RetireJapan

Which one to sell?

1) Fund A: Up by 65% in NISA
2) Fund B: Up by 30% in NISA
3) Crypto: Up by 100% in Taxable Account

Reason for selling: Need capital to make some unforeseen expenses.

I am leaning towards selling a part of "Fund A", but I needed some validation.

Any advise is appreciated.

OkiBum wrote: ↑Tue Aug 31, 2021 5:01 am Which one to sell?

1) Fund A: Up by 65% in NISA
2) Fund B: Up by 30% in NISA
3) Crypto: Up by 100% in Taxable Account

Reason for selling: Need capital to make some unforeseen expenses.

I am leaning towards selling a part of "Fund A", but I needed some validation.

Any advise is appreciated.

3

Do not sell funds in a NISA if you can avoid it. You will not get the space back.

3

Kind of depends on the amount, as crypto is treated as ordinary income (top tax band = 55% )

If I sell option 3, I need to pay taxes though. This would require me to sell more units than I want in order to consider capital gains.

Option 1 and 2 were invested in 2018 so how does it affect the space/limit?

Am I missing something?

OkiBum wrote: ↑Tue Aug 31, 2021 6:03 am If I sell option 3, I need to pay taxes though. This would require me to sell more units than I want in order to consider capital gains.

Option 1 and 2 were invested in 2018 so how does it affect the space/limit?

Am I missing something?

The space is in the NISA only having 3 years tax free instead of the full 5 (assuming this is normal NISA). They're saying you didn't fully use your NISA allowance from 2018.

You could make an argument to sell the NISA if the growth you're expecting in the next 2 years is less than the tax you'd have to pay on your crypto.

RetireJapan wrote: ↑Tue Aug 31, 2021 6:01 am Kind of depends on the amount, as crypto is treated as ordinary income (top tax band = 55% )

Ok let me get more specific then. I need approximate 400,000 in capital from selling my funds.

If I sell crypto, I approximately need to pay approx 20% capital gains correct? If I need 400k in capital, it would mean that I need to sell units worth 445k approximately which would result in 400k after tax.

Isn't it better to sell 400k worth of units from my NISA and pay 0 yen to Suga san?

OkiBum wrote: ↑Tue Aug 31, 2021 6:15 am

RetireJapan wrote: ↑Tue Aug 31, 2021 6:01 am Kind of depends on the amount, as crypto is treated as ordinary income (top tax band = 55% )

Ok let me get more specific then. I need approximate 400,000 in capital from selling my funds.

If I sell crypto, I approximately need to pay approx 20% capital gains correct? If I need 400k in capital, it would mean that I need to sell units worth 445k approximately which would result in 400k after tax.

Isn't it better to sell 400k worth of units from my NISA and pay 0 yen to Suga san?

My understanding is that crypto in Japan is not taxed at 20% for capital gains, but rather at your marginal tax rate for income. So if your marginal tax rate is low the crypto might be relatively better, but if it is high it is likely to be painful.

Selling NISA assets tax free might be good if you are unlikely to regret losing the NISA allowance.

OkiBum wrote: ↑Tue Aug 31, 2021 6:15 am If I sell crypto, I approximately need to pay approx 20% capital gains correct?

No, crypto gains are treated as miscellaneous income. So it gets lumped in with your salary, etc, and affects your tax band and residence tax too. You pay whatever the tax works out at for your band, after deductions.

OkiBum wrote: ↑Tue Aug 31, 2021 6:15 am Isn't it better to sell 400k worth of units from my NISA and pay 0 yen to Suga san?

You don't have to pay tax if you sell from the NISA, but you are also irreversibly locking yourself out of future tax-free gains.

So the question is are the potential gains over the next two years in the NISA likely to make up for whatever tax you will pay if you sell a taxable asset?

If you pay 50% income tax, for example, you'll need to sell 800k of crypto to get 400k in return after tax*. If you think NISA asset is likely to grow more than 400k, it's best to sell the crypto. If not (or you don't want the tax headache), sell the NISA asset.

*That's assuming you bought it at zero, so it's not as bad as it sounds. Actually you only pay income tax on the gain.

RetireJapan wrote: ↑Tue Aug 31, 2021 6:25 am
but rather at your marginal tax rate for income. So if your marginal tax rate is low the crypto might be relatively better

Could you mind explaining this in detail.
This is linked to my annual income at my full time job?
So if my annual salary is 4 million or 6 million or 8 million; my taxes on crypto gains is different?