Why we chose to own our home instead of renting

Back in January 2023 I wrote a post on the renting vs buying decision in Tokyo concluding that the two options have comparable financial outcomes (assuming the renter invests the additional money into a diversified portfolio). Yet we decided to build our house. In this post I’ll share the reasons that contributed to this decision.

The cost of our Ichijo house

We are building a house in Tokyo with Ichijo 一条工務店. In a previous post I covered the costs associated with buying the land, and in this post I’ll talk about the cost of our house built by Ichijo. There will be additional fees (e.g. garden, registration, etc.) that I will write about in a separate post once we move in. This post is only about the money we pay to Ichijo for the building itself.

Buying a land in Tokyo

About a year ago we bought a plot of land in western Tokyo in Musashino city (see this post about why we chose this place). In this post I’ll share the process of finding and buying the land, and the associated costs.

Pension in Japan

I’m still pretty far from retirement, but recently I’ve been looking into how the pension works in Japan, so I’ll share my learnings in this post.

Family Finance Meeting

People with (good) financial advisors often have family meetings, where they discuss financial matters (income, spending, investments) with their immediate family (spouse, kids). This can be useful for people without financial advisors too, so we decided to start doing it. In this post I’ll describe why and how we are going about it.

Using e-Tax from a non-supported browser

Japan’s online tax filing system, e-Tax, only supports a handful of operating systems and browsers:

• Windows 10 or 11 with either Microsoft Edge or Google Chrome
• MacOS 12-15 with Safari

(Moreover officially the operating system has to be set to Japanese, though I don’t think they check this one.)

Calculating and declaring capital gains tax in Japan

Last year I sold some ETFs in my Interactive Brokers account, which doesn’t withhold taxes in Japan, so I had to report it in my tax return (確定申告) and pay tax on it. In this post I’ll share how I went about this.

This is not tax advice, and it might be incorrect/incomplete or simply doesn’t apply to your situation. Do your own research and do not follow this blindly.

On investment risk

This is something that I have been trying to wrap my head around for a while: people say that the global stock market returns around 5% yearly (on top of inflation, based on the last 100 year), but it’s still risky and the risk is the volatility: the stock returns change a lot year over year, but on the long run they average out. But if the returns average out, then as long as I don’t check my portfolio daily and make bad decisions on short-term swings, I should be fine, right? If yes, then where is the risk? And in general how is volatility the same as risk?

A low-effort way of getting paid well

I work in IT, which generally means great salaries, but there is still a difference between companies. Moreover changing jobs leads to higher compensation on average, as one is in a better negotiation position when joining a company compared to when simply asking for a raise.

However constantly looking for jobs and interviewing requires substantial efforts, so I have a more passive approach to it.

What to check before buying a land in Tokyo

We are currently at the final steps of buying a land in Tokyo, so in this post I’ll share the information we checked when considering a given land. In an earlier post I looked at comparing the data on cities of Tokyo, which gives a good high level view, while this post will look at data-sources that are useful when looking at a specific land.

Comparing cities to live in: Musashino vs Mitaka vs Koganei

We decided to build our own house in Tokyo. We narrowed down our area to the following stations on the Chuo line: Mitaka (Mitaka City), Musashi-sakai (Musashino City), Musashi-Koganei (Koganei City). We also considered Kichijoji, but it was way out of budget (also it gets very crowded on weekends), and Higashi-Koganei (the station between Musashi-sakai and Musashi-Koganei), but currently it lacks the shops and amenities that we got used to. It is being actively developed, so it might get there in the next 5-10 years, but it’s also between two pretty well developed stations, so chain stores might pass on opening their stores there (e.g. both neighboring stations have Ito-Yokado shopping malls, making it unlikely that there would be one in Higashi-Koganei in the future).

Choosing where to live is one of the truly life-altering decisions, especially for our children (as it affects which school they go to, their friends and also influences their career). While big part of this can’t be foreseen, I decided to take a look at the data available to compare these cities. I believe the same data is published for most cities in Japan, so even if you are looking at other places, this post might be able to help you make your own comparison.

Medical expense tax deduction in Japan (医療費控除)

In Japan if one pays more than 100,000 yen of medical expenses in a calendar year, they can deduct it from their pre-tax income (usually leading to an income tax refund). In this post I’ll attempt to summarize the rules of this.

As with all my posts, this is not tax advice and do your own research before making any decision. Also if you find any inaccuracy or mistake, please leave a comment at the end, so that I can correct it.

Home loan tax deductions in Japan (as of 2024)

Japan has a system that provides income tax deduction for people with a home mortgage in the first years of the mortgage (住宅ローン減税). The rules have changed in the past, and which rules apply depends on when one bought/built their home. In this post I’ll attempt to summarize the rules applicable to a home acquired in 2024. As with all my posts, this is not tax advice and do your own research before making any decision. Also if you find any inaccuracy or mistake, please leave a comment at the end, so that I can correct it.

Thoughts on handling money in a relationship

One of the common causes of divorce is money problems, so it’s important to be mindful about it. Here are my thoughts on one possible way of doing it.

A look at life insurance in Japan

I’m starting a family, so I’ve been recently thinking about life insurance to ensure they won’t have financial hardship if I pass early. In this article I’ll review what I found. Please remember that I’m not a professional, and none of this is financial or tax advice. As always, do your own research.

Investing plans with the upcoming new NISA

From 2024, Japan’s tax-free investment system, NISA, is getting a major overhaul. Investments made within the system are tax-free (no dividend and capital gain tax), with the only major limitation on yearly and lifetime contribution limits, and that a third of the limits can only be used for mutual funds. This is not a retirement scheme, and there is no penalty for selling early. In this post I will review how I plan to invest from 2024.

Adding Furusato nozei to e-Tax

How to indicate furusato nozei when filing taxes online. (To learn about furusato nozei, see Furusato nozei - end to end guide.)

Furusato nozei - end to end guide

What is furusato nozei, a bit of history, and how you can do it end to end. This won’t be short, but I try my best to provide the full picture with all the details. While I do my best to keep this information accurate, if you find any inaccuracies, please let me know.

Thoughts on the future of the real estate market of Tokyo

This is a continuation of my previous post on buying vs renting in Tokyo

The future resale price of a property depends on demand: are there going to be people willing and able to purchase it? Let’s look into the forecasts affecting this. I will try my best to use official (government) statistics and forecasts, even if these are a few years outdated.

Thoughts on renting vs buying in Tokyo

Recently I’ve been thinking a lot about buying either a house or an apartment (mansion), or whether renting makes more sense for now. The primary aim of this post is to collect my thoughts, and record the decision so that I can revisit it in the future. It might also help others considering the same question, but that’s not the main intention (e.g. I will focus exclusively on my use-case and not cover other locations or sizes).

All-World ETFs for NISA

My go-to investment is the Vanguard Total World Stock ETF (VT) that includes stocks in close to all companies of the world, so as long as the world economy does well, it goes up. Being a US-based security the dividends are subject to a 10% tax withholding in the US (regardless of me not having to file US taxes). This is not an issue for regular investments, as Japan levies a 20% tax on dividends and due to the tax treaty with the US I can deduct the already paid 10% and only pay the other 10% in Japan (I’m using Interactive Brokers, so I’m doing this myself when filing my taxes).

However I also started doing NISA recently, which is tax-exempt, so I don’t need to pay taxes in Japan on neither the capital gains nor the dividends. But this does not affect the 10% dividend tax levied in the US. So I set out to find a comparable investment that is domiciled outside the US.

Shared bank account for non-married couples in Japan

The internet wisdom seems to agree that shared accounts (or joint accounts) are illegal and impossible in Japan. As a workaround some banks will issue a second card in the name of the spouse (e.g. SMBC), however that’s generally only available for married couples.

So if you live with a partner, but not married, you are out of luck? Not entirely.