Companies offering real estate products that sell fractional interests in central Tokyo office buildings to individuals in units of ¥5 million or ¥10 million are changing their strategies as demand for inheritance tax planning declines. The expected rule change by the National Tax Agency in January 2027 is behind the shift.
Fractional real estate products are based on a business model that divides interests in office buildings and other properties into units of ¥5 million or ¥10 million and sells them to individuals. They have been widely used for tax savings because the interests can be valued below their actual value for inheritance and gifting purposes.
However, reports indicate that the National Tax Agency is expected to change the rules in January 2027, and demand is expected to decline. This could shrink the market for fractional real estate products.
In response, some companies involved in fractional real estate products, including FPG, are changing their business strategies. They are expected to pursue responses and explore new sources of revenue.