Main Changes in the Municipal Resident Tax and Tokyo Metropolitan Resident Tax for Fiscal Year 2020

Review of the Furusato Tax Donation System

The local governments eligible for hometown tax (special deduction amount for donations related to Municipal Resident Tax and Tokyo Metropolitan Resident Tax) are designated by the Minister of Internal Affairs and Communications based on certain criteria. For information on the eligible local governments, please check the website of the Ministry of Internal Affairs and Communications below.

• General Affairs Department Hometown Tax Portal Site(External Link)

Donations made to organizations not designated as eligible after June 1, 2019, will not be eligible for the hometown tax system.
(Note) The special deduction amount related to the Municipal Resident Tax and Tokyo Metropolitan Resident Tax donation tax credit is not eligible, but the income deduction for Income Tax and the basic deduction for individual resident tax are eligible.

Expansion of Special Tax Deduction for Housing Loans

If you acquire a residence for living purposes between October 1, 2019, and December 31, 2020, the following review will apply. However, this does not apply to residential acquisitions that are not subject to a 10 percent consumption tax rate.

Extension of Applicable Years

The applicable period will be extended from the current 10 years to 13 years.

Review of the Maximum Amount for Special Deductions on Housing Loans

For the three years after the 11th year, a cap on the deduction amount focusing on the burden of the 2 percent increase in the consumption tax rate will be set. Specifically, for each year, the lesser of the following amounts will be deducted.

1. 2 percent of the building purchase price ÷ 3
2. 1 percent of the year-end balance of housing loans

The amount that cannot be deducted from the Income Tax amount will be deducted from the Municipal Resident Tax and Tokyo Metropolitan Resident Tax within the same deduction limit as before the revision (7 percent of the total taxable income for Income Tax, up to a maximum of 136,500 yen). Additionally, the deduction limit for the purchase price of buildings and the year-end balance of housing loans remains at the current level.