Principal investment/gains separated when selling?

[cocacola]

You cannot sell the gains. You can only sell your investments. If you are selling them for more than you bought them for, you pay capital gains tax on any gain.
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I understand -- I am not selling "gains", I am selling shares. And it's the difference in value of those shares from the purchase price to the current valuation that I am paying capital gains tax on.

I think one of the reasons why I am so confused is because Monex (as well as other institutions) allows you to input the Yen amount of what you wish to sell, and the backend will automatically calculate the number of shares to facilitate that. Also, in the Monex investment display, it shows how much a particular investment has appreciated/depreciated since the day before (for mutual funds) in Yen. I think these points are part of why my mind is always thinking about these investments in Yen.

[cocacola]

It's now 67 shares for 100,500 which is different from 100 shares for 100k. The capital gains is much higher than 500.

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Thinking about this, would it be better to sell the entire lot of shares, rather than only shares that cover the gains?

If I understand you correctly:

If I sell shares to cash-out the "gains", that leaves me with the principal investment amount, in Yen.

However, the value of those remaining shares is still higher than when they were first acquired (or higher than the average purchase price).

This means that, if I sell any of the remaining shares, capital gains tax would be applied to those sales, as well. (This is assuming that the price didn't appreciate much, or at all).

Is this correct?

If that is correct, and considering that my thought of selling shares of the investment is because of family-need, I should probably sell the entire investment to avoid needing to pay additional capital gains on the remainder of the shares, if I so need to sell again soon. Would this be a prudent way of thinking?

[zeroshiki]

It's now 67 shares for 100,500 which is different from 100 shares for 100k. The capital gains is much higher than 500.

Thinking about this, would it be better to sell the entire lot of shares, rather than only shares that cover the gains?

If I understand you correctly:

If I sell shares to cash-out the "gains", that leaves me with the principal investment amount, in Yen.

However, the value of those remaining shares is still higher than when they were first acquired (or higher than the average purchase price).

This means that, if I sell any of the remaining shares, capital gains tax would be applied to those sales, as well. (This is assuming that the price didn't appreciate much, or at all).

Is this correct?

If that is correct, and considering that my thought of selling shares of the investment is because of family-need, I should probably sell the entire investment to avoid needing to pay additional capital gains on the remainder of the shares, if I so need to sell again soon. Would this be a prudent way of thinking?

I mean it's up to you because it's your money but I don't understand this extreme allergic reaction to capital gains. Whether you sell it now or sell it in the future you still incur capital gains unless you lost money on the investment.

Ask yourself this, what do you gain by selling your shares now and locking in the capital gains tax versus in the future? Why is it important for you to not have capital gains when you sell in a few years? Nothing you do now can cause you to pay 0 capital gains in the future unless your investments made no gain at all.

Now, if there's an important need for this and you know you need the money in the near future, then you shouldn't be holding securities now and you should sell them and hold it as cash.

[adamu]

If that is correct, and considering that my thought of selling shares of the investment is because of family-need, I should probably sell the entire investment to avoid needing to pay additional capital gains on the remainder of the shares, if I so need to sell again soon. Would this be a prudent way of thinking?

No, in general it's best to defer capital gains for as long as possible as it allows the pre-tax amount to grow more. Yes, you will pay more tax this way, but that's because you will have earned more money (assuming you make a gain).

[cocacola]

If that is correct, and considering that my thought of selling shares of the investment is because of family-need, I should probably sell the entire investment to avoid needing to pay additional capital gains on the remainder of the shares, if I so need to sell again soon. Would this be a prudent way of thinking?

No, in general it's best to defer capital gains for as long as possible as it allows the pre-tax amount to grow more. Yes, you will pay more tax this way, but that's because you will have earned more money (assuming you make a gain).

Are you suggesting that I defer from selling any (or all) of the shares in order to have the investment grow more?

I am planning on selling some (or all) of the shares in the near-future. I'm not so concerned with further growth of the investment.

As a user said previously, if I sell the amount of shares to cover the gains the investment has made, and then sell shares of the remainder later (assuming the price of each share is still above their acquisition price), I will have to pay capital gains on the sale of the remaining shares, as their price has appreciated. This is why I am thinking to sell the entire investment in one go... since I will need the funds soon, and I am unsure of how much of the investment (in Yen terms) that I will need later, selling the whole thing might be better for me.

[cocacola]

I mean it's up to you because it's your money but I don't understand this extreme allergic reaction to capital gains. Whether you sell it now or sell it in the future you still incur capital gains unless you lost money on the investment.

Ask yourself this, what do you gain by selling your shares now and locking in the capital gains tax versus in the future? Why is it important for you to not have capital gains when you sell in a few years? Nothing you do now can cause you to pay 0 capital gains in the future unless your investments made no gain at all.

Now, if there's an important need for this and you know you need the money in the near future, then you shouldn't be holding securities now and you should sell them and hold it as cash.

I had posted earlier that I am planning to sell some, or all, of the shares because of a family-need. I will need cash from the investment in the near-future.

I'm not opposed to paying capital gains tax. I want to know ideas of the most tax-efficient way of liquidating the investment, as I need to sell in the near-future.

[adamu]

If that is correct, and considering that my thought of selling shares of the investment is because of family-need, I should probably sell the entire investment to avoid needing to pay additional capital gains on the remainder of the shares, if I so need to sell again soon. Would this be a prudent way of thinking?

No, in general it's best to defer capital gains for as long as possible as it allows the pre-tax amount to grow more. Yes, you will pay more tax this way, but that's because you will have earned more money (assuming you make a gain).

Are you suggesting that I defer from selling any (or all) of the shares in order to have the investment grow more?

Yes.

if […] sell shares of the remainder later (assuming the price of each share is still above their acquisition price), I will have to pay capital gains on the sale of the remaining shares, as their price has appreciated.

That's true. But due to the increased price, you will have made more money than if you sell it now and are overall better off.

[zeroshiki]

I mean it's up to you because it's your money but I don't understand this extreme allergic reaction to capital gains. Whether you sell it now or sell it in the future you still incur capital gains unless you lost money on the investment.

Ask yourself this, what do you gain by selling your shares now and locking in the capital gains tax versus in the future? Why is it important for you to not have capital gains when you sell in a few years? Nothing you do now can cause you to pay 0 capital gains in the future unless your investments made no gain at all.

Now, if there's an important need for this and you know you need the money in the near future, then you shouldn't be holding securities now and you should sell them and hold it as cash.

I had posted earlier that I am planning to sell some, or all, of the shares because of a family-need. I will need cash from the investment in the near-future.

I'm not opposed to paying capital gains tax. I want to know ideas of the most tax-efficient way of liquidating the investment, as I need to sell in the near-future.

Japan has a flat capital gains tax rate that does not change no matter how long a security is held. This means that there is not a lot you can do to minimize capital gains tax unless you want to loss harvest on something else to wipe out the gains on paper (and subsequent tax).

My honest suggestion is for you to sell how much you will need for this expenditure and hold it as cash. For all we know the market will crash tomorrow and you will have an issue paying off this expenditure because you held too long.

[banders]

So, if I am understanding you correctly:

Initial investment: 100,000 yen
Investment valuation after 3-months: 105,000 yen

If I sell the entire investment (105,000 yen), it will all incur capital gains tax?

Cap gains tax = 20.315%

105,000 x 0.20315 = 21,331 yen (rounded-up)

I would have to pay 21,331 yen in cap gains tax?
Cap gains would not only be applied to the gains portion (5,000 yen)? It would be applied to the entire investment?

Thank-you for the info and any corrections.

Yes, you will incur capital gains tax on the entire capital gain (the sale price - the purchase price).

Perhaps the 'yes' answer at the end confused the OP?

[ChapInTokyo]

And only on the Capital Gain on the Units you sell when you sell them.

The remaining units you keep also retain their unrealised Capital gain that will only be realised and subject to Capital Gains Tax when those units are sold...

So, to re-use the example you gave above:

Say you purchase 200 units at 500 each = 100,000
Each unit goes up to 505
Now 200 Units x 505 = 101,000

If I sell 1,000 yen (or dollars), that would be the gain, and I would have to pay cap gains tax on that.

After I sell the 1,000 yen gain, I would have 100,000 yen left, but the valuation of those unit-shares has gone up. Since I didn't sell those units yet, there are "unrealised capital gains" on those units, on that amount of yen.

If I sell any of that 100,000 yen worth of shares, those would be realised capital gains, so I would have to pay cap gains tax on that sale.

So, if I sell the entire "leftover" 100,000 yen, that would still incur capital gains tax. ← is this correct? Or, have I confused myself (yet) again?

If you log into your Monex account, and open the 保有残高・口座管理（Holdings balance/Manage Account) screen, there is a list of your mutual fund holdings with a column with a header 評価損益（円）. This is the approximate current gains of that holding, which will be taxed at 20.315%. If you sell only 50% of the funds, then the capital gains will be 50% of that amount and so the tax at 20.315% will be 50% of the tax that would have been withheld if you had sold 100% of your holdings.



There is no way to sell your funds in a "tax efficient" way, except for buying the funds in a tax advantaged account such as a NISA or an iDeco.

If you wish to sell just enough of the funds to meet your immediate cash needs, there is a nifty calculator (in Japanese) which allows you to enter the Net Asset Value (基準価格） of the fund, the Cost Basis 平均取得価格 of the fund, and the Net Amount after capital gains tax that you wish to get. This will calculate how much of the fund you will need to sell in order to have the desired after tax amount from the sale.