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Today's story will be a bit more difficult. That is, what happens to your mortgage deduction if you are transferred overseas/return home? This is because many of our foreign clients ask us, “What will happen to my mortgage deduction if I am transferred overseas?

Because many of our foreign clients ask us, “What will happen to my mortgage deduction if I am posted overseas?

How can I get the mortgage deduction even if I am posted abroad? How can I avoid losing money?

This is because we receive many inquiries such as “What will happen to my mortgage deduction if I am transferred abroad?

This is a very in-depth topic, so we will be sharing the information in a series of articles.

If you still have a mortgage on your house and you receive a notice from your company that you will be transferred overseas or return to your home country, you may be wondering what to do about the mortgage deduction.

What will happen to the mortgage deduction if I cannot continue to live in my house because of the overseas assignment/return to Japan?

In conclusion,
If the entire family moves to the overseas assignment/return destination:

Mortgage deduction is not available.

If a family member continues to live in the home after moving to a single location:

The deduction may or may not be taken depending on the date and time of acquisition of the house.

However, the above will be treated differently depending on the presence or absence of dependents and the date and time of acquisition of the residence.

Furthermore, even if the entire family moved to the overseas assignment/return destination, when they return home and live in the house again, they may be able to take the deduction again if the mortgage deduction period remains.

However, you will not be able to receive the deduction unless you have completed the proper procedures before moving abroad/returning to your home country.

If you do not take the necessary procedures before going abroad/returning home, you may lose up to 400,000 yen per year in deductions that you should have received.

This article will explain in detail about the mortgage deduction for expatriate/returning home.

By reading this article and understanding the mortgage deduction for overseas assignment/returning home, you will know if your case is eligible for the mortgage deduction or not.

By understanding the procedures to be taken before going abroad or returning home, you will be able to take advantage of the mortgage deduction even when going abroad or returning home, and maximize your deductions without losing money.

1. Can I take a mortgage deduction for overseas assignments? Can you not take it?

The question is: “Can I continue to receive the mortgage deduction in my case? Or can I not?”

From the next section, we will explain in detail the detailed reasons and points to avoid losing money.

If you are eligible to receive it:

2. If you are posted abroad/returned to your home country, you can receive the mortgage deduction if you are posted alone and meet the two conditions.

If you are not eligible:

3. If you move with your entire family when you are transferred overseas/return to your home country, you cannot receive the mortgage deduction.

2. Mortgage deduction is available if you are posted abroad/return to your home country but are posted alone and meet the two conditions.

If both of the following two conditions are met, you can continue to receive the mortgage deduction even if you are transferred overseas or return to your home country.

The two conditions that allow you to continue to receive the mortgage deduction even if you are posted abroad/return to your home country are as follows.

Let's look at each of them in detail.

2-1. [Condition 1] Housing was acquired on or after April 1, 2016.

The first condition for continuing to receive the mortgage deduction for overseas assignment/returning home is that the home was acquired on or after April 1, 2016.

Previously, overseas assignments/returning homeowners were not eligible for the mortgage deduction even if they were posted abroad alone.

However, due to the 2016 tax reform, the mortgage deduction is now available for single expatriates as long as the home was acquired on or after April 1, 2016 (April 1, 2016).

When is the date the home was acquired?

The date you acquired the housing is the date you took delivery of the housing.

Specifically, the date when the keys were handed over is considered to be the relevant date.

2-2. [Condition 2] A relative who shares the same livelihood continues to live in the house

The second condition for continuing to receive the mortgage deduction even if you are transferred abroad or return to your home country is that “a living relative who makes a living in the same household” continues to live in the house.

What is a “living relative”?

A “relative” who lives in the same house and “shares living expenses.

Relatives usually include the following persons

Husband (wife)

Children

Father

Mother

Siblings

Grandfather (grandmother), etc.

In addition, if they live in the same house and pay utilities out of the same wallet, they are basically considered to share the same livelihood.

However, if they live in a two-family house and have separate utility contracts and pay for their own food and other expenses, they are considered to have separate livelihoods.

Also, even if they do not live together, if they share living expenses, for example, a child living alone who sends money home or parents living out of state, they are considered to share a common livelihood.

It is important to note that this is the case for partners who have not joined the family and are in a common-law relationship.

Even if you live together and contribute to each other's living expenses, you are not considered relatives in the case of common-law relationships and are therefore not eligible for the mortgage deduction.

If you are unsure, it is advisable to contact your local tax office.

3. If you move with your entire family on an overseas assignment/return to your home country, you will not be eligible for the mortgage deduction.

If you are transferred overseas/returning home and moving with all family members who live with you, you cannot take the mortgage deduction.

As with domestic transfers, if you move with all family members living together in an owner-occupied house, you are not eligible for the mortgage deduction.

Similarly, if you live alone, you will not be eligible for the mortgage deduction because you do not have any family members living in the home you own.

However, when you return home and are able to live in your owner-occupied home again, you may resume the deduction as long as the mortgage deduction is still available.

However, in order to resume the mortgage deduction, you must complete the necessary procedures prior to your posting/return to your home country.

Please refer to the next section for detailed information and procedures!


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