This is admittedly very very long so TLDR at the bottom.
My wife and I are planning to move to Tokyo in January 2025 from the United States and are hoping to get some eyes on our plan to see if there are things we might have overlooked. We have no kids but will be bringing our ~6.5 lbs dog.
We are both US citizens. I will be transferring to my company’s Japan branch with a HSP visa and my expected annual base pay is 16-20 mil yen (depending on when I get my promotion) and an additional 50-100k USD in RSUs (depending on market). My wife will not be working in Japan.
My understanding regarding my RSUs is that if I leave the RSUs in my US brokerage without remitting any, it will be excluded from Japanese taxes for the first five years (until I become a permanent tax resident).
On the topic of permanant tax residency, is it correct that if we do move in January 2025 our first year of permanant tax residency will be for the 2030 tax year to be completed in 2031?
We also plan to repurchase all our stocks to reset the cost basis right before we hit the 5 year permanant tax residency.
Our plan is to rent for the first ~2 years until I get my PR (1 year for qualification + another year for processing buffer). Upon which we plan to purchase a home. I also plan to pass N2 in November 2024 (I have been studying for a few years).
I plan to work for 5 years in Japan while we live on half our take home. I’m calculating this as 65% of base salary so at minimum 10.4 mil if 16 mil base. Following the 5 years of working, I plan to retire completely (in Japan).
The idea is that we’ll have enough yen to live for 10 years total which gives our USD assets another 10 years to grow, at which point (assuming a 7% annual return) we expect to have reached our FIRE number. Our understanding is that we can forget about any 401k, IRA, HSA tax benefits and have accepted this.
I believe Japanese pension requires at least 10 years and if you leave Japan before then you can get it refunded. In the event I stop working in 5 years but stay in Japan, can I get it refunded or a reduced pension? Or can I just keep paying into the system after I retire so I pay for full 10 years? In case it matters, I have worked in the States long enough to qualify for US social security.
We currently have 2 homes in the States. One is our current residence and the other is being rented out. We’re planning to sell both before our move (moving the assets into stocks) just so we don’t have to worry about any issues that might arise such as bad tenants or extended vacancy.
My understanding is that the disadvantage to selling the homes and moving the assets to stocks will mean that it will count towards exit tax and to us this is an acceptable outcome for the peace of mind.
Before the actual move, we will be splitting our assets in half so that if something happens to one of us while we’re in Japan, we get hit with less inheritance tax. I also plan to gift my wife the maximum allowable amount every year so that she has some yen in her name.
We have consulted with both our US accountant and a Japanese accountant but figured it doesn’t hurt to get more potential eyes on our plan to poke at any potential holes. If any of my understanding above is wrong or there are any clear gaps in the plan, please correct me.
TLDR: Moving to Tokyo with wife (both US citizens) and retiring. Some questions:
1. Are RSUs paid to US brokerage (not remitted) excluded from taxes while not permanant tax resident?
2. Is calculating take home pay as 65% of total a reasonable estimate?
3. Is it reasonable to expect a zero down mortgage (5x base / 4x total pay) after getting 1 year PR?
4. How does pension work if I retire after only 5 years but stay in Japan? Can (should?) I just keep paying the pension until I hit the 10 years?
5. Is it wise to repurchase all our assets to reset our cost basis right before 5 year permanant tax residency?
edit: corrected terminology tax resident -> permanant tax resident
by timmythetagang