Spousal Residence Right Valuation Simulator | How Much Is the Inheritance Tax Value?

Enter the building's inheritance tax value, structure type, years since construction, the number of years the spousal residence right will last, and the land value, and this free simulator instantly calculates the inheritance tax value of both the spousal residence right and the site use right.

The spousal residence right (Article 1028 of Japan's Civil Code, effective April 2020) lets a surviving spouse go on living rent-free in the home they were living in at the time of inheritance, as a right that is separate from ownership of the property. For inheritance tax purposes, the building's value is split into two parts and valued separately: the "spousal residence right" (the right to live there) and the "encumbered ownership" (the right to receive full ownership once the residence right ends), as set out in Article 23-2 of the Inheritance Tax Act.

Simulate from the building and land value, structure type, years elapsed, and duration of the right

Tips

  • The spousal residence right can't be asserted against third parties unless it's registered. It's a good idea to file the registration jointly with the building's owner soon after the inheritance takes place.
  • The spousal residence right can't be transferred, and it disappears when the spouse passes away, at which point full ownership reverts to the owner. Because no inheritance tax is charged on the residence right at that point, it's often used as a strategy for reducing tax on the second inheritance.
  • The longer the duration, the smaller the present value discount factor becomes, which lowers the value on the ownership side while raising the relative value of the spousal residence right. For a lifetime right, this effect is stronger the younger the spouse is.
  • Entering a land value also estimates the site use right, but keep in mind that the spousal residence right itself is registered only against the building. The site use right is simply a right that arises automatically alongside it, tied to that building's spousal residence right.

Frequently Asked Questions

It requires that the surviving spouse was already living, at the time of inheritance, in a building owned by the deceased. It can then be granted through an agreement among the heirs, a will, or a family court ruling. It can't be set up if the building was jointly owned by the deceased and someone other than the spouse.

By default it lasts for the rest of the surviving spouse's life. However, the heirs' agreement or the deceased's will can instead set a fixed term, such as 10 years. If a fixed term is used, the right ends automatically once that term expires.

No. It's a right that belongs personally to the surviving spouse and can't be transferred to anyone else. That said, with the owner's consent, the spouse can rent the building out to someone else and collect the rent.

The spousal residence right is registered against the building itself. The site use right is what lets the spouse use the land the building sits on, and it arises automatically once the spousal residence right is granted — there's no need to register it separately.
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Side Note — Why the spousal residence right helps with the second inheritance

The spousal residence right was introduced in April 2020 partly out of concern for what happens at the "second inheritance," a concept shaped by Japan's aging population. When one spouse passes away first (the first inheritance) and the surviving spouse inherits full ownership of the family home outright, the entire value of that home ends up subject to tax again later, when the surviving spouse themselves passes away (the second inheritance).

Using the spousal residence right, the home can instead be split at the time of the first inheritance into a "spousal residence right" (the right to live there) and an "encumbered ownership" (the right to receive full ownership later), with the surviving spouse taking the residence right and the children, say, taking the ownership. Because the residence right disappears the moment the spouse passes away, there's nothing left of it to tax again at the second inheritance.

The upshot is that splitting the same home into a spousal residence right plus encumbered ownership, and having the children take the ownership share at the first inheritance, can shrink the total taxable estate at the second inheritance. It secures a place for the surviving spouse to keep living while also planning ahead for the tax burden, which is exactly the intent behind Japan's 2020 reforms to the Civil Code and inheritance tax rules.

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