Act on Special Measures Concerning Taxation

If an individual, in Japan, newly constructs a house listed in Article 41, paragraph (6), items (i) through (iii) (hereinafter referred to as a "certified house, etc." in this paragraph and paragraph (5)) or acquires a certified house, etc. that has not been used since its construction (meaning acquisition as prescribed in paragraph (1) of that Article; the same applies in paragraphs (5) and (6)), and uses that certified house, etc. as the individual's residence during the period from the date of enforcement of the Act on the Promotion of Long-Life Quality Housing to December 31, 2028 (limited to the case where the individual uses that certified house, etc. as the individual's residence within six months from the date of its new construction or the date of its acquisition), an amount equivalent to 10 percent of the amount specified by Cabinet Order as the amount of standard costs pertaining to the structure and equipment provided for that certified house, etc. (or 6,500,000 yen, if that amount exceeds 6,500,000 yen) (with any fraction of less than 100 yen in that amount being rounded down; referred to as the "maximum tax credit" in this paragraph and the following paragraph) is deducted from the amount of income tax of the individual for the year that includes the day on which the individual began to use it as a residence (referred to as the "date of moving in" in paragraph (4)). In this case, if that maximum tax credit exceeds the amount of income tax of the individual for that year, the amount to be deducted is limited to that amount of income tax.

If, in a given year, an individual has, out of the maximum tax credit for the preceding year (limited to the case where the individual has filed a tax return prescribed in Article 37-12-2, paragraph (1) with respect to income tax for that preceding year), any amount that could not be fully deducted even by the deduction under the provisions of the preceding paragraph, or if the individual falls under neither the case where the individual is required to file such a tax return with respect to income tax for the preceding year nor the case where the individual may file one, an amount equivalent to that amount not fully deducted, or the maximum tax credit for the preceding year (referred to as the "undeducted tax credit amount" in this paragraph), is deducted from the amount of income tax of the individual for that year. In this case, if that undeducted tax credit amount exceeds the amount of income tax of the individual for that year, the amount to be deducted is limited to that amount of income tax.

The provisions of paragraph (1) do not apply if the total income referred to in Article 2, paragraph (1), item (xxx) of the Income Tax Act pertaining to the individual's income tax for the year for which the individual seeks the application of the provisions of that paragraph exceeds 20,000,000 yen.

The provisions of paragraph (2) do not apply if the total income referred to in Article 2, paragraph (1), item (xxx) of the Income Tax Act pertaining to the individual's income tax for the year that includes the date of moving in or for the following year exceeds 20,000,000 yen.

If an individual, within a disaster risk area, etc. (meaning a disaster risk area referred to in Article 39, paragraph (1) of the Building Standards Act (hereinafter referred to as a "disaster risk area" in this paragraph), a landslide prevention area referred to in Article 3, paragraph (1) of the Landslide Prevention Act (hereinafter referred to as a "landslide prevention area" in this paragraph), a steep slope failure hazard zone referred to in Article 3, paragraph (1) of the Act on Prevention of Disasters Caused by Steep Slope Failure (hereinafter referred to as a "steep slope failure hazard zone" in this paragraph), a special sediment disaster hazard area referred to in Article 9, paragraph (1) of the Act on Sediment Disaster Countermeasures for Sediment Disaster Prone Areas (hereinafter referred to as a "special sediment disaster hazard area" in this paragraph), or a flood damage prevention zone referred to in Article 56, paragraph (1) of the Act on Countermeasures against Flood Damage of Specified Rivers Running Across Cities (hereinafter referred to as a "flood damage prevention zone" in this paragraph); hereinafter the same applies in this paragraph), newly constructs a certified house, etc. (excluding specified rebuilding prescribed in Article 41, paragraph (27)) or acquires a certified house, etc. that has not been used since its construction, and uses that certified house, etc. (including a certified house, etc. part of which is within a disaster risk area, etc., and, for a certified house, etc. within a disaster risk area (limited to an area that does not overlap with a landslide prevention area, steep slope failure hazard zone, special sediment disaster hazard area or flood damage prevention zone), limited to a certified house, etc. built without following a recommendation under the provisions of Article 88, paragraph (3) of the Act on Special Measures concerning Urban Reconstruction pertaining to a notification under the provisions of paragraph (1) of that Article concerning the construction of that certified house, etc. (hereinafter referred to as a "recommendation" in this paragraph), in the case where the fact that the person who received the recommendation did not follow it has been made public under the provisions of paragraph (5) of that Article; hereinafter the same applies in this paragraph) as the individual's residence on or after January 1, 2028 as provided in paragraph (1), the provisions of that paragraph and paragraph (2) do not apply; provided, however, that this does not apply if, at the time of receiving the confirmation under the provisions of Article 6, paragraph (1) of the Building Standards Act for that certified house, etc., all of the land on which that certified house, etc. was to be built was outside a disaster risk area, etc.

The provisions of paragraph (1) apply only if the tax return contains a statement concerning the deduction of the amount to be deducted under the provisions of that paragraph and has attached to it a written statement concerning the calculation of that amount and a document issued by a registered housing performance evaluation body or any other person specified by Order of the Ministry of Finance certifying that the house newly constructed or acquired by the individual is a house that falls under a certified house, etc. prescribed in that paragraph and other matters specified by Order of the Ministry of Finance, or any other document specified by Order of the Ministry of Finance (referred to as a "certificate for a certified house, etc." in the following paragraph and paragraph (8)).

The provisions of paragraph (2) apply only if a written statement of the undeducted tax credit amount prescribed in that paragraph is attached to the tax return for the year for which the individual seeks the application of those provisions, and the tax return for that year contains a statement concerning the deduction of the amount to be deducted under the provisions of that paragraph and has attached to it a written statement concerning the calculation of that amount (or, if the individual falls under neither the case where the individual is required to file a tax return prescribed in Article 37-12-2, paragraph (1) with respect to income tax for the year preceding the year for which the individual seeks the application of those provisions nor the case where the individual may file one, that written statement and a certificate for a certified house, etc.).

Even if no tax return has been filed, or a tax return without the statement or the attachment referred to in paragraph (6) has been filed, the district director may, if the district director finds that there were unavoidable circumstances for the failure to file it or for the absence of the statement or the attachment, apply the provisions of paragraph (1), but only if a document containing that statement, and the written statement and the certificate for a certified house, etc. referred to in that paragraph, have been submitted.

The provisions of the preceding paragraph apply mutatis mutandis to the case where an individual seeks the application of the provisions of paragraph (2). In this case, the phrase "paragraph (6)" in the preceding paragraph is deemed to be replaced with "the preceding paragraph", the phrase "the written statement and the certificate for a certified house, etc. referred to in that paragraph" is deemed to be replaced with "the written statement of the undeducted tax credit amount prescribed in that paragraph and the written statement concerning the calculation of the amount to be deducted", and the phrase "paragraph (1)" is deemed to be replaced with "paragraph (2)".

The provisions of the first sentence of Article 92, paragraph (2) of the Income Tax Act apply mutatis mutandis to the amount to be deducted under the provisions of paragraphs (1) and (2). In this case, the phrase "the deduction under the provisions of the preceding paragraph" in the first sentence of paragraph (2) of that Article is deemed to be replaced with "the deduction under the provisions of the preceding paragraph and Article 41-19-4, paragraphs (1) and (2) (Special Income Tax Credit for New Construction, etc. of Certified Houses, etc.) of the Act on Special Measures Concerning Taxation".

With regard to the calculation of the amount of income tax listed in Article 120, paragraph (1), item (iii) of the Income Tax Act in the case where the provisions of paragraph (1) or (2) are applied with respect to income tax for that year, the phrase "Chapter III (Calculation of Tax Amount)" in that item is deemed to be replaced with "Chapter III (Calculation of Tax Amount) and Article 41-19-4, paragraphs (1) and (2) (Special Income Tax Credit for New Construction, etc. of Certified Houses, etc.) of the Act on Special Measures Concerning Taxation".

The provisions of paragraphs (1) and (2) do not apply if an individual receives the application of the provisions of Article 31-3, paragraph (1) or Article 35, paragraph (1) (excluding the case where it is applied pursuant to the provisions of paragraph (3) of that Article; the same applies in the following paragraph) with respect to income tax for the year that includes the day on which the individual began to use the certified house, etc. referred to in paragraph (1) as a residence, or has received the application of those provisions with respect to income tax for the year preceding, or the year before the year preceding, the year that includes the day on which the individual began to use it as a residence.

If an individual who has begun to use the certified house, etc. referred to in paragraph (1) as a residence transfers, in any year within three years from the year following the year that includes the day on which the individual began to use it as a residence, an asset (limited to one that falls under residential property prescribed in Article 31-3, paragraph (2) or an asset prescribed in Article 35, paragraph (1)) other than that certified house, etc. which the individual began to use as a residence and the land used as the site of that certified house, etc. (including rights existing on that land), and the individual receives the application of the provisions of Article 31-3, paragraph (1) or Article 35, paragraph (1) with respect to that transfer, the provisions of paragraphs (1) and (2) do not apply.

If an individual who has transferred an asset prescribed in the preceding paragraph and has come to fall under the provisions of that paragraph has received the application of the provisions of paragraph (1) or (2) with respect to income tax for any year within the three years preceding the year that includes the day of that transfer, the individual must file an amended return form with respect to income tax for each year within those preceding three years by the due date for filing a tax return for income tax for the year that includes the day of that transfer, and must pay, within that due date, the amount of tax to be paid as a result of filing that amended return form.

If a person who is required to file an amended return form under the provisions of the preceding paragraph fails to file that amended return form, the district director having jurisdiction over the place for tax payment is to make a reassessment under the provisions of Article 24 or 26 of the Act on General Rules for National Taxes with respect to the amount of income, the amount of income tax and other matters that should have been stated in that amended return form.

The provisions of the Act on General Rules for National Taxes apply to the amended return form under the provisions of paragraph (14) and the reassessment referred to in the preceding paragraph as follows:

an amended return form that is filed by the due date for filing prescribed in paragraph (14) is deemed to be a return filed by the due date prescribed in Article 17, paragraph (2) of the Act on General Rules for National Taxes, except when the provisions of Article 20 of that Act are applied;

with regard to an amended return form that is filed after the due date for filing prescribed in paragraph (14) and that reassessment, the phrases "statutory due date for filing a return" and "statutory due date for payment" in the provisions of Chapters II through VII of the Act on General Rules for National Taxes are deemed to be replaced with "the due date for filing an amended return form prescribed in Article 41-19-4, paragraph (14) of the Act on Special Measures Concerning Taxation", the phrase "return filed by the due date" in Article 61, paragraph (1), item (i) of that Act is deemed to be replaced with "tax return prescribed in Article 2, paragraph (1), item (x) of the Act on Special Measures Concerning Taxation", the phrase "return filed by the due date or return filed after the due date" in paragraph (2) of that Article is deemed to be replaced with "amended return form under the provisions of Article 41-19-4, paragraph (14) of the Act on Special Measures Concerning Taxation", and the phrase "return filed by the due date" in Article 65, paragraph (1), paragraph (3), item (ii) and paragraph (5), item (ii) of that Act is deemed to be replaced with "tax return prescribed in Article 2, paragraph (1), item (x) of the Act on Special Measures Concerning Taxation";

the provisions of Article 61, paragraph (1), item (ii) and Article 66 of the Act on General Rules for National Taxes do not apply to the amended return form and the reassessment prescribed in the preceding item.

Beyond what is provided for in paragraph (3) through the preceding paragraph, necessary matters concerning the application of the provisions of paragraphs (1) and (2) are specified by Cabinet Order.