your house, check that these standards are met in order to qualify for the housing loan deduction:
- Energy Saving Standards: Must meet current energy efficiency standards and have certification from an authorized agency
- Zero Energy House: Requires ZEH certification and documentation of energy production/consumption
- Low Carbon Housing: Must have Low Carbon Building certification
- Long-life Quality Housing: Requires Long-life Quality Housing certification from the Ministry of Land, Infrastructure, Transport and Tourism
Application Process
Claiming the deduction is simple and is part of the standard tax filing package either handled directly by your employer, or on your year-end tax return if you handle it yourself. For the initial year, however, you will be required to file a tax return yourself to claim the deduction no matter what.
Initial Year:
File a tax return with required documentation including:
- Housing loan contract and repayment schedule
- Property registration certificate
- Relevant energy efficiency certifications
- Residence certificate (住民票)
Subsequent Years:
Submit year-end tax adjustment documents to employer or file a tax return annually yourself.