Death & Taxes

[Coligny]

My head is going to explode, I hate you all and need a hug.

[Wage Slave]

Those who have some concerns will probably be doing some number crunching over the next few days, calculating just how much they are prepared to pay to enjoy continuing to live in Japan.

On the contrary. If that method is correct - and it's nutty enough to be so - then it's far better not worse than I was speculating. This is because you only pay tax on your share but you can apply the full allowances. Then they share the liability (but only for your share) back out which is again to advantage because it is a progressive tax. Finally, they add it all back together. Great - if true. In the worked example the guy paid about 1% on his share of 100 million.

Please be true!

Remember that that calculation is based on the previously more generous exemptions, and also remember that owning a house in a major city these days adds up to a large sum: there are a lot of middle class dead people leaving those sort of amounts now.

I agree that it seems more fair than I first thought it would be. I will also say that I did run some numbers. Let's just say that my brother had better not die before my mother does (although my mother has very generously offered to write me out of her will) .

Yes - you are right on both counts but for one reason or another that method would be just dandy for me. I like the idea of being written out. Who was it said that inheritance tax is for people who trust their own family considerably less than they dislike the taxman? As long as gifts are not taxable on sight - which they aren't in many countries, but not here regrettably - then there are ways and means. You often have to plan well ahead though, like 7 years at least.

Edit to add:

“Inheritance Tax is, broadly speaking, a voluntary levy paid by those who distrust their heirs more than they dislike the Inland Revenue” – Roy Jenkins MP, Commons Debate, 1986

[IparryU]

@wagyl thanks for digging all this up. nice sections you got together... we need to make a fucking guide out of this now.

[Samurai_Jerk]

Edit to add:

“Inheritance Tax is, broadly speaking, a voluntary levy paid by those who distrust their heirs more than they dislike the Inland Revenue” – Roy Jenkins MP, Commons Debate, 1986

Easy to say but I've seen too many cases where families who had no reason not to trust each other found out the hard way that you can't trust anyone no matter how much you love them or think you know them.

[Wage Slave]

Edit to add:

“Inheritance Tax is, broadly speaking, a voluntary levy paid by those who distrust their heirs more than they dislike the Inland Revenue” – Roy Jenkins MP, Commons Debate, 1986

Easy to say but I've seen too many cases where families who had no reason not to trust each other found out the hard way that you can't trust anyone no matter how much you love them or think you know them.

That's where discretionary trusts can be useful - But yeah, you are right, it still relies on everyone behaving properly. I have come to realise from speaking to people here that I am very lucky to have that kind of family. Regrettably, I hear quite a few tales of being screwed over - and quite a lot of that can be done prior to the final curtain as well.

[wagyl]

@wagyl thanks for digging all this up. nice sections you got together... we need to make a fucking guide out of this now.

That all sounds nice and while I do think that is likely to be legitimate, I don't really want to sign my name to something found on GaijinPot with source material no longer in existence, and allow people to make pretty major decisions based on it.

One thing I will say, is that I think the calculated results are, if incorrect, conservative, so at the very least some people will be able to look at that and make a decision that maintaining a life in Japan is not worth the risk from an estate-planning point of view, or look into ways of reducing that risk.

[Samurai_Jerk]

Edit to add:

“Inheritance Tax is, broadly speaking, a voluntary levy paid by those who distrust their heirs more than they dislike the Inland Revenue” – Roy Jenkins MP, Commons Debate, 1986

Easy to say but I've seen too many cases where families who had no reason not to trust each other found out the hard way that you can't trust anyone no matter how much you love them or think you know them.

That's where discretionary trusts can be useful - But yeah, you are right, it still relies on everyone behaving properly. I have come to realise from speaking to people here that I am very lucky to have that kind of family. Regrettably, I hear quite a few tales of being screwed over - and quite a lot of that can be done prior to the final curtain as well.

I thought everything went fine with my mom's estate and was really happy at how reasonable everyone had been considering all the horror stories I'd heard from friends only to find out a couple of years later someone had fucked the rest of us. It wasn't a money thing but more of a family heirloom thing (though that heirloom is definitely valuable) that we had thought lost. Turns out it was gifted to a significant other in such a way that it would be very hard to reclaim.

[Wage Slave]

Wagyl, It struck me last night that I know a perfect person to check this with. Give me a few weeks and I will report back.

[wangta]

Sorry, I put a slightly wrong link in my post. It should have been forums.gaijinpot.com

No www. The discussion went on for a long time and if you have the time and inclination to sift through it, it's rather fascinating to read about potential traps for anybody who qualifies for definition as a PR for tax purposes only or an actual PR who has legal recognition for it in Japan.

Message to Kurogane - do you remember Super Grover and all his trying to justify hiding his and his J wife's Canadian investments from the J taxman for years?

[wagyl]

Edit to add:

“Inheritance Tax is, broadly speaking, a voluntary levy paid by those who distrust their heirs more than they dislike the Inland Revenue” – Roy Jenkins MP, Commons Debate, 1986

Easy to say but I've seen too many cases where families who had no reason not to trust each other found out the hard way that you can't trust anyone no matter how much you love them or think you know them.

That's where discretionary trusts can be useful - But yeah, you are right, it still relies on everyone behaving properly. I have come to realise from speaking to people here that I am very lucky to have that kind of family. Regrettably, I hear quite a few tales of being screwed over - and quite a lot of that can be done prior to the final curtain as well.

I have also seen cases where a family that was "that kind of family" changed when push came to shove. Greed is a powerful force.

I'm guessing that Roy Jenkins made his statement as part of an argument to abolish Inheritance Taxes. I can see both sides of the argument. I have seen them abolished in a culture where the eldest son works his guts out on the family farm for nothing with the promise that "one day, son, all this will be yours" only to see the farm have to be sold off to pay the tax bill. I can, like Roy Jenkins, see that they are a little ridiculous when fairly simple measures can be and are taken to avoid them, by a large proportion of the population. But in many cases where they are imposed, including Japan, they are a social strategy, both to share the largesse of that windfall you received in unearned assets with the nation, and also as a deliberate measure to remove the superrich class from society, making a more level social structure. I can't find fault with either argument. Where it becomes a discussion for us here is that some FGs are in a position where they can think about avoiding this tax by moving on, and they can ask themselves whether their continued life in Japan is worth the risk of having to make that payment one day.

[matsuki]

Another tangent...

Is the whole "your house is worthless or neg value after 30 years" tied to this at all?

Taken a step further, if you inherit a home overseas, well over 30 years old...unless you sell the property, how can they pin a value on it?

[Samurai_Jerk]

Another tangent...

Is the whole "your house is worthless or neg value after 30 years" tied to this at all?

Taken a step further, if you inherit a home overseas, well over 30 years old...unless you sell the property, how can they pin a value on it?

Use the value of the estate as assessed by the local agency in charge. I'm not saying that's what they would do but they certainly could.

[IparryU]

Another tangent...

Is the whole "your house is worthless or neg value after 30 years" tied to this at all?

Taken a step further, if you inherit a home overseas, well over 30 years old...unless you sell the property, how can they pin a value on it?

you get an appraiser...

different in each country, but if the property is depreciating that is good for your taxes (if you aren't planning on selling it).
http://en.wikipedia.org/wiki/Real_estate_appraisal

[matsuki]

I know what appraisers are but since it's a Japanese tax, why wouldn't the Japanese-style appraisal apply?

[wagyl]

I know what appraisers are but since it's a Japanese tax, why wouldn't the Japanese-style appraisal apply?

Japanese style appraisal = what the market will pay for the property.
Foreign style appraisal = what the market will pay for the property.
Point out the difference.




Yes, I know what you are saying, but you also sound like a ....... God, there has to be an American equivalent of this slang but for the moment I will say "bush lawyer": "person who uses casuistry when arguing, especially by inventive interpretation of rules, terms, etc." Like someone interpreting any leeway to suit their own argument and stretching definitions just that little bit too far. Trying that at a tax office is a very quick way to get slapped with the rule book and an "audit" stamp on your file.

[matsuki]

I know what appraisers are but since it's a Japanese tax, why wouldn't the Japanese-style appraisal apply?

Japanese style appraisal = what the market will pay for the property.
Foreign style appraisal = what the market will pay for the property.
Point out the difference.

Where do I begin?

http://www.nri.com/global/opinion/paper ... 008137.pdf

I guess it's easier to just tell the J-tax office, of course with an appropriate amount of teeth sucking, that your parents both died in the home and it's haunted....so the market value is zero or in the neg since the building obviously needs demolishing.

Yes, I know what you are saying, but you also sound like a ....... God, there has to be an American equivalent of this slang but for the moment I will say "bush lawyer": "person who uses casuistry when arguing, especially by inventive interpretation of rules, terms, etc." Like someone interpreting any leeway to suit their own argument and stretching definitions just that little bit too far. Trying that at a tax office is a very quick way to get slapped with the rule book and an "audit" stamp on your file.

I prefer my battles without bush and I'm half jesting with all this but I guess my point is the way things are playing out, it looks like they are aiming this mostly at Japanese who have oversea assets and with a sidenote, are taking overreaching swipes at FG oversea assets, even if said FG aren't given a reasonable shake when it comes to their residency, rights, etc....which, as we all know, has many further implication on a FG's life here. Legally speaking, yeah, I understand how it's supposed to work. In practice, however, it can put you in a sort of FG limbo.

So....if you're an FG, looking at inheriting a significant amount of wealth in a country without inheritance laws, it wouldn't seem so smart to become a tax bitch of Japan, yes? Just a guess but wouldn't seem to include a good chunk of the affluent/skilled workers Japan is supposedly attempting to attract?

[Coligny]

I thought everything went fine with my mom's estate and was really happy at how reasonable everyone had been considering all the horror stories I'd heard from friends only to find out a couple of years later someone had fucked the rest of us. It wasn't a money thing but more of a family heirloom thing (though that heirloom is definitely valuable) that we had thought lost. Turns out it was gifted to a significant other in such a way that it would be very hard to reclaim.

Might have been better to somewhat realize quite sometimes after (then go "fuck it anyway") than add the fuel onto a still burning fire... Or vinegar on the wound... Even if that also might work as a disinfectant, if you don't have anything better...

[matsuki]

SJ, when you say gifted, do you mean gifted or was it more like "gifted" ???

[Coligny]

I know what appraisers are but since it's a Japanese tax, why wouldn't the Japanese-style appraisal apply?

Japanese style appraisal = what the market will pay for the property.
Foreign style appraisal = what the market will pay for the property.
Point out the difference.

Where do I begin?

http://www.nri.com/global/opinion/paper ... 008137.pdf

I guess it's easier to just tell the J-tax office, of course with an appropriate amount of teeth sucking, that your parents both died in the home and it's haunted....so the market value is zero or in the neg since the building obviously needs demolishing.

Yes, I know what you are saying, but you also sound like a ....... God, there has to be an American equivalent of this slang but for the moment I will say "bush lawyer": "person who uses casuistry when arguing, especially by inventive interpretation of rules, terms, etc." Like someone interpreting any leeway to suit their own argument and stretching definitions just that little bit too far. Trying that at a tax office is a very quick way to get slapped with the rule book and an "audit" stamp on your file.

I prefer my battles without bush and I'm half jesting with all this but I guess my point is the way things are playing out, it looks like they are aiming this mostly at Japanese who have oversea assets and with a sidenote, are taking overreaching swipes at FG oversea assets, even if said FG aren't given a reasonable shake when it comes to their residency, rights, etc....which, as we all know, has many further implication on a FG's life here. Legally speaking, yeah, I understand how it's supposed to work. In practice, however, it can put you in a sort of FG limbo.

So....if you're an FG, looking at inheriting a significant amount of wealth in a country without inheritance laws, it wouldn't seem so smart to become a tax bitch of Japan, yes? Just a guess but wouldn't seem to include a good chunk of the affluent/skilled workers Japan is supposedly attempting to attract?

Being Japan, if you are not too confrontational and explain calmly what you thought you understood of the law, even if it's completely wrong you have more chances to face someone that might be open to point your mistakes and help you fix them. Rather than see you as a hardened criminal purposefully trying to defraud the tax office...

[wagyl]

I know what appraisers are but since it's a Japanese tax, why wouldn't the Japanese-style appraisal apply?

Japanese style appraisal = what the market will pay for the property.
Foreign style appraisal = what the market will pay for the property.
Point out the difference.

Where do I begin?

http://www.nri.com/global/opinion/paper ... 008137.pdf

Sixteen pages and I still don't see where it doesn't say that the market value of an asset is the amount that the market will pay to buy the asset.

Sure, the market here is different to the market there, but if what you are saying is correct, then why are you not taking out loans to buy every second hand house you see: they are so cheap for the price and obviously undervalued that you cannot possibly lose.
If only there was a way to ship real estate across the Pacific to SoCal....

Hang on, wait, do I hear you saying on another thread that the construction standard is so crappy that they aren't worth anything anyway.....



You are correct that FGs are not the target here, we are just collateral damage. I actually doubt that the Tax Authority sees FGs as a particularly juicy source of income, but they are happy to take whatever flows past them on the way.

And in a day and age where zillow.com will estimate a value of every house in town, if the Tax Authorities think there is enough money in it, they can easily investigate.

[Samurai_Jerk]

I thought everything went fine with my mom's estate and was really happy at how reasonable everyone had been considering all the horror stories I'd heard from friends only to find out a couple of years later someone had fucked the rest of us. It wasn't a money thing but more of a family heirloom thing (though that heirloom is definitely valuable) that we had thought lost. Turns out it was gifted to a significant other in such a way that it would be very hard to reclaim.

Might have been better to somewhat realize quite sometimes after (then go "fuck it anyway") than add the fuel onto a still burning fire... Or vinegar on the wound... Even if that also might work as a disinfectant, if you don't have anything better...

I'm not really giving the full story but let's just say the family dynamics have been fucked since.

[kurogane]

Message to Kurogane - do you remember Super Grover and all his trying to justify hiding his and his J wife's Canadian investments from the J taxman for years?

Do I???? Probably one of the things I miss most about the demise of GP is losing the chance to screw that otherwise loveable and wonderful screwball over his tax rage. It was his Kryptonite; he was absolutely loony when it came to his tax obligations. And as I used to say over there, and as Wagyl said above just now, FGs are utterly trivial to any and all JRA regulations and activities. This isn't to say we aren't subject to them, but it is to say that anybody that thinks they are specifically targetting foreigners has a Debito level case of delusional self-importance, not to mention an internet conspiracy theory level understanding of the issue.

I never had a serious issue with the JRA and I earned a nice income that was exempted from taxes by a rather complicated inter-departmental agreement between the Ministry of Education and the Ministry of whatever the JRA is in; they contacted me a few times but it was quick and easy to resolve their inquiries. I found them at least as professional as Revenue Canada, which is allegedly known for being professional and reasonable. I am also convinced that without at least my level of Japanese or some serious pluck things would not have gone that smoothly. Christ, not even educated Japanese can read the tax code

[matsuki]

Sixteen pages and I still don't see where it doesn't say that the market value of an asset is the amount that the market will pay to buy the asset.

Sure, the market here is different to the market there, but if what you are saying is correct, then why are you not taking out loans to buy every second hand house you see: they are so cheap for the price and obviously undervalued that you cannot possibly lose.
If only there was a way to ship real estate across the Pacific to SoCal....

Hang on, wait, do I hear you saying on another thread that the construction standard is so crappy that they aren't worth anything anyway.....

I was more trying to point out the market values here are largely influenced by the local culture which despises second hand homes and abhors homes people have died in. (and since this is the Japanese tax authority, how would they argue against these cultural beliefs) I realize that yes, the markets/construction are different and so adopting the local system for appraisal makes perfect sense....but we're talking about tax law in the land of case by case and loopholes. What if there is a dispute over the appraisal? What if one gets a negative value appraisal to oppose their 3000K appraisal? The tax assessments overseas don't include the garage, closets, spaces in the walls like they do in Japan so that can't exactly be referenced as equal. Seems like there are so many ways you can dispute their findings and once it's in dispute limbo, I don't see much happening on the Japan side. Like I mentioned before, I know many people in the inaka who have had their property lines redrawn by the local gov and been fucked out of land...but they dispute the findings, keep on living there....and if they outlive past whatever that land use clause is, they can either reclaim it as their own. Even the ones that are sure they will lose out after death aren't bothered.

You are correct that FGs are not the target here, we are just collateral damage. I actually doubt that the Tax Authority sees FGs as a particularly juicy source of income, but they are happy to take whatever flows past them on the way.

Indeed, I just think they're reaching a bit too far when it come to inheritance when it is far from a standardized tax. (imagine if it was...trying to explain to U.S. tax authorities that property in Japan has a negative value) In some cases, they'd effectively taking everything they can from someone because they're a "tax resident" without giving them any kind or permanent residency, let alone rights that are only guaranteed by "citizenship." Soooooo, yeah, not exactly a very welcoming message for highfalutin, skilled FG to immigrate to Japan.

[IparryU]

a little info on death tax @ 5:00 ish

http://youtu.be/8vQJXyIEtHw?t=5m00s

[Wage Slave]

Choko, I think you are getting a bit tangled in the minor practicalities. The point is that everything has a market value. Finding that figure can be a bit of an art form but in the case of property there are plenty of people who have the knowledge and skills to do it. There is also a lot of data available on comparable properties. There may be some dispute about the last few percent but it isn't that much of a grey area.

(imagine if it was...trying to explain to U.S. tax authorities that property in Japan has a negative value)

You only have to explain that the building on the land has a negative value because it the market deems it needs demolition and removal before the land can be re-used. Therefore the value of the land is lower than it would be if there was nothing on it. Surely that also happens in America? A piece of land has a derelict property on it that will need to be demolished and removed and that prompts a discount in the price?

Seems like there are so many ways you can dispute their findings and once it's in dispute limbo, I don't see much happening on the Japan side.

I don't think the NTA, or any tax authority, works like that. They just present you with a bill and then it moves on to pay now and argue later if you choose.

[wagyl]

And more than that, to get a will proved in everywhere that I am aware of, including places which do not have Inheritance tax, requires that the assets get a valuation. This makes sense, where you want to make sure that the two halves to the two grieving daughters are equal. One of those daughters is an FG -- whoops there is a papertrail giving a valuation.

You can gnash your teeth all you like, Choko, but the only result you will achieve is worn molars.

[Samurai_Jerk]

Choko, I don't know why you're going down this rabbit hole of what-if scenarios. The fact is that in the end an estate gets assessed a value of X by whoever the local authority is. The Japanese could easily just take that number X and use it to asses your tax liability. Maybe (probably?) it's not the simple. However, just because something doesn't make sense to you doesn't mean that's not the way it is.

It doesn't make sense to me that lottery winnings, a corvette won in a radio contest, a luxury vacation won on a game show, and forgiven debt are all taxable income in the US but they are.

[matsuki]

I concede...besides the tax balance being tipped in Japan's favor, apparently my real issue with this all is the "taxation without representation" and being American, that mentality is hammered into me beyond repair.

[IparryU]

Dude, it is not meant to be understood and it is just a money game. They deal the cards and you play, but it is up to you to decide how to play out your hand, win or lose.

And tax attorneys make fucking bank, so there is no way in hell the tax code will be made simple (despite Obama's plea to do so, wont pass congress).

[wagyl]

I concede...besides the tax balance being tipped in Japan's favor, apparently my real issue with this all is the "taxation without representation" and being American, that mentality is hammered into me beyond repair.

Well if you want representation you can become a native son by naturalisation. (yes I know I am being glib and that is not the intended emphasis of your post)

The perspective I get, not being from a rebellious colony, is that all you guys got out of that deal is a system where "you've got representation? Well then you have a tax liability" with the way the US taxes citizens wherever they are on the globe.