Photo/Illutration Kyoto Mayor Daisaku Kadokawa, right, receives an expert panel report about a new tax on vacant houses in April 2021. (Asahi Shimbun file photo)

KYOTO—The central government approved Kyoto city’s plan to impose a tax on unoccupied homes and villas in hopes of prompting their owners to either inhabit, rent or sell the properties.

Kyoto city is looking to enforce the nation’s first such taxation system in 2026 at the earliest.

The city’s assembly approved a draft ordinance for the new tax in March 2022. The municipality and the internal affairs ministry then started discussions on which estates should be covered under the ordinance-based tax system.

Takeaki Matsumoto, the internal affairs minister, in late March gave Kyoto permission to impose the tax.

Kyoto’s population dropped by more than 10,000, the largest decrease among all municipalities nationwide, in 2021.

Buyers have gobbled up properties in Kyoto for investment purposes alone, and they are not renting them out. This has led to shortage in available housing while driving up real estate prices in the city.

The tax is intended to press the home owners to use the properties. Tax revenues will be used for measures to increase the city’s population.

The tax will apply to real estate in urban zones valued at 1 million yen ($7,500) or higher. The minimum value will be lowered to 200,000 yen in the sixth year of the taxation system.

Traditional homes and other historic buildings requiring special preservation will be exempt from the tax.

Property owners who are seeking residents will not be taxed if they meet specific conditions. Leniency will be given for assets left unoccupied as a result of job relocations or hospitalizations.

The tax rate will be equivalent to 0.7 percent of the fixed assets’ value, with extra sums added depending on such factors as the lands’ evaluated price.

Vacant homes of lower values will face lower tax rates.

The Kyoto city government expects 950 million yen in annual tax revenue from 15,000 properties.

According to the ministry, Kyoto will be the first municipality to target a tax at unused buildings other than villas since the omnibus decentralization law took effect in 2000.

Atami in Shizuoka Prefecture has put in place a similar system to tax villas.

The ministry's housing and land survey showed there were 8.5 million vacant houses in Japan in 2018, more than double the figure of 30 years earlier.

The central government plans to revise the special measures law on vacant residences during the current Diet session as part of efforts to review its preferential tax treatment for homes abandoned in poor condition.

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