Cautionary tale for those investing in foreign assets

[AinT]

I decided to take the plunge and rebalance my portfolio to be a bit more agressive, shifting some allocation from bonds to stocks. Sold a few hundred shares of BND and bought some VTI in my taxable account. Sell price in USD was actually slightly below my average cost basis so I thought this would be fine and not trigger any tax, seems I was quite wrong on this.

Maybe this is known to everyone but it was news to me that tax owed is assessed against the profit in JPY of the assets you sell rather than the native currency of the assets. So now, even though I sold at a lower price in USD, I'm actually facing a substantial tax bill assessed against the JPY value of the sold assets, even though there was no JPY involved at all in the transaction.

I guess it could have been worse had more money been involved but it sucks to be taxed on what is essentially a trade where you lost money.

[goran]

I decided to take the plunge and rebalance my portfolio to be a bit more agressive, shifting some allocation from bonds to stocks. Sold a few hundred shares of BND and bought some VTI in my taxable account. Sell price in USD was actually slightly below my average cost basis so I thought this would be fine and not trigger any tax, seems I was quite wrong on this.

Maybe this is known to everyone but it was news to me that tax owed is assessed against the profit in JPY of the assets you sell rather than the native currency of the assets. So now, even though I sold at a lower price in USD, I'm actually facing a substantial tax bill assessed against the JPY value of the sold assets, even though there was no JPY involved at all in the transaction.

I guess it could have been worse had more money been involved but it sucks to be taxed on what is essentially a trade where you lost money.

Do you mind sharing which broker (securities) did you use?

[AinT]

It is through Monex using Tradestation app to trade US securities. The account is automatic tax witholding so they presented me with a next day tax bill for about a months wages... I can pay it from savings but quite annoying.

[RetireJapan]

This is one reason (the main one being not wanting to keep track of USD dividends) why I switched my entire portfolio to yen denominated mutual funds earlier this year.

[captainspoke]

... tax owed is assessed against the profit in JPY of the assets you sell rather than the native currency of the assets. ...

Yeah, tax reporting is like that. I'm US and it's most all there in dollars, so I've been used to doing this for years. It's not difficult to track, just some bookkeeping, and not rocket science. Dividends are simple--only one date for each distribution. For trades you have to plug in two dates (and rates for each). Still isn't rocket science. I usually update a couple spreadsheets 3-4 times thru the year, so that I don't have to do it all at once. That also forces me to keep an eye on it all, to pay attention to what's going on, which I think is a good thing.

Be glad that (assuming you didn't) you didn't buy anything back in 2012.