Must-see for business owners: A complete explanation of how to save taxes by pur

Hello everyone.Thank you for visiting our site and for your interest in New York real estate among other real estate investments around the world.

As of 2025, we are in a chaotic situation with a greatly weakening yen and rising prices worldwide.In Japan, it is not only the depreciation of the yen and rising prices, but also tax increases.The situation is likely to accelerate in the future, especially for those who own more assets, who will have to pay more taxes.

In this article, we introduce U.S. Real Estate Investment as a possible hint to protect your assets.Please read to the end.

3 Reasons Why Investing in U.S. Real Estate is Attractive

You may have heard, especially since the Corona Shock, that the United States is one of the most attractive, solid, and growing investment countries for overseas real estate investment.The rationale for this is, first, that the global economy is becoming dominated by the United States.

However, it is not only a short-sighted rationale that "a strong US economy = a good investment in US real estate.

There are many reasons, but we would like to pick up three of the most important ones and introduce them to you.The three points are as follows.

The strength of the U.S. economy will lead to exit strategies
American symbolism "diversity" has a positive impact on real estate investment
Investors can move to the United States on their own.

The strength of the US economy underpins these factors and elements.We will explain them in turn, so please bear with us.

Exit Strategies Guided by the Strength of the U.S. Economy

The first reason why real estate investment in the U.S. is attractive is because the strength of the U.S. economy makes it possible to find an ideal exit strategy.

The exit strategy here mainly refers to the sale of properties, which corresponds to capital gains in real estate investment.

Unlike real estate investment in Southeast Asia, where income gains are more important, the key to real estate investment in the U.S. is investment based on the assumption of capital gains even before purchase.This is due to the growth of the U.S. itself, which is the only developed country with a net population growth and active immigration, as well as the strength of its politics, military, economy, education, and all industries, which are valued The current strength of the country is expected to continue for the next 50 or 100 years, which is a major reason.

Another major reason is the chronic strength of the U.S. economy.When the economy is strong, prices rise, and wages rise with them.And when the increase in wages exceeds the increase in prices (real wage increase), real estate prices will rise.

The virtuous cycle of appreciation brought about by a booming economy is the most significant factor making it easier to target capital gains.In particular, New York City real estate prices are hard to drop, making it a great place to invest.

Exit strategies are important, and a strong economy and the ability to target capital gains greatly reduces the risk of real estate investment.

Diversity, an American Symbol, Has a Positive Impact on Real Estate Investment

The next reason why investing in real estate in the U.S. is attractive is that diversity, a symbol of the U.S., has a positive impact on real estate investment.

As we will discuss later, when considering investing in real estate in the U.S., we recommend holding real estate for the long term, from a few years to 10 years.

In the case of investment, you will receive rental income, so naturally you can expect a return during that period, but the capital gain after holding the property for a long period of time is the most important thing.

Investors themselves can move to the U.S.

The last reason why real estate investment in the U.S. is attractive is that investors themselves can migrate to the U.S..

Comparing the Japanese and U.S. economies in 2024, more and more people in Japan want to move to the U.S. If you own real estate in the U.S., the option to live is more accessible.

The world economy, for better or worse, is driven by the U.S. When the Great Depression of 1929 and the global financial crisis of 2008-2009 occurred, they both started in the U.S. and the U.S. was the fastest to recover.The global economy is heavily influenced by these U.S. factors, as evidenced again under the pandemic, which is still fresh in our minds.

It can be said that the U.S. economy does not collapse significantly, or even if it does, it recovers quickly.

We also provide support for immigration to the U.S., from obtaining visas to green cards, so if you are interested, please contact us for more information.

New York in U.S. Real Estate Investment

We recommend investing in New York Cityin American real estate investments, where asset values are less likely to decline.

Before explaining the rationale behind this, let me first touch on the real estate market in the United States.

In the U.S., with its vast land, it is said that land tends to be inexpensive and buildings expensive.Generally, the ratio of land to building to real estate value is 2:8.

Due to the high value of buildings and their long useful life, it is said that 80-90% of the U.S. real estate market is second-hand.

In New York City, on the other hand, especially popular Manhattan Island, where land is limited, land prices are also high.

In addition, high demand-driven prices are reflected in workers' salaries, and rents (i.e., income gains on the investor side), both residential and commercial, have been rising over the past 30 years.

High-value buildings, popular and scarce land, and high prices that drive up salaries and income gains are some of the factors that make it difficult to lower real estate prices in New York City.

Reference Differences between Japan and the U.S. Land

Total PopulationAreaArea per capitaJapan124,947,000 people377,975㎢3.02 m2U.S.A.About 335 million people9,833,517㎢29.35 m2

Exhibit: Statistics Bureau, Ministry of Internal Affairs and Communications.

United States Basic Data, Ministry of Foreign Affairs

GSI, Ministry of Land, Infrastructure, Transport and Tourism.

Comparing the area per capita, the U.S. is approximately 10 times larger than Japan.

What are the tax benefits of real estate investment in the U.S. that are not available in Japan?

We have already told you about the appeal of investing in real estate in the U.S. However, by investing in real estate in the U.S., you can receive preferential tax treatment.

The following two tax benefits are available for real estate investment in the U.S. while living in Japan.

1031 Tax Exchange
Accelerated depreciation is available.

We will explain in order.

1031 Tax Exchange

First of all, the 1031 Tax Exchange, in a nutshell, is a right given to owners of investment property to postpone tax payments.

The tax liability is triggered when the capital gain is acquired.However, the 1031 Tax Exchange is a tax benefit that allows you to use the taxes you would otherwise have to pay to pay for the purchase of your next property.

All four of the following conditions must be met to be eligible

When selling commercial investment real estate
Reinvest in the same type of real estate as the property sold
Hire a qualified broker
Purchase the next property within 180 days of the sale

The owner of a commercial investment property must purchase a new similar property with a qualified broker.

This will come in handy in situations where the U.S. business real estate you own is "ready to sell, but expenses are so low that you may have to pay a large tax bill if you sell now.".

In addition, you must submit a list of potential properties to be purchased within 45 days of the sale, along with the purchase of your next property within 180 days of the sale.

It is important to take action once you have decided to qualify for the 1031 Tax Exchange.

Accelerated depreciation is available.

Accelerated depreciation is literally completing depreciation in a short period of time.Although only for corporate ownership, a wooden structure over 22 years old can be depreciated in 4 years, even if it is expensive.

For example, suppose a 26-year-old wood-frame structure with a real estate value of $2 million.Since the land is not subject to depreciation, the value of the building would be $1.6 million based on the aforementioned 2:8 ratio of land to building in the United States.

Since the $1.6 million can be fully depreciated in four years, $400,000 per year can be recorded as an expense.At a simplified rate of 100 yen to the dollar, the company can expense 40 million yen; at 120 yen to the dollar, 48 million yen; and at 150 yen to the dollar, 60 million yen.

Assuming an effective corporate tax rate of 33%, at 120 yen to the dollar, this would result in a 15.84 million yen/year reduction in corporate tax, for a total tax savings of 63 million yen over the four-year period.

A caution with this system is that you should not sell the real estate unnecessarily after four years.

Capital gains are also subject to taxes, so consider selling when you have significant expenses, such as in conjunction with the aforementioned 1031 Tax Exchange, the year you installed machinery and equipment, or paid retirement allowance compensation to executives.

The Secret to Successful U.S. Real Estate Investment!Make good use of overseas business loans!

Financing and remittance are very important when investing in overseas real estate, not only in the United States.This is because there is a possibility of unexpected problems with overseas remittances.

We recommend that you look for a financial institution at the same time you are looking for a property.The following three options for overseas business financing are introduced here.

Japan Finance Corporation
Tokyo Star Bank
ORIX Bank, in no particular order

The financial institutions listed above are those with an established reputation for overseas lending and overseas.

Each financial institution has various features, so we recommend that you inquire in advance.

In addition to the above, megabanks are also available, as they can remit funds worldwide and may have overseas offices.Please contact us for more details.

Conclusion

In this issue, we have provided a complete explanation of how to save taxes by purchasing real estate in the United States.

Thank you for taking the time to read this article.

Our company, Reinvent NY Inc, continues to assist individuals and companies who are moving to the US, buying or renting real estate in 2019, offering comprehensive services to support all aspects of the process.

We would be happy to discuss your needs with you once you contact us using the form below.

Inquiry Form

If you are considering immigrating to the U.S., please contact us for any details, from a case with a small investment amount, to a case with no track record or history in the U.S. We will be happy to assist you.We promise to provide you with a friendly and sincere service.More information is below.

Read the Japanese version of this article on reinvent.co.jp