New Home Mortgage Tax Deduction: Tax Return in Year 1, Payroll Adjustment After Year 2

This guide explains how to claim the mortgage tax deduction after buying a newly built home. The first year requires filing a tax return, while from the second year onward the procedure can usually be handled through year-end payroll adjustment, with required documents and steps explained clearly.

Daisuke Inazawa August 28, 2022 Last updated: May 3, 2026 About 2 min read

For those who have purchased a newly built home, the mortgage deduction is a highly attractive system. To receive it, procedures such as filing a final tax return and completing a year-end adjustment are required, but the procedure differs depending on the year. This article organizes the procedures and required documents from the first year onward.

Is filing a final tax return required to receive the mortgage deduction?

The mortgage deduction (official name: the special deduction for housing loans, etc.) always requires filing a final tax return in the first year. From the second year onward, salaried employees can complete the procedure through a year-end adjustment.

What is the mortgage deduction?

The mortgage deduction is a system under which, when you purchase a home using a housing loan, 0.7% of the year-end loan balance is deducted from income tax, etc. From the time you move in, income tax and resident tax are reduced for a certain period (up to 13 years). To qualify, you must meet conditions such as a loan repayment period of at least 10 years, total income of 30 million yen or less, and a prescribed floor area.

From the second year, the procedure can be completed through a year-end adjustment

Be sure to file a final tax return in the first year. If you fail to do so, you will not receive the refund. From the second year onward, salaried employees can complete the procedure through their employer's year-end adjustment. You only need to submit the "Certificate for Housing Loan Deduction, etc. for Year-End Adjustment" sent by the tax office and the "Balance Certificate" from the financial institution to your company. Sole proprietors and people with annual income exceeding 20 million yen must continue filing a final tax return from the second year onward as well.

What documents are required for filing a final tax return?

Please prepare the following documents for the first year's final tax return.

List of required documents

Final tax return form (for salaried employees, Form A; available from the tax office or the National Tax Agency website)
Statement of details for the special deduction amount for housing loans, etc. (available from the tax office or by download)
Identity verification documents (My Number card or notification card + driver's license, etc.)
Certificate of registered matters for the land and building (online application through the Legal Affairs Bureau is convenient)
Copy of the real estate purchase agreement
Withholding tax slip (obtained from your employer)

It is also important to understand the documents required for the year-end adjustment

The following two documents are required for the year-end adjustment from the second year onward.

Application for the special deduction for housing loans, etc. for employment income earners

This is sent by the tax office around October of the year after you file your final tax return. If the deduction period is 10 years, the remaining 9 years are sent together; if it is 13 years, the remaining 12 years are sent together. If you lose it, please request reissuance from the tax office.

Each year, this arrives around October to November from the financial institution from which you borrowed the housing loan. In the first year, it is sent in line with the timing of the final tax return.

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Frequently Asked Questions (FAQ)

Q. If I forgot to file a final tax return, can I still receive the mortgage deduction?: A. If it is within five years, you can apply retroactively as a "refund return." It is advisable to consult your local tax office as early as possible.
Q. Can I receive the mortgage deduction through a year-end adjustment in the year I changed jobs?: A. A year-end adjustment at your new employer is possible, but depending on the timing of your job change, you may need to file a final tax return yourself.
Q. Can the mortgage deduction also be used for existing homes?: A. It also applies to existing homes and renovation work that meet certain conditions. Please check the details on the National Tax Agency website or with the tax office.
Q. How should I verify my identity if I do not have a My Number card?: A. You can use a combination such as a notification card plus a driver's license, meaning documents that confirm your My Number together with identity verification documents.