6 Different Land Prices - Real Estate Pricing in Japan
What are the differences among Official Land Price, Standard Land Price, Roadside Land Price, and Assessed value of fixed assets? Various prices that indicate the fluctuations in land prices are seasonally released in TV news programs and other media, by the name of Official Land Price, Roadside Land Price, etc.
There are 6 types of land prices in Japan, depending on the purpose of land evaluation and the survey group. The reason for such many types of pricing is that the standard for price calculation differs depending on the purpose of using the land value. In this article, we will explain about the 6 types of land prices as well as the purpose of their usages and their calculation method.
1. Official Land Price
This is determined by the Ministry of Land, Infrastructure, Transport and Tourism, officially announced price.
- Used for evaluation of collateral property by financial institutions and for land transactions.
- Evaluated by 2 licensed real estate appraisers separately on each 26,000 points of land selected mostly within the designated zone of called the ‘city planning areas.’
- Evaluated based on the criteria as of January 1st every year and announced in March of the same year.
2. Standard Land Price
This is determined by Prefectural Governments, officially announced price.
- Used as public price index for land transactions.
- Evaluated by 1 licensed real estate appraiser on each 22,000 points of land or over selected within or outside of the “city planning areas”.
- Evaluated based on the criteria as of July 1st every year and announced in September of the same year.
Generic terms for Official Land Price and Standard Land Price
Official Land Price is announced only once a year. So, to reflect price fluctuations due to change of circumstances that occur during the year, Standard Land Price (called as Autumn Price) is announced after six months from the announcement of Official Land Price (called as Spring Price).
3. Roadside Land Price
This is determined by National Tax Agency, officially announced price.
- Used to determine inheritance taxes and gift taxes
- Evaluated on 336,000 points of selected lands facing major roads nationwide and decided by referencing the Official Land Price in the previous year, actual land transactions, and evaluations by licensed real estate appraisers.
- Determined at approx.80% value of Official Land Price
- Evaluated based on the criteria as of January 1st every year and announced in July of the same year.
4. Property Tax Valuation
This is determined by Municipal Governments.
- Used for calculation of Property tax, City planning tax, Real estate acquisition tax, and Registration and License tax.
- Decided by reference to Official Land Price in the previous year and evaluation by licensed real estate appraisers.
- Determined at approx.70% value of Official Land Price
- Updated as of January 1st every 3 years and can be viewed at the municipal office from April 1st every year until the 1st tax due date of the same year.
5. Market Price
- The Quoted price based on actual land transactions.
- Decided based on “Land Transaction Price Overview “published by the Ministry of Land, Infrastructure, Transport and Tourism and by reference to the information of real estate brokerage companies near the place where you want to know the price.
6. Appraised Value
- Individual land price evaluated by a licensed real estate appraiser upon specific request by verifying economic value of the land. While market price is influenced by subjective reasons such as sellers’ idea that “they want to sell their lands as quickly as possible”, appraised value is objectively determined based on the utility value and profitability of the land.
Summary
The lands located next to each other are different in their individual shapes, sizes, slopes, etc., and no two lands are exactly the same in that sense. So, it is very difficult to determine their prices based on only one criterion. Therefore, to evaluate the price based on objective data, which both the sellers and buyers can accept during real estate transactions, or to calculate the tax amount as fairly as possible when the government asks the general public to bear tax burdens, it seems that the above stated 6 types of prices are necessary to meet such purposes.
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