When purchasing a used condominium, many additional costs arise beyond the property price. If these costs are not understood in advance, your financing plan can shift significantly. In this article, we explain the ancillary costs associated with buying a used condominium in a structured way across three phases: at contract, at handover, and after move-in.
What ancillary costs arise at the time of contract?
At the contract stage, the three main costs are the deposit, stamp tax, and brokerage fee.
Deposit
The deposit is typically around 10% of the property price, but it can vary based on agreement between the seller and buyer. If the buyer cancels for their own reasons, the deposit is forfeited. If the seller cancels for their own reasons, twice the deposit is paid to the buyer. Your financing plan should therefore account for the risk that the deposit may not be recoverable.
Stamp tax
This tax is paid by affixing a revenue stamp to the sales contract. The amount depends on the purchase price: for more than 10 million yen up to 50 million yen, a rough guide is 10,000 yen, and for more than 50 million yen up to 100 million yen, a rough guide is 30,000 yen.
Brokerage fee
This is a cost incurred when a real estate company brokers the transaction. The legal maximum is set as follows：
・up to 2 million yen: property price × 5%
・more than 2 million yen up to 4 million yen: property price × 4% + 20,000 yen
・more than 4 million yen: property price × 3% + 60,000 yen
What ancillary costs arise at the time of handover?
Housing loan-related costs
A revenue stamp is also required for the loan agreement. If the borrowing amount is between 10 million and 50 million yen, the stamp tax is 20,000 yen.
Loan guarantee fee
There are two methods: a lump-sum upfront payment and an interest add-on method. If you have sufficient cash reserves, the lump-sum upfront method can reduce the total amount paid. If you want to keep initial costs down, the interest add-on method may be an option, but the total amount paid will be higher.
Group credit life insurance premium
This insurance repays the loan on the borrower's behalf if the borrower dies or becomes severely disabled. Depending on health conditions, there are cases where enrollment may not be possible, so advance confirmation is essential.
What ancillary costs arise after move-in?
Real estate acquisition tax
Calculation formula: (fixed asset tax assessment value - deduction amount) × tax rate of 3%. A notice will arrive from the local government some time after acquisition. You may qualify for a tax reduction if the following conditions are met: floor area of 50 to 240㎡, residential use, construction in or after 1982, and compliance with the new earthquake-resistance standards.
Repair reserve fund
The repair reserve fund collected from residents typically ranges from 10,000 to 30,000 yen. Please also refer to the details on maintenance costs and build your income and expense plan accordingly.
Recommended reading
Frequently Asked Questions (FAQ)
As a rule of thumb, what percentage of the property price should be expected as ancillary costs when buying a used condominium?
In general, about 7% to 10% of the property price is a reasonable guide for ancillary costs. If you use a loan, guarantee fees and administrative charges will be added as well.
What is the typical brokerage fee, and what is the legal maximum?
For properties priced above 4 million yen, the legal maximum is "property price × 3% + 60,000 yen (excluding tax)." Depending on the negotiation, there are also cases where the fee may be discounted.
What is required to receive the tax reduction for real estate acquisition tax?
The conditions are a floor area of 50 to 240㎡, residential use (or a second home), construction in or after 1982, and compliance with the new earthquake-resistance standards.
Which loan guarantee fee option is more advantageous: lump-sum payment or interest add-on?
Looking at the total repayment amount, the lump-sum upfront option is often more advantageous. However, if your initial funds are limited, the interest add-on method may be the more practical choice.
