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Tax loss harvesting question
Posted: Fri Dec 13, 2024 3:13 am
by ChapInTokyo
Due to the yen strengthening against the dollar since the summer, I have a nice loss of around 1/4 million yen on my BNDX holdings which I wish to tax loss harvest to offset the capital gains on some stocks I sold during the year.
My question is this. I understand that there is no wash sale rule in Japan so does this mean I just need to sell the ETFs say on the day after Chrstmas (after the BNDX price has dropped after its Dec 24 ex-dividend date), and then buy it again say on Dec 27th?
Thanks.
Re: Tax loss harvesting question
Posted: Fri Dec 13, 2024 7:19 am
by Swimmer
Yes. You should be able to see your current capital gains status on your broker's website. I try to get plus/minus zero by buying or selling bits and bobs at the end of December.
Re: Tax loss harvesting question
Posted: Fri Dec 13, 2024 10:32 am
by ChapInTokyo
Swimmer wrote: ↑Fri Dec 13, 2024 7:19 am
Yes. You should be able to see your current capital gains status on your broker's website. I try to get plus/minus zero by buying or selling bits and bobs at the end of December.
Thanks! I’m trying to do exactly that or as close to it as I can. Annoyingly, the dollar seems to be strengthening again and shrinking my tax loss harvest by the day…. I hope that the yen will strengthen some more by Christmas time!
Re: Tax loss harvesting question
Posted: Fri Dec 13, 2024 10:46 am
by northSaver
ChapInTokyo wrote: ↑Fri Dec 13, 2024 10:32 am
…. I hope that the yen will strengthen some more by Christmas time!
That depends on the BOJ. They've already hinted that they won't raise interest rates at the meeting next week, which is what's causing this current bout of yen weakness. If they do raise rates next week (unexpectedly) then the yen will strengthen in a hurry!
Re: Tax loss harvesting question
Posted: Fri Dec 13, 2024 11:15 am
by ChapInTokyo
northSaver wrote: ↑Fri Dec 13, 2024 10:46 am
ChapInTokyo wrote: ↑Fri Dec 13, 2024 10:32 am
…. I hope that the yen will strengthen some more by Christmas time!
That depends on the BOJ. They've already hinted that they won't raise interest rates at the meeting next week, which is what's causing this current bout of yen weakness. If they do raise rates next week (unexpectedly) then the yen will strengthen in a hurry!
I'll keep my fingers crossed!
Re: Tax loss harvesting question
Posted: Fri Dec 13, 2024 11:58 am
by TokyoWart
Be careful about the last trading day for which gains and losses will be recorded for Japan. For Japanese brokerage firms that is something like 5 business days before the end of the year. If you wait until after December 24 to sell BNDX, the US market is closed on 25 so you trade on Dec 26 US time which may be recorded as Dec 27 in Japan and that may put you into 2025. I don't know whether or not you are directly using a US broker instead of a Japanese firm but this may be something you want to check.
As you know there is no reason to wait for ex-dividend or distribution dates from a theoretical perspective because a security falls by the amount of its dividend on the date it goes ex-dividend. I know that you are actually trying to get the lower price from the fund going ex-dividend but that means you are adding the taxable dividend (which for Japan gets taxed the same as capital gains but for the US is actually taxed at the higher ordinary income rates for a bond coupon payment) which hurts you as much as the relative drop in share price helps you from the tax planning standpoint.
Re: Tax loss harvesting question
Posted: Fri Dec 13, 2024 12:55 pm
by ChapInTokyo
TokyoWart wrote: ↑Fri Dec 13, 2024 11:58 am
Be careful about the last trading day for which gains and losses will be recorded for Japan. For Japanese brokerage firms that is something like 5 business days before the end of the year. If you wait until after December 24 to sell BNDX, the US market is closed on 25 so you trade on Dec 26 US time which may be recorded as Dec 27 in Japan and that may put you into 2025. I don't know whether or not you are directly using a US broker instead of a Japanese firm but this may be something you want to check.
As you know there is no reason to wait for ex-dividend or distribution dates from a theoretical perspective because a security falls by the amount of its dividend on the date it goes ex-dividend. I know that you are actually trying to get the lower price from the fund going ex-dividend but that means you are adding the taxable dividend (which for Japan gets taxed the same as capital gains but for the US is actually taxed at the higher ordinary income rates for a bond coupon payment) which hurts you as much as the relative drop in share price helps you from the tax planning standpoint.
Thanks for warning me about this. My BNDX shares are at Monex, and it turns out that I will need to sell the shares by 1pm EST on December 24th in order to have the trade recorded as having taken place this year.
I was wondering about whether to do the trade earlier, or to wait until the last possible moment in order to have the share price fall by the amount of the dividend, so I guess I might sell before Christmas eve, if the yen strengthens a bit again. It may be that I might decide to hold on to the BNDXs until the new year if the yen keeps getting weaker next week.
Anyway, thanks again for a most useful warning about the cut-off date!
Re: Tax loss harvesting question
Posted: Wed Dec 18, 2024 12:14 am
by ChapInTokyo
TokyoWart wrote: ↑Fri Dec 13, 2024 11:58 am
Be careful about the last trading day for which gains and losses will be recorded for Japan. For Japanese brokerage firms that is something like 5 business days before the end of the year. If you wait until after December 24 to sell BNDX, the US market is closed on 25 so you trade on Dec 26 US time which may be recorded as Dec 27 in Japan and that may put you into 2025. I don't know whether or not you are directly using a US broker instead of a Japanese firm but this may be something you want to check.
As you know there is no reason to wait for ex-dividend or distribution dates from a theoretical perspective because a security falls by the amount of its dividend on the date it goes ex-dividend. I know that you are actually trying to get the lower price from the fund going ex-dividend but that means you are adding the taxable dividend (which for Japan gets taxed the same as capital gains but for the US is actually taxed at the higher ordinary income rates for a bond coupon payment) which hurts you as much as the relative drop in share price helps you from the tax planning standpoint.
I should've taken your advice and sold my BNDX holdings last week! Back then my tax loss harvest would have been around 1/5 million yen, but with the weakening of the yen it's shrunk to more like 1/6 million yen. Boo hoo.
I guess I'll just sell them tonight, and re-buy them tomorrow. At least I'll have some tax loss harvest to work with that way. Ah the best laid schemes of mice and men...
Re: Tax loss harvesting question
Posted: Wed Dec 18, 2024 1:04 am
by adamu
ChapInTokyo wrote: ↑Wed Dec 18, 2024 12:14 am
Ah the best laid schemes of mice and men...
Still, thou art blest, compar’d wi’ me!
The present only toucheth thee:
But Och! I backward cast my e’e,
On prospects drear!
An’ forward tho’ I canna see,
I guess an’ fear!
Re: Tax loss harvesting question
Posted: Wed Dec 18, 2024 3:32 am
by captainspoke
adamu wrote: ↑Wed Dec 18, 2024 1:04 am
ChapInTokyo wrote: ↑Wed Dec 18, 2024 12:14 am
Ah the best laid schemes of mice and men...
Still, thou art blest, compar’d wi’ me!
The present only toucheth thee:
But Och! I backward cast my e’e,
On prospects drear!
An’ forward tho’ I canna see,
I guess an’ fear!
This is what keeps me coming back here.