'Shisanzei Navi' Launches 'Depreciation Checker' for Fixed Asset Tax — AI Determines if Valuation Correctly Reflects Building Age

The property tax information service 'Shisanzei Navi' (https://shisanzei.xyz) has launched the 'Depreciation Checker,' an AI-powered tool that checks if a building's age-related depreciation is correctly reflected in its assessed value. Tool URL: https://shisanzei.xyz/tools/depreciation-checker

Why are property tax errors so frequent?

Property tax is levied by municipalities, which calculate the assessed value of land and buildings and apply a tax rate (standard 1.4%). Taxpayers typically pay the amount on their notice without question, and few verify the valuation calculation themselves. However, a 2012 survey by the Ministry of Internal Affairs and Communications revealed that 97.0% of the 1,721 municipalities nationwide (1,669 municipalities) had made some form of valuation 'correction' (Source: Ministry of Internal Affairs and Communications, 'Survey on Tax Amount Corrections for Fixed Asset Tax and City Planning Tax,' 2012). The majority of these corrections were for over-assessment (i.e., over-taxation). A particularly common cause of these errors is the 'failure to reflect or incorrect reflection of age-related depreciation.' The fixed asset tax valuation for a building is calculated by multiplying the reconstruction cost score at the time of new construction by the age-related depreciation correction rate. This rate is calculated based on standards set by the national government (Ministry of Internal Affairs and Communications) according to the building's structure (e.g., wooden, steel frame, RC) and elapsed years. However, cases have been reported where the structure type was incorrectly registered, renovations were not reflected, or the correction rate was not updated during the triennial reassessment. As a result, a certain number of property owners have been overpaying taxes for years.

How the Depreciation Checker Works

This tool allows taxpayers to easily check if age-related depreciation is properly reflected in their building's assessed value.

Information to Input:

• Building structure (Wooden, Light-gauge steel, Heavy steel, Reinforced Concrete, Steel-framed Reinforced Concrete)
• Year of construction (new construction year)
• Total floor area
• 'Assessed Value' as stated on the fixed asset tax statement (enclosed with the tax notice sent from April to May each year)
• Location (Prefecture, Municipality)

If the structure and construction year are unknown, they can be found on the Certificate of Registered Matters (property registration). It can be obtained online through the Legal Affairs Bureau's service.

Check Flow:

1. Calculate Depreciation Correction Rate: The tool calculates the elapsed years from the input structure and construction year and determines the age-related depreciation correction rate based on the 'Fixed Asset Valuation Standards' table set by the Ministry of Internal Affairs and Communications. For example, a 20-year-old wooden house would have a correction rate of about 0.26 (approx. 26% of its new value).

2. Estimate Theoretical Assessed Value: The tool estimates a theoretical assessed value by referencing the average reconstruction cost score for buildings of the same structure and floor area in the region. While this is an approximation, an alert is shown if there is a large discrepancy with the input assessed value.

3. Determine Discrepancy Level: The difference between the input assessed value and the theoretical estimate is displayed as a 'discrepancy' percentage. If the discrepancy exceeds a certain threshold, a result is displayed in one of three levels:

• Discrepancy under 10%: 'Largely Appropriate' - Age-related depreciation is likely reflected correctly. However, as this is a simple check, using the public inspection system (details below) is recommended for a precise verification.
• Discrepancy 10-30%: 'Verification Recommended' - There may be a partial discrepancy in how depreciation is reflected. This could be due to incorrect structure registration, unreflected renovations, or region-specific adjustments. Please compare the details on your tax statement with your property registration.
• Discrepancy over 30%: 'Investigation Required' - The assessed value is significantly different from the theoretical value. This could be due to incorrect structure registration or a failure to update the correction rate during reassessment. Contacting your municipal property tax department is strongly recommended.

4. Guide to Next Actions: Depending on the check result, the tool provides guidance on specific next steps:

• How to check your tax statement and what items to look for.
• How to use the public inspection system (available annually from April 1st to April 20th or the first tax payment deadline).
• An overview of the request for review process (a formal appeal if you disagree with the assessed value).
• Cases where consulting a tax accountant specializing in property tax is effective.

Why focus on 'Age-Related Depreciation'?

While property tax valuation is divided into 'land' and 'buildings,' land valuation is more subject to public scrutiny through official land prices and inheritance tax路線価 (rosenka), whereas building valuation is largely at the discretion of the municipality, with less external oversight. Within building valuation, age-related depreciation is a good match for AI-based checking because it can be calculated mechanically from just the structure type and elapsed years. 'Shisanzei Navi' is starting with this automated check and plans to gradually support other factors like use-based and wear-and-tear corrections.

Use Cases

1. When Your Annual Tax Notice Arrives: Before you pay the property tax notice that arrives between April and May, enter the assessed value from the statement into this tool. The check takes less than 5 minutes. It's especially worthwhile for buildings over 15 years old to confirm if depreciation is correctly reflected.

2. When Considering Buying a Used Property: When buying a used property, the annual property tax is a crucial running cost. However, the tax amount presented by the seller might be based on an over-assessment, which could be corrected after purchase. Conversely, an under-assessment could mean a future tax increase. This tool can be used for a pre-purchase check.

3. When Inheriting a Property: A property acquired through inheritance has had its taxes paid by the previous owner for many years. However, the previous owner may not have been aware of any assessment errors. A check upon inheritance can lead to a more appropriate tax burden for decades to come.

※ This tool is a simple checking tool and does not provide tax determination or legal advice. If you have questions about your assessed value, please consult your municipal property tax department or a tax accountant.

▼ Check your depreciation here
https://shisanzei.xyz/tools/depreciation-checker

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