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Why Are Roadside Land Prices and Market Prices So Different?

2026年7月14日 09:14

The Misconception That "It Would Sell at the Inheritance Tax Valuation"

In inheritance consultations, I often encounter this situation.

"It was 30 million yen when calculated using the roadside land price, but the real estate company's appraisal was 40 million yen." "Conversely, I was told it wouldn't sell at all unless I lowered the price below the valuation."

Even though it is the same land, the price varies completely depending on the context. In fact, this is common in the world of real estate. There is a term in real estate called "one property, four prices," meaning there are four different prices for a single property.

In this article, I will clarify the nature of these price differences and how they affect inheritance.

One Property, Four Prices: Real Estate Has Four Prices

First, let's take a look at the four prices.

Even for the same land, the "price for calculating taxes" and the "price at which it is actually bought and sold" are designed as separate things.

Why Is the Roadside Land Price Kept at "80%"?

The roadside land price used for inheritance tax calculations is set at approximately 80% of the official land price. Why is it intentionally kept low?

The reason is that it serves as a buffer to protect taxpayers.

Land prices are constantly fluctuating. If the roadside land price were set right at the market level, a situation could arise in a year when land prices fall where "taxes are levied based on a valuation higher than the actual value." Therefore, it is set about 20% lower in advance so that even if there are fluctuations, the tax valuation does not exceed the actual market value.

The fixed asset tax valuation (about 70%) is based on the same idea. In other words, the fact that prices for tax purposes are lower than market prices is because the system is designed that way.

Why Market Prices "Fluctuate": Real Estate Is a Negotiated Transaction

So, why can't the market price be fixed at a single value?

The answer is that real estate transactions are negotiated transactions.

Unlike stocks, which have a price set every day in the market, real estate has no fixed price. The price is determined by the seller and buyer facing each other one-on-one, based on their respective circumstances and negotiations.

If the seller is in a hurry, the price will be lower
If multiple buyers are competing, the price will be higher
If the land has special value to the buyer (such as adjacent land), it can be sold for more than the market price.
Conversely, land with no demand will not find a buyer, no matter how high the appraised value is.

In other words, the price of the same piece of land changes depending on 'when, to whom, and under what circumstances it is sold.' This is another reason why a gap arises between market prices and appraised values.

In inheritance, this 'difference' has significant meaning.

Knowledge of the 'four prices for one property' has practical implications in inheritance situations.

1. Inheritance tax is calculated using the 'road land price'.

In principle, land valuation for inheritance tax is based on the road land price. Since it is valued about 20% lower than the market price, for the same asset value, the inheritance tax valuation is lower if held as real estate rather than cash. This is the root of how real estate is used for inheritance tax planning.

2. Disputes arise over 'which price to use' in the division of an estate.

On the other hand, this difference can also be a source of conflict.

For example, suppose the eldest son inherits the family home (road land price of 30 million yen) and the second son inherits 30 million yen in cash. At first glance, this looks fair, but if the market price of the family home is 40 million yen, the eldest son has effectively received 10 million yen more.

When dividing an estate, if you do not align your understanding of whether to divide based on 'road land price' or 'market price,' feelings of unfairness will erupt later.

3. There is also a 'reversal phenomenon' for land in rural areas.

It is important to note that there are cases where the market price is lower than the road land price.

For land in rural areas with little demand, a reversal phenomenon occurs where 'an appraised value is assigned, but it cannot be sold at that price.' Inheritance tax is levied based on the road land price, but when you try to sell it, it can only be sold for less—when inheriting a family home in a rural area, you must also take this reality into account.

Those who know the 'four prices' will not lose out in inheritance.

Knowing the 'four prices for one property' changes how you view inheritance.

Calculate inheritance tax using the road land price, but consider the actual asset value using the market price.
When dividing an estate, align on which price to use as the standard from the beginning.
Inheritance planning using real estate is a mechanism that utilizes the difference between appraised value and market value.
Land in rural areas cannot always be sold at its appraised value.

There is not just one price for land. Being able to distinguish between its "tax face" and its "market face" is the dividing line between avoiding losses in inheritance.

Understanding how much your land is worth for tax purposes versus what it would actually sell for—this dual perspective is difficult to grasp without practical experience in rental management and real estate transactions. Let's examine this together, including the gap between valuation and market reality.

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