Types of expenses incurred when selling real estate

Here we will give a detailed explanation of the costs involved when selling real estate.

Stamp Duty

The first type of expense incurred when selling real estate is the stamp tax.
When a seller and a buyer exchange a real estate sales contract in a real estate sale, revenue stamps of a set amount are affixed, and when the it is stamped with a seal, the stamp tax is considered to have been paid.
Two copies of a real estate sales contract are usually prepared and kept by the seller and the buyer, and each must have its own stamp affixed.
As seller and buyer are both jointly and legally obligated to pay the tax, it is important to not fail to affix the stamps to each contract.

Capital gains tax

The second type of expense incurred when selling real estate is capital gains tax.
When real estate is sold and a profit is generated, income tax and inhabitant tax are imposed on the profit.
This taxable profit is called capital gain.
In order to determine the capital gains tax, the transfer income must first be accurately calculated.
The method of calculating transfer income is as follows

The capital gains tax rate varies depending on the period of ownership of the sold real estate.
If the period of ownership is 5 years or less, the tax rate becomes short-term transfer income, and if the period exceeds 5 years, the tax rate becomes long-term transfer income.

The tax rate varies greatly over the period of ownership of the property sold.

Title transfer fees

The third type of expense that occurs when selling real estate is the title registration fee.
The registrations required for the sale of real estate include mortgage cancellation registration and ownership transfer registration.
In most cases, the seller generally bears the cost of mortgage cancellation, and the market price is approximately 20,000 to 30,000 yen when requested by a judicial scrivener.
For most cases, the buyer generally bears the cost of registration of transfer of ownership, and the amount to be paid to a judicial scrivener is generally in the range of 50,000 yen.
Both registrations can be done by yourself at the Legal Affairs Bureau, but requesting a judicial scrivener will be less time-consuming and more error-free.

Mortgage repayment handling fees

The fourth type of expense incurred when selling real estate is the mortgage repayment fee.

When selling real estate on which a mortgage is being repaid, the mortgage must be repaid in full to the financial institution.
Real estate cannot be sold without removing the mortgage and any other liens on the property.
A fee is charged for the lump-sum repayment of the mortgage, which varies from one financial institution to another.
The fee may also vary depending on the time of year, so it is advisable to check in advance.

Cleaning fees

The fifth type of expense incurred when selling real estate is house cleaning costs.
House cleaning is also necessary to make a good impression on viewers when selling real estate.
Keeping the property for sale clean gives the buyer a good impression.
Particular attention should be paid to the water area.
We recommend house cleaning because some buyers will pay attention to water areas such as bathrooms, kitchens, and sinks.
It is better to ask a professional company to do the house cleaning as it will be cleaner than doing it yourself.

Brokerage Fees

The sixth type of expense that occurs when selling real estate is a brokerage fee.
A mediating fee is a commission paid to a real estate company when the sale of real estate is completed.
The details of a mediating fee will be explained in the next paragraph.

What is a real estate "brokerage" fee?

When you request the sale of real estate to a real estate company, you will incur a type of cost such as a brokerage fee.
In this chapter, we will explain what it is.

What is a brokerage fee?

A brokerage fee is a commission paid to the real estate company that made the request for sale when the sale of real estate was concluded.
Although a real estate company performs sales activities such as posting a sale property on the Internet and distributing advertising flyers, a brokerage fee includes the cost of such sales activities.
However, special activities such as surveying and building demolition for sale generally require additional costs.

How brokerage fees are calculated

The formula for a brokerage fee varies according to the sales price, and the maximum amount of the fee is determined by law.

The formula for the brokerage fee is as follows:

For example, if the sale price of real estate is 30 million yen, the brokerage fee is as follows.
(30 million yen × 3% + 60,000 yen) + consumption tax = 1,056,000 yen.

When to pay the brokerage fee

Since the brokerage fee is a contingency fee, it is paid after a sales contract is concluded.
The timing of payment after a sales contract is concluded differs according to a real estate company, and there is the method of paying it in two installments, 50% at the time of a contract and 50% at Close and a method of paying it collectively in a lump sum.
Since it is a large amount of money, it is good to confirm when concluding a brokerage contract with a real estate company about the timing of paying a mediating fee.

What is a "mortgage cancellation fee"?

When selling real estate, you cannot sell it without registering the cancellation of the mortgage in the first place.
Here, we will explain the "mortgage cancellation costs," which are part of the costs incurred when selling real estate.

What is a mortgage?

A mortgage is the right of a financial institution to set up real estate as collateral when signing a mortgage contract.
The real estate is taken as collateral in case the mortgage loan is not repaid as promised.
The financial institution that creates the mortgage registers the mortgage in order to assert its mortgage rights to third parties.
In the unlikely event that you are unable to repay the mortgage, the financial institution has priority to convert the collateralized property into money and use it as a source of repayment.

What are mortgage cancellation fees

Mortgage cancellation fees are the costs incurred to cancel the mortgage when it is paid off.
This is always done when the mortgage is paid off, since the real estate cannot be sold without the mortgage cancellation registration.
Although it is common to ask a specialist such as a judicial scrivener or lawyer to register the mortgage cancellation, it is also possible to go to the Legal Affairs Bureau and apply for it yourself.
The registration tax for mortgage cancellation is 1,000 yen per property.

A Word of Caution about Mortgage Cancellation

Simply paying off the mortgage does not erase the mortgage.
It is important to remember to register the cancellation of the mortgage, rather than simply paying off the mortgage.
If you do not register the cancellation of the mortgage, the mortgage will remain attached to the property in the registry even if the mortgage has been paid off.
If this happens, a third party may judge that the mortgage is still attached to the property, and this may cause trouble.
Since the mortgage does not automatically disappear even if the mortgage is paid off, it is advisable to register the mortgage cancellation as soon as possible after the mortgage is paid off.

In conclusion

In this article, we talked about the various costs involved in selling real estate.
If you understand what kind of fees there are and how much it costs in advance, communication with a real estate company will proceed smoothly.
When selling off real estate, aim for a satisfactory sale.