Resetting cost basis?

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Tylenol Jones
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Joined: Mon Sep 14, 2009 6:54 am

Resetting cost basis?

Post by Tylenol Jones »

I'm moving from a capital gains tax-free country to a country with capital gains tax. I'd like to reset the cost basis to the current prices to lock in gains prior to the move. Is there any way to achieve this without having to sell and then buy again?
nalor511
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Joined: Mon Jul 27, 2015 1:00 am

Re: Resetting cost basis?

Post by nalor511 »

Tylenol Jones wrote: Sun Jun 13, 2021 12:58 am I'm moving from a capital gains tax-free country to a country with capital gains tax. I'd like to reset the cost basis to the current prices to lock in gains prior to the move. Is there any way to achieve this without having to sell and then buy again?
Yes, sell and buy again . :twisted:

Or, just exchange for something practically identical, and be done.
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celia
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Re: Resetting cost basis?

Post by celia »

Don't worry. When you die, the cost basis will reset to the current market value. Just mail the custodian a copy of your death certificate.
:oops:
TedSwippet
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Joined: Mon Jun 04, 2007 4:19 pm
Location: UK

Re: Resetting cost basis?

Post by TedSwippet »

Tylenol Jones wrote: Sun Jun 13, 2021 12:58 am I'm moving from a capital gains tax-free country to a country with capital gains tax. I'd like to reset the cost basis to the current prices to lock in gains prior to the move. Is there any way to achieve this without having to sell and then buy again?
None that I know of. A few countries 'step up' basis on becoming resident, though (Canada, for example, but not the US or the UK).

You don't say where you are moving to, but if/when selling and re-buying to reset your basis, take care not to run into problems with any special rules your target country has on this. For example, the UK disallows a sell-and-buy basis reset where there is less than 30 days between the two, under so-called 'bed and breakfast' rules. As it happens, this rule is relatively easily neutered, even when investments are not index funds/ETFs (where a simple and effectively identical alternative fund or ETF can be used as a switching partner).
celia wrote: Sun Jun 13, 2021 2:15 am Don't worry. When you die, the cost basis will reset to the current market value. Just mail the custodian a copy of your death certificate.
True of the US, but not necessarily true of every country.
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Hyperborea
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Re: Resetting cost basis?

Post by Hyperborea »

TedSwippet wrote: Sun Jun 13, 2021 3:11 am
Tylenol Jones wrote: Sun Jun 13, 2021 12:58 am I'm moving from a capital gains tax-free country to a country with capital gains tax. I'd like to reset the cost basis to the current prices to lock in gains prior to the move. Is there any way to achieve this without having to sell and then buy again?
None that I know of. A few countries 'step up' basis on becoming resident, though (Canada, for example, but not the US or the UK).

You don't say where you are moving to, but if/when selling and re-buying to reset your basis, take care not to run into problems with any special rules your target country has on this. For example, the UK disallows a sell-and-buy basis reset where there is less than 30 days between the two, under so-called 'bed and breakfast' rules. As it happens, this rule is relatively easily neutered, even when investments are not index funds/ETFs (where a simple and effectively identical alternative fund or ETF can be used as a switching partner).
I know that a bunch of countries have rules targeting the immediate purchase of the same security within some window after selling it. However, I didn't think they had any effect on sales and purchases that took place when one wasn't a resident of that country at the time. So, do they?

I ask because I'm considering the same thing myself before I move on from Japan. For the first 5 years of residence assets outside the country gather no tax in Japan so I'm planning to sell and reset my basis.
It’s hard to win an argument with a smart person, it's damn near impossible to win an argument with a stupid person. - Bill Murray
TedSwippet
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Joined: Mon Jun 04, 2007 4:19 pm
Location: UK

Re: Resetting cost basis?

Post by TedSwippet »

Hyperborea wrote: Sun Jun 13, 2021 9:10 am I know that a bunch of countries have rules targeting the immediate purchase of the same security within some window after selling it. However, I didn't think they had any effect on sales and purchases that took place when one wasn't a resident of that country at the time. So, do they?
I don't know. Not even definitively for the UK (elderly UK-specific discussions here and here).

It probably depends on how any such rule operates, and that may vary widely across countries. I just mentioned it as something to watch out for.
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