Resetting cost basis?
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Resetting cost basis?
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?
Re: Resetting cost basis?
Yes, sell and buy again .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?
Or, just exchange for something practically identical, and be done.
Re: Resetting cost basis?
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.
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Re: Resetting cost basis?
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).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?
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).
True of the US, but not necessarily true of every country.
- Hyperborea
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Re: Resetting cost basis?
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?TedSwippet wrote: ↑Sun Jun 13, 2021 3:11 amNone that I know of. A few countries 'step up' basis on becoming resident, though (Canada, for example, but not the US or the UK).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?
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 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 not just that facts don’t seem to matter anymore. It’s that it doesn’t seem to matter that facts don’t matter.
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Re: Resetting cost basis?
I don't know. Not even definitively for the UK (elderly UK-specific discussions here and here).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?
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.