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2026-09-09

The inheritance tax basic deduction and whether you need to file ― work out in 10 minutes whether your family owes inheritance tax

Inheritance tax applies only to families whose estate exceeds "30,000,000 yen + 6,000,000 yen × the number of statutory heirs". This article covers how to calculate the basic deduction (基礎控除), what counts as part of the estate and what does not, how to get a rough land valuation, and the trap of special rules that "require a return even when the tax is zero". It is written from the standpoint of an administrative scrivener and licensed real estate agent, as groundwork before consulting a tax accountant.

About this translation ― This page is an English translation of an article originally written in Japanese by KuraLab's operator, a licensed real-estate transaction specialist (宅地建物取引士) and administrative scrivener (行政書士) in Japan. The Japanese original is the authoritative text; where the two differ, the Japanese version prevails. The article explains Japanese law and procedure in general terms as of the date shown. It is not legal, tax or immigration advice for your situation ― please confirm with a licensed professional in Japan. Japanese terms are kept in parentheses so you can search for them. Read the Japanese original

"Before I talk to a tax accountant, I just want to know whether it applies." The man who had lost his mother laid the fixed asset tax statement, three passbooks and a life insurance policy on the table. The heirs were the man and his sister, two people. I took out a calculator and had the answer in ten minutes. "It does not apply. But you do need to file a return." This answer, "no tax, but a return is needed," is the most confusing thing at the entrance to inheritance tax. This article is about those ten minutes of calculation.

The question always asked in inheritance consultations is "will my family owe inheritance tax?" The entrance to the answer is one formula. Inheritance tax has a basic deduction (基礎控除), and if the total estate is at or below that amount, no inheritance tax applies and in principle no return is needed. The basic deduction is "30,000,000 yen + 6,000,000 yen × the number of statutory heirs." If the heirs are a spouse and two children, three people, it is 30,000,000 + 18,000,000 = 48,000,000 yen. If the estate does not exceed this, the inheritance tax conversation ends here.

The basic deduction by number of statutory heirs: one heir, 36,000,000 yen; two heirs, 42,000,000 yen (the family in this article); three heirs, 48,000,000 yen; four heirs, 54,000,000 yen. If the total estate is at or below this, no inheritance tax applies and no return is needed (except where a special rule is used).

There are points to watch in counting statutory heirs. A person who renounced the inheritance is still counted. Adopted children count up to one if there are biological children, up to two if there are none. You cannot calculate this formula until you have settled "who the heirs are," as set out in another article on this site.

Next, what to include in the estate. Cash, deposits, land, buildings, shares, investment trusts, golf club memberships, cars, precious metals: these naturally go in. Easily overlooked are life insurance proceeds and death retirement benefits. Life insurance with a named beneficiary is not subject to division of the estate, but for inheritance tax it is included as "deemed inherited property" (though 5,000,000 yen × the number of statutory heirs is exempt). Property gifted to heirs within three years before death (for gifts from 2024, phasing in to seven years) is also added back. Conversely, debts, unpaid taxes and funeral expenses can be deducted.

The biggest uncertainty is the valuation of land. Land is valued for inheritance tax by roadside land value (路線価), which, as described in another article on this site, is about 80 per cent of the official land price. Multiplying the valuation on the fixed asset tax statement (about 70 per cent of the official price) by 1.14 brings you close to a roadside-value estimate. For a rough figure, land valuation on the tax statement × 1.14, and the building as it is, will do. Further, where a spouse or a co-resident child inherits the land the deceased lived on, the "special rule for small residential land" (小規模宅地等の特例) reduces it by 80 per cent up to 330 square metres, so in many families the home lot is greatly compressed.

Here is a trap. The special rule for small residential land and the spousal tax reduction (a spouse is tax-free up to 160,000,000 yen or the statutory share) are special rules that "can be used only by filing." Even where the tax comes to zero as a result of a special rule, if you do not file a return the rule is not applied, and tax is charged on the amount above the basic deduction. "With the special rule the tax is zero, so I need not file" is wrong. A family above the basic deduction that reaches zero through a special rule is a family that must file.

Taking this article's example, with two heirs (basic deduction 42,000,000 yen), home land of 24,000,000 yen (rough roadside-value estimate), building 4,200,000 yen and savings 16,500,000 yen: the rough estate without special rules is land 24,000,000, building 4,200,000 and savings 16,500,000, 44,700,000 yen in total. With the special rule for small residential land (land reduced by 80%), land 4,800,000, building 4,200,000, savings 16,500,000, with 19,200,000 yen of reduction. The basic deduction is 42,000,000 yen. The 44,700,000 yen without the rule exceeds the basic deduction by 2,700,000 yen; the 25,500,000 yen after the rule is below it. But the rule "can only be used by filing," so this family must file.

The filing deadline is ten months from the day after you learned of the death. Within this period, settling the heirs, valuing the assets, the estate division agreement and preparing the return must all be completed. A return is needed even if the division is not agreed; in that case you file on the basis of the statutory shares and amend after the division (but while undivided, the small residential land rule and the spousal reduction cannot in principle be used, and you must submit a "statement of intention to divide within three years").

Whether a return is needed (as of September 2026): total estate at or below the basic deduction, no special rule used, tax zero, no return needed. Above the basic deduction, brought to zero by the small residential land rule or the spousal reduction, tax zero, return needed (the rule cannot be used without filing). Above the basic deduction, tax remaining even with special rules, tax payable, return needed within ten months.

The order in practice is this. First settle the number of heirs and work out the basic deduction. Next, estimate the estate from the tax statement, the passbooks and the insurance policies. Land at valuation × 1.14, and for the home, provisionally enter the 80 per cent reduction. If this estimate is half the basic deduction or less, there is almost no need to worry about inheritance tax. If it is close to or above the basic deduction, go to a tax accountant early with the ten-month deadline in mind. The closer a family is to the basic deduction, the more the result depends on the method of valuation, so do not decide on your own that "it does not apply."

The ten minutes of calculation, as they were. Basic deduction 30,000,000 + 6,000,000 × 2 = 42,000,000 yen. Assets: the land valuation on the tax statement was 21,000,000 yen, multiplied by 1.14 to convert to a roadside-value basis, about 24,000,000 yen. The building stays at its valuation of 4,200,000 yen. Savings across the three passbooks, 16,500,000 yen. Life insurance 8,000,000 yen, with an exempt allowance of 5,000,000 × 2 = 10,000,000 yen, so the 8,000,000 yen is entirely exempt, zero. Total 24,000,000 + 4,200,000 + 16,500,000 = 44,700,000 yen. 2,700,000 yen over the basic deduction of 42,000,000 yen.

Now the special rule. The man lived with his mother and will go on living in the house. It qualifies for the small residential land rule, and the land of 24,000,000 yen is reduced by 80% to 4,800,000 yen. Total 4,800,000 + 4,200,000 + 16,500,000 = 25,500,000 yen. Within the basic deduction; tax zero. But the 44,700,000 yen before the rule exceeds the basic deduction, so without a return the rule cannot be used, and inheritance tax is charged on the 2,700,000 yen. About 270,000 yen. File and it is zero; do not file and it is 270,000 yen plus a penalty for non-filing. "No tax, but a return is needed" is about this 2,700,000 yen.

I also told him there and then what a tax accountant would cost. Assets of 44,700,000 yen, one parcel of land, two heirs: a fee of about 180,000 yen for the return. Paying 180,000 yen to avoid 270,000 yen in tax, but that is not all: the work includes assembling the documents for the conditions of the special rule (the fact of co-residence, continuing to live there until the filing deadline, and so on). The man said, "I will try it myself," went twice to the tax office consultation desk, and filed the return himself. He could do it because the assets were only savings and the home, the land was one regularly shaped parcel, and there were two heirs. With three parcels of land, I think he would have delegated it.

Filing inheritance tax returns is the work of a tax accountant; neither an administrative scrivener nor a licensed real estate agent can do it. This article is for getting a rough answer yourself before consulting a tax accountant, so that you know what to ask when you do.

The answer from ten minutes with a calculator was one line: "44,700,000 yen, 25,500,000 with the special rule, tax zero, return needed." The example in the first figure in this article is this family's figures. The mistake of "zero with the special rule, so no need to file" turns a 2,700,000 yen difference into 270,000 yen. Once you have your rough answer, if that answer is "zero through a special rule," start preparing the return.

Written by: 長澤 湊（licensed real-estate transaction specialist, administrative scrivener, assistant surveyor）　Content checked on: 2026-10-14

This article is a general explanation of Japanese rules and procedures, not advice on an individual case. Figures and rules are as of the date shown. For your own situation, consult a lawyer, judicial scrivener, tax accountant or administrative scrivener in Japan.

Official sources

The rules and figures in this article can be checked against the following official pages (in Japanese).

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