The Japanese Depreciation Curve
The Japanese Depreciation Curve describes how residential buildings lose value on a fixed schedule while the land beneath them follows its own local market.12 Buyers who read the two parts separately price property more accurately than buyers who treat a house and its lot as one appreciating asset.
Procedures, fees, and requirements can change. Confirm current details at the National Tax Agency and the Ministry of Land, Infrastructure, Transport and Tourism (MLIT).
Overview
This guide is for buyers evaluating the long-term financial outcome of buying property in Japan.2 It explains the statutory depreciation schedule, the market habits that reinforce it, the land-plus-building resale split, and how new and used stock each price the curve.
The tax mechanism is national and uniform.1 Market outcomes vary by location, since land demand differs between central cities, commuter belts, and depopulating towns.2 Foreign and Japanese buyers face the same legal terms; the constraint at resale is local liquidity, not nationality.2
The curve looks like this in outline: the structure trends down on schedule while the land follows local demand.
The Statutory Schedule: 22 Years and 47 Years
Japan assigns each building a statutory useful life (法定耐用年数, hōtei taiyō nensū, "statutory useful life") used only for tax depreciation.13 The figure is an accounting allocation period, not a physical limit on how long the building can stand.3
A reinforced concrete home does not become unusable at year 47, just as a car keeps running after it is fully depreciated.3 That distinction causes much of the confusion around the 30-year shorthand.
What the Schedule Covers: Buildings Only, Never Land
Assets whose value declines with time, such as buildings, count as depreciable assets (減価償却資産, genka shōkyaku shisan, "depreciable assets").1 Land and antiques whose value does not decline with time are not depreciable assets.1
The acquisition cost of a depreciable asset is divided across its usable period rather than expensed at once.1 The statutory life standing in for that period is set in the Ministry of Finance ordinance schedule.1 The NTA English overview confirms the same structure of divided costs, legal durable years, and ordinance-set rates.4
For buildings acquired on or after April 1, 1998, only the straight-line method (定額法, teigaku-hō, "straight-line method") applies.14 Attached structures are outside this article's scope; buyers of houses and condos meet the straight-line rule.
Useful Lives by Structure Type
The schedule below carries no cash price; it sets how fast a building portion is written down for tax. Figures below are statutory and carry no as-of dating because only an amended ordinance moves them.
| Structure | Statutory useful life | Straight-line annual rate |
|---|---|---|
| Wooden or wooden-frame mortar | 22 years | 0.046 |
| Lightweight steel frame (3mm or under) | 19 years | 0.053 |
| Steel frame (3-4mm) | 27 years | rate per ordinance table |
| Steel frame (heavier than 4mm) | 34 years | 0.030 |
| Brick, stone or block | 38 years | rate per ordinance table |
| Steel-reinforced concrete or reinforced concrete | 47 years | 0.022 |
The lives match the NTA useful-life tables, as reproduced in buyer-facing sources.356 The headline rates come from the same reporting.5
A new wooden building portion of ¥20,000,000 at 0.046 gives ¥920,000 of annual depreciation across 22 years.5 A 10-year-old wooden building instead depreciates over a 14-year residual life: (22 minus 10) plus (10 times 0.2).67
A wooden building already past its 22-year life depreciates over 22 times 0.2, or 4.4 years rounded down to 4 years.65 The general residual formula is (statutory life minus age) plus (age times 0.2) below life, and statutory life times 0.2 once past it.657
Only the building portion forms the depreciation base, so the contract split between land and building decides every later calculation, including the purchase taxes and ownership budget covered in Property Taxes and Ongoing Costs.17 Confirm how the paperwork allocates the price before closing.
Why Buildings Lose Market Value Too
The schedule writes the building down on paper, and buyer demand discounts older wooden stock in price.23 The two mechanisms are distinct but point the same way for aging wood.
Banks reinforce the pattern by lending against the land more than the aging structure.2 The building line of a valuation on an older wooden house therefore trends toward zero in practice.
The Preference for New Construction
Japanese buyer norms have long favored new construction over used stock.25 Used homes have carried a stigma while new homes command a premium, which shifts demand toward fresh supply.
Postwar history made replacement routine.3 Fast wooden rebuilding after war and disaster normalized knock-down-and-rebuild, so replacing a home felt ordinary rather than exceptional.
Postwar Stock, Seismic Standards, and Replacement Habits
The stricter seismic standard (新耐震基準, shin-taishin kijun, "new seismic standard") applies from construction confirmation on or after June 1, 1981.3 The Housing Quality Assurance Act has applied since 2000 with clearer condition-assessment measures.3
The often quoted 30-year figure measures replacement frequency, not lifespan: Japanese homes average around 30 years old at demolition (as of 2026-06; confirm current figures with MLIT housing-stock publications).3 Demolition-age comparisons put Japan at 32.1 years against 66.6 in the United States and 80.6 in the United Kingdom (as of 2020).3
A survival-based MLIT study that counts standing homes alongside demolished ones estimates an average around 65 years (as of 2026-06).3 With maintenance, even a wooden house can last 60 years or more (as of 2026-06).3
Averages taken only at demolition leave out every house still standing, which is most of them.3 Judge a specific building by inspection and records, not by the national average.
Land vs Building: The Resale Split
The advertised price of a detached house (一戸建て, ikkodate, "detached house") is land value plus building value.23 The distinction decides what a buyer pays for and what a seller recovers.
MLIT transaction-price records (不動産取引価格情報, fudōsan torihiki kakaku jōhō, "Real Estate Transaction Price Information"), covering millions of sales since 2005 with price, areas, building year, structure, and block location, let analysts separate the two components.2 The building component fades with age while the land component follows local demand.2
How Resale Prices Divide at Sale
Wooden structures beyond roughly 25 to 30 years often contribute little measurable premium over a comparable empty lot.2 A realistic resale of an older house is frequently priced at or near land value.2
In such sales the structure may be treated as worth little, or even as a demolition cost the buyer prices in.2 Sellers who expect the building to carry value face a gap between hope and appraisal; the market prices the lot.
Where Location Overrides the Curve
Land in high-demand urban districts has held or risen, while land in depopulating rural towns has fallen toward token levels (as of 2026-06; confirm current figures with MLIT land-price publications).2 The same vintage structure therefore produces different outcomes by municipality and district.2
Residential land in the Tokyo 23 wards has shown long-run resilience in MLIT published land prices, with some central areas above any point in two decades (as of 2026-06).3 Central urban property whose value sits mostly in land barely notices structure depreciation; a newer wooden house on cheap rural land carries most of its value in the declining part.2
Two homes at the same asking price can have opposite trajectories purely from their land-to-building ratios.2 Compare recent sold prices for the district before weighing the building.
New vs Used: How the Curve Shapes Buying Strategy
This section describes how each stock type prices the curve; it does not recommend one over the other. Buyer-facing sources describe a new-construction premium qualitatively without a verifiable national band, so no percentage is stated here.23
Buyers weigh structure condition against land durability in both cases.32 New builds offer current standards and broader future buyer pools, while used stock offers land-weighted pricing with inspection and retrofit checks.
What a New Build Buys Beyond the Structure
Newer buildings meet current seismic and quality-assurance baselines.3 They are also favored by Japanese buyers, which can support demand when the property is later resold.3
A new build carries the full statutory life from purchase: 22 years of depreciation for new wood at 0.046 per year.57 The building therefore starts at its maximum paper value and declines from there.
What a Used Property Prices In
A used property past its statutory life carries a compressed residual schedule: 4 years for wood past year 22.65 That concentrates the paper write-down into a short window rather than spreading it.
Buyer checks on used stock include seismic vintage (before or after June 1981), quality-assurance era (before or after 2000), and maintenance and renovation records.3 A well-kept older home can be a sound place to live even where its appraised structure value is small.
Japan vs Price-Appreciation Markets
Japan follows a scrap-and-build pattern in which structures are replaced rather than preserved across generations.35 That contrasts with US and UK markets where older homes routinely gain value with maintenance.
In Western markets, residential buildings are commonly expected to last 50 to 100 years or more and often appreciate when maintained (limitation: this band is a practitioner generalization).5 In Japan, a wooden house carries a 22-year statutory life for tax regardless of upkeep.5
MLIT publishes transaction prices, areas, building age, and structure type but no official depreciation curve.2 Curve statements are inferred by comparing land-only sales against land-plus-building sales and by tracking price against building age across comparable records.2
Good to know
A 22-year-old wooden house is not uninhabitable at year 22
Exceeding the statutory useful life ends depreciation for tax purposes.13 It does not make the building uninhabitable or legally unusable.
Sources compare the point to a fully depreciated car that keeps running.3 Occupancy, habitability, and market use continue; only the paper allocation is finished.
Renovation rarely resets appraised building value on older wooden stock
Renovation can improve marketability and rental use.2 For older wooden houses, however, resale often stays anchored to land value with buyers discounting the structure.
Whether work pays back varies with location, value mix, and buyer pool.2 Treat renovation as use-value or yield improvement first and as a resale multiplier only with district evidence.
Lenders price the same curve into loan terms
Banks treat older wooden structures as low or zero collateral weight and lend chiefly against the land (limitation: practitioner characterization, not a published bank rulebook).2 Loan tenor and valuation therefore reflect building age and structure type.
Confirm tenor and collateral treatment with the specific lender before assuming an older structure supports borrowing.2 Terms differ by institution and by property.
See also
- Property Taxes and Ongoing Costs
- New vs. Used Property in Japan
- Can Foreigners Buy Property in Japan?
- Mortgages for Foreign Residents