How a Salaried Worker with Rental Income Prepares a Statement of Earnings and Expenses (Shushi Uchiwakesho) with e-Tax

Some people work as salaried employees while also investing in property and earning income from it. If you have rental income in addition to employment income, a final tax return is required in Japan.

This explains the flow for preparing the statement of earnings and expenses when filing with e-Tax, and what to enter in each field.

Starting the tax return

Go to the National Tax Agency's tax return preparation corner and click "Start preparing."

Since we want to submit via e-Tax, for "method of submission to the tax office" choose whichever of the following suits your environment:

・e-Tax using a smartphone

・e-Tax using an IC card reader/writer

・e-Tax using the ID/password method

Selecting the return to prepare

From the list for preparing the relevant year's returns, choose "Financial statements / statement of earnings and expenses (+ income tax)."

Choosing Mynaportal linkage

If you use Mynaportal, choosing "Link with Mynaportal" makes part of the entry easier.

Mynaportal linkage is a function that, in the income tax return procedure, retrieves the data for necessary documents such as deduction certificates in bulk via Mynaportal and enters it automatically into the relevant fields of the return.

Selecting the statement to prepare

After signing in to Mynaportal and checking your e-Tax registration status, choose "Statement of earnings and expenses" in the selection of the financial statement / statement to prepare, and click Next.

Entering the statement of earnings and expenses (for rental income)

In "Select the type of statement of earnings and expenses," choose "Those with rental income" and proceed to entry.

Entering the period: this covers the full target year, so set January 1 to December 31.

Revenue

・Type (rented building, rented land, etc.): choose the applicable option from the dropdown

・Use: choose the applicable option from the dropdown

・Location of the property: enough to identify which property it is

・Address of the tenant: the same applies

・Name of the tenant: the name of the tenant with whom you have the lease

・Lease period: enter this year's lease period

・Rented floor area: the area can be written to two decimal places, but it doesn't have to be exact

・Rent (monthly): enter the contracted monthly rent

・Rent (annual): if there were no move-ins or move-outs and it was rented for the full year, this is 12 times the monthly rent. If the lease started partway through the year, enter the amount actually received as rent.

・Key money and other income: enter these if you have any

・Year-end balance of deposits held: if you hold deposits such as a security deposit or shikikin from the time of contract, enter that amount. Enter it even if it wasn't in the target year, as long as you took it at the time of contract

If you have other properties click "Continue and enter one more"; if not, click "Check entered content."

Expenses — depreciation

・Type of depreciable asset: choose straight-line

・Details of the depreciable asset: buildings and their attached equipment

・Name of the depreciable asset: enough to identify the item

・Area or quantity: if you bought a single unit, "1" is fine. Area is fine too

・Date of acquisition: enter the year and month you actually acquired the property

・Acquisition cost: enter the amount at the time of acquisition. It isn't only the building's purchase price — since it's the cost of making the fixed asset usable for business, it's the total including renovation costs at purchase, brokerage fees, property tax settlement money, and so on

・Undepreciated balance at the end of the previous year: the "undepreciated balance" in the "depreciation calculation" column of last year's financial statement becomes this year's "undepreciated balance at the end of the previous year"

・Useful life: for reinforced concrete bought new, it's set at 47 years. For a secondhand apartment, enter the value calculated as follows

・Revised acquisition cost: becomes enterable when needed

・Depreciation period during this year: basically "12 months," representing a full year

・Business-exclusive (rental) ratio: 100%

Useful life at acquisition = useful life when new − years elapsed + years elapsed × 0.2

Expenses — loan interest

Payments to financial institutions: enter the year's interest paid to the bank. You can find it easily by looking at the repayment schedule issued by the bank. If you have loans from several banks, enter the combined amount.

Expenses — other expenses

・Taxes and dues: enter the amounts actually paid, such as fixed asset tax. Others include business tax, automobile tax, real estate acquisition tax, registration and licence tax, and stamp duty

・Casualty insurance premiums: the actual amount of fire insurance and similar taken out on the property

Repair costs

Enter the costs of repairs to the building you rent out.

The repair reserve fund you pay to the management association can also be treated as an expense.

https://www.nta.go.jp/law/shitsugi/shotoku/04/12.htm

Only three items can be entered, so if you need four or more, enter the combined amount in the third item as "XX and others."

Expenses — optional accounts

Enter these as needed.

If you pay management fees to the management association or to a property management company, enter the combined amount.

If you employ a full-time family worker to manage the rental property, enter the details too, then click "Proceed to next."

That's the flow for preparing the statement of earnings and expenses using e-Tax.

It may feel daunting, but once you understand what each field means and try it a single time, I think it will click. Do make sure you always keep receipts and other evidence proving the expenses you incurred.