summary
To save tax on stock investments, it is more important to understand the system correctly and set operational rules than to intentionally make losses. We will explain how to stably increase after-tax returns using NISA, profit and loss aggregation, carryover deductions, etc.
conclusion
The purpose of tax saving is not to ``reduce taxes to zero,'' but to ``maximize the growth rate of assets after tax.'' To achieve this, it is more effective to decide on the following three rules first than to use a single technique.
- Prioritize tax-free accounts
- In taxable accounts, sales decisions are made based on profit and loss totals.
- Manage profit and loss and cash flow on an annual basis
Why “tax cutting that causes losses” is dangerous
The statement that "determining unrealized losses will save you taxes" is half true and half false. Even if taxes are reduced, investment performance does not necessarily improve.
- If the stock price returns immediately after a loss is confirmed, there will be an opportunity loss.
- transaction costs increase
- “Buying and selling to save taxes” is increasing, and investment decisions are becoming erratic.
Tax savings are just a supplement to your investment strategy. The main focus is on expected returns and risk management.
Three systems to understand first
1. NISA
- Investment profits are tax exempt
- Since there is an upper limit to the tax-free allowance, it is efficient to prioritize long-term holding assets.
2. Total profit and loss
- You can offset profits and losses on listed stocks, etc.
- Basic system to avoid a situation where only profits are taxed
3. Carryover deduction
- Losses that cannot be totaled can be carried forward to the next year or later.
- Offset against future profits and help level the tax burden
①～⑥ Specific tax saving techniques used in practice
From here, we will organize the ``specific movement methods'' that are actually used in the field. The key is to use them in combination, rather than using them singly.
① Total profit and loss (the most basic)
⇒ Mechanism to offset profits and losses
Example:
- Profit: +1 million yen
- Loss: ▲400,000 yen
⇒ Taxable amount = 600,000 yen
Practical points
- Review stocks with unrealized losses at the end of the year
- The more profitable the year, the higher the value of utilization.
- It is important to have the ability to make judgments that do not leave things in doubt even if they “might come back.”
② Carryover deduction (can be used for 3 years)
⇒ Offset this year's loss with future profit
Example:
- This year: ▲1 million yen
- Next year: +1 million yen
⇒ Zero tax
Practical points
- A final tax return is required (if you forget it, it will be invalid)
- The more important the year is when there was a large loss
- Becomes the “seed that makes future profits tax exempt”
③ Utilization of NISA (top priority)
⇒ Profits themselves are tax exempt
- Normal: Profit x approximately 20% tax
- NISA: 0 yen
Practical points
- Prioritize allocation of assets that are assumed to be held for a long time
- Do not include stocks with high turnover
- Returns vary greatly depending on how you use the frame.
⇒ “Design to avoid taxation” rather than tax saving
④ Adjustment of timing of profit taking
⇒ Control the year in which you make a profit
Example:
- Already profitable this year → Transfer the sale to the next year
Practical points
- The end of the year is the most important time
- Determine whether stocks with unrealized gains should be sold this year
- Reduce the impact of tax rates by preventing income concentration
⑤ Balance adjustment between dividends and sale gains
⇒ Take advantage of differences in taxation methods
- Comprehensive taxation (with dividend deduction)
- Separate declaration taxation
Practical points
- Comprehensive taxation may be more advantageous for people with lower annual incomes
- Separate taxation is more likely to be advantageous for high-income earners.
- Your strategy will change depending on whether you focus on dividends or capital gains.
⇒ Taxes vary depending on how you receive the item.
⑥ Utilization of specified accounts (withholding tax)
⇒ Automate tax processing
Benefits
- Automatically calculates taxes
- Profit and loss totals are automatically reflected in the account.
- In many cases, filing a tax return is not required.
Practical points
- This is the basic choice for beginners.
- If you have multiple accounts, consider reporting for totalization.
- “Easy and error-free” is the greatest value
Optimization rules that can be used in practice
Rule 1: Separate account roles
- NISA: Long-term core assets
- Taxable account: for adjustment/buying and selling
Rule 2: Judging the sale based on the “after-tax return”
⇒ Instead of “how much money did I make?” ⇒ Think in terms of “How much will be left?”
Rule 3: Inventory your profits and losses at the end of the year
- Confirmation of fixed profit/loss
- Check total room available
- Preparation for carryover
Summary
The important thing about stock tax savings is
Not “loss and tax savings” “Maximize after-tax returns with rules”
It is.
Two things are especially important:
⇒ Tax exempted with NISA
⇒ Reduce taxation by totaling profits and losses
This combination provides the most repeatable tax saving strategy.