RetireJapan

zeroshiki wrote: ↑Wed Jul 28, 2021 2:59 pm But if its a mutual fund, you sell and you get money that you then use to buy another mutual fund that's exactly the same (or close enough).

I guess the (only, as far as I can see) disadvantage is that if OP sells at a loss, re-buys the same funds in his/her country, and then later sells at a gain, more capital gains tax is due, compared to the case where the funds were not sold upon leaving Japan.

zeroshiki wrote: ↑Wed Jul 28, 2021 2:59 pm

Established wrote: ↑Wed Jul 28, 2021 1:27 pm
Because the stock market does not only go up....

If OP needs to leave during a recession or downturn he does not want to have to sell at a loss.

But if its a mutual fund, you sell and you get money that you then use to buy another mutual fund that's exactly the same (or close enough). There is no loss there except for maybe currency or minor fees. There is no capital gains tax since its NISA so you get the full amount that you can then reinvest in your foreign country.

I would understand if the argument is they don't want to go through the hassle of selling then rebuying but I would think the tax free capital gains from NISA would offset that.

Typically there are 4 main reasons to avoid selling and rebuying.

1. Missing a market upturn or dividend day. Having to rebuy shares at a higher premium.

2. Triggering the wash sale rule.

3. Creating a taxable event.

4. Currency risk fears and transfer and broker fees.

I suppose it would really depend on OP and their rules in their home country. 2 and 3 may not be an issue in this case, but 1 and 4 could be.

However, transferring shares also is not free.

rasselbiluga wrote: ↑Thu Jul 29, 2021 1:09 am I guess the (only, as far as I can see) disadvantage is that if OP sells at a loss, re-buys the same funds in his/her country, and then later sells at a gain, more capital gains tax is due, compared to the case where the funds were not sold upon leaving Japan.

That's an interesting point. I guess it depends on what the relevant tax authorities use as the cost basis for capital gains. For example, would it be the price you acquired the stock at, or would it be the value at the time you became resident for tax purposes?

fools_gold wrote: ↑Thu Jul 29, 2021 1:30 am

rasselbiluga wrote: ↑Thu Jul 29, 2021 1:09 am I guess the (only, as far as I can see) disadvantage is that if OP sells at a loss, re-buys the same funds in his/her country, and then later sells at a gain, more capital gains tax is due, compared to the case where the funds were not sold upon leaving Japan.

That's an interesting point. I guess it depends on what the relevant tax authorities use as the cost basis for capital gains. For example, would it be the price you acquired the stock at, or would it be the value at the time you became resident for tax purposes?

Good point... I assumed that the cost basis would be the price you acquired the stock at. But if it's the value at the time you became resident for tax purposes, the cost basis would be the same upon leaving Japan, regardless of whether you (1) buy in Japan, sell, and re-buy, or (2) buy overseas from the start. So there would be no difference in terms of capital gains tax, regardless of whether upon leaving Japan you have a gain or a loss.

On the other hand, if the cost basis is the price you acquired the stock at, then if you have a loss, strategy (2) is advantageous (my previous post) concerning capital gains tax. But if you have a gain, strategy (1) is better provided you use NISA (because you will have a higher cost basis when leaving Japan, compared to strategy (2)).

Faxingberlin_ wrote: ↑Tue Jul 27, 2021 4:34 am I have decided against NISA and buying etfs/mutual funds through SBI and instead buy Vanguard funds in USD with Interactive Brokers and just eat the currency fluctuation risk, its unavoidable.

Could you explain what kind of currency risk you are referring to? In general, the trading currency (i.e. the currency in which you buy the funds) doesn't matter. What matters is the currency of the underlying assets. For example, if you buy a global index with say 50% US companies, you will have considerable currency risk of the USD vs your home currency. But it doesn't matter whether you buy that global index with USD, JPY or any other currency. It's explained more in detail here. Or maybe I am misunderstanding your post?

Telebroker wrote: ↑Wed Jul 28, 2021 6:04 am Try using non-dividend paying (accumulating) ETFs/index funds. I buy into ishares MSCI World ETF (ticker IWDA).

I am considering this as well, although I am still not 100% sure that you indeed don't need to pay taxes on dividends if the dividends are not paid out.