Simple Q&A - NISA

[Viralriver]

But you can go with a bonus payment. Set up the minimum payment of 100 yen per month for each security you want to invest in, then setup a bonus payment for the next month that equals 400k - (100 * #securities * #remaining months).

Genius! I changed my next payment this morning to do just that and it worked perfectly. Now I get to maximize my gains (or losses). Thanks for the tip!

No worries - the only thing I would warn about is dollar cost averaging. If you actually spread the investments over the year, you hedge against sudden jumps and dips in the market (i.e. you don't want to throw 400k in now and find out that you put it all in at a market peak). On the other hand, I know someone here linked to a document recently which seemed to err towards lumpsum investment benefits outweighing the dollar averaging idea, but the market has been pretty unstable for the last year, so I'm not sure how much that analysis holds up.

Up to you though - I like the idea of just getting it out of the way as well, but unfortunately I'm going down the route of using my rakuten credit card so I can't use the bonus option .

[dangocurry]

I have been learning the details of NISA over the last month till the time I can get my number card to go through opening NISA with rakuten.
Of all the points, I couldn't understand how the withdrawal of funds works?
Like can I withdraw them within 5 years period? What would be the taxes applied, charges at that time? In the event I leave Japan in 5 years for temporary, say 1 year, can I keep the investments, or I have to liquidate the entire portfolio in NISA? Also, in case I stay complete 5 years of NISA, then what would be liquidating charges and taxes?
Better to liquidate when in the 5 year period or after finishing the 5 year period?
Kind off confused regarding how withdrawal works and what might be best case scenario for reducing taxes and charges in the 2 cases -
1. In case one leaves Japan before the term of 5 years
2. In case one leaves/ liquidates the portfolio after the term

The reason being I might need the liquidated amount for higher studies, so it might be in next 3-4 years or after 5 years( no rollover as such at any cost).

[adamu]

Like can I withdraw them within 5 years period?

You can sell a stock that you bought in a NISA at any time.

What would be the taxes applied, charges at that time?

None if it's within the 5 year period since you bought it, or you rolled over. Standard capital gains otherwise.

In the event I leave Japan in 5 years for temporary, say 1 year, can I keep the investments, or I have to liquidate the entire portfolio in NISA?

As far as I know, you can't keep a NISA (or a discount brokerage account, for that matter) as a non-resident, so you'd have to sell everything.

Also, in case I stay complete 5 years of NISA, then what would be liquidating charges and taxes?

Standard capital gains tax on the gains on the price the investments were at when they came out of the NISA. Or after the 5 years are up, you can rollover the investments another year, consuming next year's allowance rather than making new NISA investments.

You don't have to sell any stocks when they finish their 5 year period. They just get moved to a standard taxable account and capital gains taxes are counted from that point forward.

Better to liquidate when in the 5 year period or after finishing the 5 year period?

It doesn't make a difference. When the 5 year period is up, the rate that capital gains tax is calculated reset. So if you liquidate after, you'll only be paying GCT on the gains since the stocks came out of the NISA.

The only thing worth bearing in mind is that if your stocks are at a loss at the end of the 5 years, any gains after that will be calculated from the deflated loss price.

Kind off confused regarding how withdrawal works and what might be best case scenario for reducing taxes and charges in the 2 cases -
1. In case one leaves Japan before the term of 5 years
2. In case one leaves/ liquidates the portfolio after the term

Think this was covered by the above point.

Definitely not a simple question and probably worth its own thread.

[dangocurry]

Like can I withdraw them within 5 years period?

You can sell a stock that you bought in a NISA at any time.

What would be the taxes applied, charges at that time?

None if it's within the 5 year period since you bought it, or you rolled over. Standard capital gains otherwise.

In the event I leave Japan in 5 years for temporary, say 1 year, can I keep the investments, or I have to liquidate the entire portfolio in NISA?

As far as I know, you can't keep a NISA (or a discount brokerage account, for that matter) as a non-resident, so you'd have to sell everything.

Also, in case I stay complete 5 years of NISA, then what would be liquidating charges and taxes?

Standard capital gains tax on the gains on the price the investments were at when they came out of the NISA. Or after the 5 years are up, you can rollover the investments another year, consuming next year's allowance rather than making new NISA investments.

You don't have to sell any stocks when they finish their 5 year period. They just get moved to a standard taxable account and capital gains taxes are counted from that point forward.

Better to liquidate when in the 5 year period or after finishing the 5 year period?

It doesn't make a difference. When the 5 year period is up, the rate that capital gains tax is calculated reset. So if you liquidate after, you'll only be paying GCT on the gains since the stocks came out of the NISA.

The only thing worth bearing in mind is that if your stocks are at a loss at the end of the 5 years, any gains after that will be calculated from the deflated loss price.

Kind off confused regarding how withdrawal works and what might be best case scenario for reducing taxes and charges in the 2 cases -
1. In case one leaves Japan before the term of 5 years
2. In case one leaves/ liquidates the portfolio after the term

Think this was covered by the above point.

Definitely not a simple question and probably worth its own thread.

Thank you for resolving my doubts!
I thought of making another thread but then I thought this was simple question, so ~

So, the inference I'm making is that if I sell within 5 years, I pay no taxes as such. After 5 year period, the entire portfolio if not extended into NISA for next period, then will be rolled into normal taxed account on which taxes will be applied.
So, if someone wants to sell off everything, doing it within 5 years would be a good option.

[RetireJapan]

So, the inference I'm making is that if I sell within 5 years, I pay no taxes as such. After 5 year period, the entire portfolio if not extended into NISA for next period, then will be rolled into normal taxed account on which taxes will be applied.
So, if someone wants to sell off everything, doing it within 5 years would be a good option.

Selling within 5 years or after 5 years is the same, because the purchase price is reset when your investments come out of NISA.

So if you bought things for 1 million yen, and five years later they were worth 1.5 million yen, when they come out of NISA the purchase price will be reset to 1.5m yen and you will only pay tax on subsequent gains.

[adamu]

After 5 year period, the entire portfolio if not extended into NISA for next period, then will be rolled into normal taxed account on which taxes will be applied.

Not the entire portfolio. Each year is treated separately.

Every year, you can chose to invest up to your annual allowance in the NISA. Those investments are tax free for five years, including the current year.

Investments in 2021 -> Tax free until end 2025.
Investments in 2022 -> Tax free until end 2026
...etc

Then there is rollover.

At the end of 2025, you can either let your 2021 investments expire into a taxable account, or roll them over for another year, consuming your 2026 allowance.

[dangocurry]

So, the inference I'm making is that if I sell within 5 years, I pay no taxes as such. After 5 year period, the entire portfolio if not extended into NISA for next period, then will be rolled into normal taxed account on which taxes will be applied.
So, if someone wants to sell off everything, doing it within 5 years would be a good option.

Selling within 5 years or after 5 years is the same, because the purchase price is reset when your investments come out of NISA.

So if you bought things for 1 million yen, and five years later they were worth 1.5 million yen, when they come out of NISA the purchase price will be reset to 1.5m yen and you will only pay tax on subsequent gains.

Ah, this clears my doubt! thank you!

[dangocurry]

After 5 year period, the entire portfolio if not extended into NISA for next period, then will be rolled into normal taxed account on which taxes will be applied.

Not the entire portfolio. Each year is treated separately.

Every year, you can chose to invest up to your annual allowance in the NISA. Those investments are tax free for five years, including the current year.

Investments in 2021 -> Tax free until end 2025.
Investments in 2022 -> Tax free until end 2026
...etc

Then there is rollover.

At the end of 2025, you can either let your 2021 investments expire into a taxable account, or roll them over for another year, consuming your 2026 allowance.

Thank you for making this clear! so every year is treated as different and not as a whole.

[adamu]

You inspired me to start the first article on retirewiki.jp https://retirewiki.jp/wiki/NISA

Of course, RetireJapan also has a lovingly crafted guide to NISA you can buy if you want a full introduction: https://gumroad.com/l/sLEXJ

[dangocurry]

You inspired me to start the first article on retirewiki.jp https://retirewiki.jp/wiki/NISA

Of course, RetireJapan also has a lovingly crafted guide to NISA you can buy if you want a full introduction: https://gumroad.com/l/sLEXJ

Thank you for your work! I hope the Wiki grows a lot!