RetireJapan

I just sold some of my mutual funds to fund my half of a house purchases (Sale is still pending annoyingly but I need to be ready).

I did it in two tranches of 1,500,000 and 1,000,000.Yesterday, the sale of 1,000,000 yen worth of Emaxis All Country that was held in a taxable account went through.

Today, after scheduling a withdrawal, its shows that 919,820 will be sent to my account.

80,180 in capital gains tax was paid.

(Note that this investment was quite profitable with a gain of around 400,000 yen)

Congratulations!

So, just to try and get a clear picture on that, 80180 yen represented 20.315% of 実現損益?

Mrblobby wrote: ↑Thu Jul 04, 2024 1:00 am Congratulations!

So, just to try and get a clear picture on that, 80180 yen represented 20.315% of 実現損益?

Right, that was all tax. 20.315% worth of my profits

Also, no congrats yet. I will find out on Saturday. The seller is abroad and taking their sweet time.

Good luck!

Silly me, again, I was actually expecting to pay the 20.315% tax on the whole amount that I withdrew (reasoning: because it was all profit over my initial investment amount).

It was in my head that I would just not pay tax on the initial invested amount when I eventually withdraw that.

In hindsight, the way it actually works seems pretty obvious now.
But no-one told me. Or, perhaps more likely, I just didn't grasp that concept.

I'm not even bothered if all the numbers go up from now, after just cashing in on some.
Very pleased with what I got, and in fact, I want them to keep on going up as I have left most of it in there.

This really has been an interesting learning experience.
I'm sure I would enjoy this 'game' much less if/when the numbers were sliding down...

Mrblobby wrote: ↑Thu Jul 04, 2024 1:23 am It was in my head that I would just not pay tax on the initial invested amount when I eventually withdraw that..

You DO NOT have to pay tax on the initially invested amount.

A large portion of the withdrawn funds were profit, my investment returned over 60%+ in 3 years.

The calculation is
Income tax amount = (surrender price - individual principal) x 15.315% income tax *1
Resident tax amount = (surrender price - individual principal)

所得税額＝（解約価額－個別元本）×所得税15.315%※1
住民税額＝（解約価額－個別元本）×住民税5%

Tsumitate Wrestler wrote: ↑Thu Jul 04, 2024 1:56 am You DO NOT have to pay tax on the initially invested amount.

Understood!

My point, probably not well articulated, was that I somehow thought that every time I withdrew any profits - ie. amounts over the invested amount - I would pay the 20.315% tax on the whole amount that I withdrew. I now know that was incorrect. (I think).

I don’t think you are alone at all in experiencing some confusion about it - it is remarkable to me that New NISA has spurred so much extra investing activity this year.

I don’t think it is the case that paying zero tax on capital gains and dividends is a prerequisite for those new New NISA investors to invest, so my conclusion is that many people are mistaken about their understanding of how the related taxes work normally.

It’s interesting how just the existence of a tax can have detrimental effects on the activity subject to the tax.

The complexity of it all is definitely a huge hurdle. It certainly was for me. There is just so much to take in and digest.

I was fortunate to be able to literally spend over a month last summer gradually learning about it all. As seen in this topic, I'm still learning.

The money just arrived in my bank. Numbers as expected. Phew. I now know how the selling thing works, yey.

The NISA thing is getting a lot of publicity, isn't it. "NISA boom!"

Tsumitate Wrestler wrote: ↑Thu Jul 04, 2024 12:49 am I did it in two tranches of 1,500,000 and 1,000,000.Yesterday, the sale of 1,000,000 yen worth of Emaxis All Country that was held in a taxable account went through.

Today, after scheduling a withdrawal, its shows that 919,820 will be sent to my account.

80,180 in capital gains tax was paid.

(Note that this investment was quite profitable with a gain of around 400,000 yen)

So, essentially, the capital gains tax was applied to the 400,000 yen, correct?

This is what I have thought is the case, and I think OP's initial thinking was this, as well. But it seems that OP's initial consideration of cap gains tax has changed, judging from his latest responses. Just wondering if I am missing something?

Example:

Initial Numbers
Principal investment: 1,000,000 yen
Growth: 300,000 yen
Total: 1,300,000 yen

Withdrawal/Taxes
Withdrawn: 150,000 yen
Cap gains taxed on the 150,000 yen withdrawal because it is part of the "growth" portion
Cap gains tax paid: 150,000 x 0.20315 = 30,473 yen

One more example, using the above initial numbers:

Withdrawal/Taxes
Withdrawn: 500,000 yen
Cap gains taxed on the 300,000 yen portion only, as that is the entire growth portion. Principal (200,000 yen) not taxed at all.
Cap gains tax paid: 300,000 x 0.20315 = 60,945 yen

Would the above example calculations be correct?

cocacola wrote: ↑Fri Jul 05, 2024 3:05 am Would the above example calculations be correct?

Not at all.

You don't get to sell 'profit' or 'capital'. Your entire investment is deemed to have gone up in value, and you are taxed on the increase only.

So in your example the initial investment has gone up by 30%.

30% of the withdrawal would be the capital gain, and that would be taxed at 20.315%.