There are many incentives for buying a home. One of them is to simply get out of paying rent — but that isn’t to say that once you own your residence there aren’t costs that have to be paid on a regular basis.

If it’s a house it must be maintained, and if it’s a condominium there are monthly management and repair fees that can add up to as much as the rent of an apartment.

Then there’s property tax, which in Japan is made up of a koteishisan-zei (fixed-asset tax) and a toshikeikaku-zei (municipal tax). Though everyone knows property owners have to pay the authorities for the privilege of owning that property, the obligation doesn’t always figure into a potential buyer’s financial plan. Whenever we inspect properties we ask the real-estate agents how much the annual tax is, and many times they say they don’t know, which seems strange. Understanding the tax liability is as important as understanding the payment terms of the housing loan.

If you hold the title deed to property on Jan. 1 you pay taxes on the property for that calendar year, and will likely receive your bill sometime between April and June. These taxes are based on a standardized assessment of the property, which is divided into land and structure.

The fixed-asset tax is 1.4 percent and the municipal tax 0.3 percent of the “taxable value,” which is typically lower than the market price. Assessing rosenka (taxable value), is carried out by determining a price for a particular plot of land in a given area based on its relation to roads and train lines, and then using that price to determine other plots of land in the area using variables such as size, distance from amenities, etc. Assessing structures is based on materials and features, and as the structure ages its value depreciates. Though condominiums come with considerably less land, they are usually assessed at higher rates than houses because their structures are considered longer lasting.

Tax rates are determined by the central government, but the taxes are assessed and collected by local governments, which take 52 percent of the revenues, the rest being divided between the central and prefectural governments. Most localities also levy a second city tax for services. If a residential area is designated as an “urban zone,” meaning the residents have access to services and infrastructure, they pay an extra property tax. One of the ironies of the tax-city services relationship is that houses assessed as being “stronger” — more fireproof, more quake-resistant — have higher values and thus pay higher taxes even though that strength makes them less likely to require city services such as the fire department.

After the first of the year, the property owner receives a tax bill from the local government, which specifies the different levies but does not indicate the value of the property itself. Property assessments are adjusted every three years, but most homeowners never see an inspector. Commercial property owners sometimes hire independent evaluators, and according to a recent report by TBS news, some of these evaluators have discovered that local governments routinely overvalue properties.

In Tokyo alone, there are now more than 200 cases of overvaluation being investigated. The main problem is that many officials aren’t properly trained to carry out assessments, though experts told TBS that it is also apparent some local governments purposely overvalue commercial properties. The evaluation manuals, which are notoriously detailed and as thick as telephone books, are compiled by the Ministry of Internal Affairs.

The vast majority of homeowners pay their bills when they arrive without asking how they were calculated; unless, of course, they don’t have the money to pay them. Property tax is not based on how much the property owner earns, which means that people who suddenly lose income may be unable to pay their property tax. It also means that as long as you own property, even if you don’t live on it or rent it out, you have to pay the tax. In 2009, 7.1 percent of all property owners nationwide did not pay the taxes they owed.

Keiko, who asked that her last name not be used, is one such property owner. She and her husband, both in their 50s, built a house in Kiryu, Gunma Prefecture, in 2001. They stopped paying property taxes four years ago after they both lost their jobs. Their annual tax bill is ¥160,000 for about 100 sq. meters of land and a two-story 110-sq. meter house.

As the couple’s finances became tighter, they reached an understanding with the bank over their mortgage but ignored the property tax notices. Eventually, the local authorities threatened to “seize” their property if the taxes weren’t paid, so they went in to talk to them. This is a common strategy. Local governments want cash, not property, since they aren’t banks and don’t have the resources to sell land or houses. The threat of “seizure” is made to get nonpayers attention.

“They worked out a plan where we could pay the back taxes at a rate of ¥50,000 a month,” Keiko says. “But even that’s too much for us.”

She isn’t sure if the standard 14 percent late payment penalty has been added to the bill. Often, local governments will not impose the penalty if nonpayers come to talk to them voluntarily. The local government had already tried to acquire the money owed by going into the couple’s savings account, but since they had no savings, there was nothing to acquire.

Even if Keiko and her husband declared bankruptcy, it would only free them from their mortgage obligation. They would still be liable for back taxes. Local governments derive at least half their revenues from property taxes, and since land values are dropping, so are tax revenues. Consequently, the central government is discussing doing away with the special measure that currently reduces residential property taxes even more. This measure was originally implemented to keep in check sudden spurts in land prices, and without it property taxes will rise, even as property values themselves continue to decline.

If that happens, Keiko’s situation will likely become even worse. Though both she and her husband recently found jobs, their combined salaries are still well below what they used to be and not enough to cover their debts, most of which are related to their house.

“We should never have built it in the first place,” she says.

Philip Brasor and Masako Tsubuku blog about Japanese housing at www.catforehead.wordpress.com.

• Plots of land up to 200 sq. meters with a single dwelling are taxed at a lower rate than larger plots of land.

• Closed parking spaces add to the value of properties, resulting in higher taxes, while open parking spaces adds nothing. That’s why few homes have garages.

• Empty land is taxed at a higher rate than land that has a residential structure on it, just as land designated for agriculture is taxed at a higher rate if it is not being used to grow something.

• Buildings made of concrete with steel frames are taxed at higher rates than are houses with wooden frames.

• Unlike housing loan balances, property taxes are not deductible on income tax returns.

• If the taxable value of your house falls below ¥200,000, no fixed-asset tax is levied.

• The Research Center for Property Assessment provides land values for all regions of Japan for the purposes of estimating property and inheritance taxes.These can be accessed at www.chikamap.jp.