A former tenant of an apartment in Tokyo was taken aback when a tax inspector revealed he owed approximately 800,000 yen in back taxes due to a withholding error. This situation unfolded as the property's owner turned out to be a foreign national without a legal residence in Japan, creating a challenging scenario for the former tenant and drawing heightened scrutiny from national tax authorities on similar cases involving foreign property owners.
The man in question had established a corporation and deemed his rented apartment as "company housing," deducting a portion of the rent on his tax return. However, he failed to withhold the required amount from his rent payments to the non-resident owner, leading to a significant tax liability. The complex tax structure involved in renting from a non-resident owner and the obligation to withhold taxes have caught many renters off guard, including the unfortunate former tenant facing the hefty tax bill.
Certified public accountant Shinya Yamada highlighted the increase in consultation cases similar to the mentioned incident, particularly in areas such as Minato Ward known for properties owned by foreign nationals. Yamada emphasized the importance of understanding tax obligations for both renters and owners, urging caution and thorough contract reviews to avoid falling into tax pitfalls. This situation sheds light on the challenges faced by individuals renting from non-resident property owners and underscores the need for awareness and proactive measures within the real estate industry.