Japan RE - Minimizing Taxes while Building a Bigger Portfolio

[Keen C.]

Hi BP!  

I joined recently after hearing much about the forum.  I'm an American based in Japan, and finally decided to take the plunge as a personal investor a couple months ago and acquired a 14 unit residential building in Osaka.  Seems like there are quite a number of BP'ers based in Japan, so here goes my first post:

In the U.S., it seems like a 1031 exchange would one of the better methods for building a bigger portfolio while minimizing tax leakage, but it doesnt seem like Japan has such a tax deferment scheme with respect to investment property (but there is such a scheme for self-use residential property in Japan).  In Japan, I understand the capital gains tax to be 39% for ownership less than 5 years and 20% for ownership greater than 5 years.

1. Given the above, how are BP'ers in Japan building bigger portfolios while minimizing tax leakage on capital gains as properties are sold in order to acquire properties?    

2. Or, rather than selling, would it be better to continually refinance and use the proceeds to acquire more property?

3. At what point (in terms of portfolio asset value) would there be benefits to start engaging an accounting firm to structure Japanese legal entities to hold property?

Thanks!