Rental Property Valuation for Inheritance Tax Is Being Reviewed

01Why the valuation is being reviewed

For inheritance tax, assets are valued at "market price" in principle, but in practice a notice-based method (such as roadside land prices) is used. When this assessed value differs greatly from the actual market price, it can lead to excessive tax saving via real estate, so valuation has been tightened in recent years.

As a flow following the valuation review of tower condominiums and the like, discussion of a review is progressing for rental real estate too.

02The basics of rental-property valuation

Property rented out is generally assessed lower for inheritance tax than property you use yourself. This reflects the idea that "because you cannot use it freely while renting it out, its value is assessed lower".

• Land: reduced by a set ratio as "leased-building land"
• Building: reduced by a set ratio as a "rental building"
• The small residential-land special may also apply if requirements are met

03Cases likely to be affected, and what you can do now

1. Grasp the current inheritance-tax assessed value of the rental property you own
2. Check whether your estate plan assumes a valuation reduction
3. Once the reform is finalized, estimate the impact
4. Review your planning approach as needed

This article is based on information available at the time of publication. Rules and systems may change. Please consult a professional before making any individual decisions.