Consecutive Inheritance Tax Credit Simulator | Reduce Tax When Inheritance Occurs Within 10 Years
Enter the total estate value, the statutory heir composition, the tax paid on the first inheritance, its net asset value, and the years elapsed to estimate the consecutive inheritance tax credit (Japan's Inheritance Tax Act, Article 20) and the tax owed after the credit is applied. Free simulator.
When the current decedent themselves acquired property in a separate, earlier inheritance (the "first inheritance") and paid inheritance tax on it within 10 years before their own death, part of that earlier tax can be subtracted from the tax owed on the current inheritance. This is known as the Consecutive Inheritance Tax Credit (Inheritance Tax Act, Article 20), designed to ease the burden of the same property being taxed twice within a short span of time.
Consecutive Inheritance Tax Credit Formula
| A: Inheritance tax paid on the first inheritance | The inheritance tax the current decedent themselves was charged at the time of the first inheritance |
|---|---|
| B: Net asset value from the first inheritance | The net asset value (value of property minus liabilities) the current decedent acquired at the time of the first inheritance |
| C: Total taxable base of the current inheritance | The combined net asset value acquired by all heirs and beneficiaries in the current inheritance |
| D: Amount acquired by the qualifying heir | The net asset value acquired by this heir in the current inheritance (this tool assumes acquisition according to the statutory share) |
| E: Years elapsed | The number of years elapsed from the first inheritance to the current inheritance (fraction of a year rounded down; 10 years or more is ineligible) |
The number of years elapsed used in the calculation is the period from the start of the first inheritance to the start of the current inheritance, with any fraction of a year rounded down. Consult a tax accountant or tax office for the exact eligibility requirements and credit amount.
Simulate From the Estate Value, Heir Composition, and First-Inheritance Details
Tips
- The consecutive inheritance tax credit only applies when the current inheritance occurs within 10 years of the first inheritance. Beyond 10 years, the credit amount becomes 0 yen.
- The years elapsed (E) is calculated by rounding any fraction of a year down. For example, 9 years and 11 months since the first inheritance is counted as "9 years."
- If the decedent did not actually pay inheritance tax at the first inheritance (tax A is 0 yen), there is nothing to credit, so the consecutive inheritance tax credit does not arise.
- This credit tends to come up when an elderly parent and child pass away in close succession (for example, a father dying shortly after his own father's death), so if this situation seems likely, it is worth consulting a tax accountant early.
Frequently Asked Questions
Side Note — Why Does the "Within 10 Years" Limit Exist?
The consecutive inheritance tax credit was created to ease the burden on surviving family when the same property is taxed twice in quick succession. For example, if a grandfather dies and a father inherits and pays inheritance tax on the property, and then the father himself dies just a few years later and a child inherits the same (or part of the same) property, the property ends up being taxed almost twice within a short period.
The reason the credit rate decreases by 10 percentage points for each year elapsed is the idea that, as more time passes, the "back-to-back inheritance" nature of the situation fades, and the case comes to resemble an ordinary inheritance more closely. The 10-year limit is likewise set as a rough guideline for how long this kind of double-taxation relief is considered necessary.
The mechanism that caps the value of C ÷ (B − A) at 1 is an adjustment to prevent the credit from exceeding the tax actually paid at the first inheritance (A) in cases where the current estate (C) is larger than the net assets received at the first inheritance (B − A, roughly the after-tax amount actually received).