Strategy for the 2025 NISA

[goodandbadjapan]

Last year for the new NISA, I let my 2019 Nisa roll automatically into my taxable and then sold some to buy the same products in new NISA. Is there any disadvantage to this, other than the fact that I will pay tax if there are any gains during the very small window that the funds are out of the NISA? I can of course sell before year end and then rebuy in the new year to avoid any tax but as we don't know what the markets will do while those funds are out of the market, it seems to me that you might gain or lose either way so isn't it pretty much pot luck? Or am I missing something important?

[adamu]

Is there any disadvantage to this

Yep. See the last Caveat.

[goodandbadjapan]

Thanks @adamu. That's what had been niggling at the back of my mind as I remember reading that before. But, still would it really make a difference? If I had, say 100 of an asset in Nisa and 100 of the same asset in taxable and the 100 Nisa move over to taxable, I now have 200 in taxable. If I sell 100 to rebuy in new NISA, I get that I will pay tax based on the average gain over 200 but as the NISA ones would have entered at their gain-included price, it's surely just as if you were selling taxable assets that you would have had to pay gains on in the future anyway? Yes, I would pay no tax just selling NISA before moving, but by moving them my NISA assets will enter at their value when moved and hence not really affect the gain, if you see what I mean? In other words, any tax I pay on gains is basically tax I am going to have to pay later anyway?

P.S. I am rubbish at maths, which may turn out to be very apparent with this post!

[Bushiman]

Last year for the new NISA, I let my 2019 Nisa roll automatically into my taxable and then sold some to buy the same products in new NISA. Is there any disadvantage to this, other than the fact that I will pay tax if there are any gains during the very small window that the funds are out of the NISA? I can of course sell before year end and then rebuy in the new year to avoid any tax but as we don't know what the markets will do while those funds are out of the market, it seems to me that you might gain or lose either way so isn't it pretty much pot luck? Or am I missing something important?

Pretty sure I did something similar last year as I had no idea how to separate the funds into specific years... I think I let the 2019 NISA roll over, I transferred in cash of the same value, then bought in the new NISA and sold on exactly the same (within 10mins of each other), then transferred the proceeds of the sale out to my bank after that completed... It may have been a bit convoluted, but I didn't notice any great discrepancies or fees/tax...

[adamu]

by moving them my NISA assets will enter at their value when moved and hence not really affect the gain, if you see what I mean? In other words, any tax I pay on gains is basically tax I am going to have to pay later anyway?

Right, but you pay it earlier, which means that money can no longer compound. If you sell from the NISA this year, you'll pay no tax at all and 100% of it can be reinvested tax free next year.

See also viewtopic.php?p=30211#p30211

[goodandbadjapan]

by moving them my NISA assets will enter at their value when moved and hence not really affect the gain, if you see what I mean? In other words, any tax I pay on gains is basically tax I am going to have to pay later anyway?

Right, but you pay it earlier, which means that money can no longer compound. If you sell from the NISA this year, you'll pay no tax at all and 100% of it can be reinvested tax free next year.

See also viewtopic.php?p=30211#p30211

I suppose it's a bit of pot luck either way. Sell this year and are out of the market for a short time and could miss out on gains that way too. Ultimately, I don't think it will be a huge difference either way.

[Moneymatters]

by moving them my NISA assets will enter at their value when moved and hence not really affect the gain, if you see what I mean? In other words, any tax I pay on gains is basically tax I am going to have to pay later anyway?

Right, but you pay it earlier, which means that money can no longer compound. If you sell from the NISA this year, you'll pay no tax at all and 100% of it can be reinvested tax free next year.

See also viewtopic.php?p=30211#p30211

I suppose it's a bit of pot luck either way. Sell this year and are out of the market for a short time and could miss out on gains that way too. Ultimately, I don't think it will be a huge difference either way.

I recall reading something about the impact of missing the 10 best/worst days on the markets.
https://www.reddit.com/r/fiaustralia/co ... ys_on_the/
Anyhow, some bright spark did the math.. you can draw your own conclusions..

And nobody tell Adam, but a while back I sold our earliest 'old school' ippan 2020 NISA year when the yen was weakest for decades just to fix the amount I'd need to top up that cash to fill the 2025 NISA allowance.
My simple logic was, i have to sell this 2020 year soon anyway and if market tanked I'd need to find more cash to reach the 2025 allowance. And as I'm quitting work next year I just wanted to have some simple knowns for the 2025 NISA allowances even if that meant potentially missing some gains..
Luckily, and this might not work for everyone, I find that being super lazy/adhdy I'm not exactly going to go back are second guess myself with a bunch of if-only thoughts....

[Bubblegun]

I’m very sorry to jump in. Hopefully not upset the apple cart.
So with our old NISA, we only get tax free for 5years. Then they move it to a taxable account. Unless we move it to another NISA account/year?
Am I missing something? So I would have to sell the old NISA and move it into the long term NISA growth thingmebob fund? Otherwise it’s going to get taxed down the line.
If this is the case, do we get the head up from eg Rakuten Shoken,? Or is it left to us Rodney’s with GCSEs in math to do it?
Sometimes I have to wonder how complicated a simple thing can be in Japan.siiigh

[RetireJapan]

I’m very sorry to jump in. Hopefully not upset the apple cart.
So with our old NISA, we only get tax free for 5years. Then they move it to a taxable account. Unless we move it to another NISA account/year?
Am I missing something? So I would have to sell the old NISA and move it into the long term NISA growth thingmebob fund? Otherwise it’s going to get taxed down the line.
If this is the case, do we get the head up from eg Rakuten Shoken,? Or is it left to us Rodney’s with GCSEs in math to do it?
Sometimes I have to wonder how complicated a simple thing can be in Japan.siiigh

It's very simple. At the end of your legacy NISA year's tax duration your investments are moved into a taxable account. The price is set at that point so you don't pay tax on gains so far. You can sell the investments (and do what you want with the money, including buying something in new NISA). If you don't sell, any gains going forward would be taxed when you eventually sell.

[Bubblegun]

I’m very sorry to jump in. Hopefully not upset the apple cart.
So with our old NISA, we only get tax free for 5years. Then they move it to a taxable account. Unless we move it to another NISA account/year?
Am I missing something? So I would have to sell the old NISA and move it into the long term NISA growth thingmebob fund? Otherwise it’s going to get taxed down the line.
If this is the case, do we get the head up from eg Rakuten Shoken,? Or is it left to us Rodney’s with GCSEs in math to do it?
Sometimes I have to wonder how complicated a simple thing can be in Japan.siiigh

It's very simple. At the end of your legacy NISA year's tax duration your investments are moved into a taxable account. The price is set at that point so you don't pay tax on gains so far. You can sell the investments (and do what you want with the money, including buying something in new NISA). If you don't sell, any gains going forward would be taxed when you eventually sell.

Thanks for that. I thought it would all rollover due to the new NISA rules being implemented. I guess stocks, Vulcan mindset and Logic , didn't reach the chancellor of the exchequers mindmelt in Japan.

Sorry to bother you again but how will i know if its moved into a TAXABLE account? 特定口座になる？