If I sell stocks in my NISA account mid-term, can the investment allowance be reused?

Hello! Regarding whether the investment limit in a NISA account can be reused after selling stocks, it depends on the specific NISA scheme you are using: the "Old NISA" or the "New NISA" introduced in 2024. This is a crucial distinction.

Old NISA (up to 2023)

Conclusion: No, it cannot.

You can think of the Old NISA's annual investment limit as a one-time ticket.

For example, the General NISA had an annual limit of JPY 1.2 million. If you used this limit to purchase JPY 500,000 worth of stocks this year.
Your remaining limit for the year would then be JPY 700,000.
Even if you immediately sell those JPY 500,000 worth of stocks, the JPY 500,000 limit you've already used will not be restored. Your total annual limit for the year will still show JPY 500,000 used and JPY 700,000 remaining.

In simple terms, the Old NISA operated on a "use it or lose it" principle. Once you made a purchase, the corresponding limit was consumed, regardless of whether you held or sold the investment afterward.

New NISA (from 2024)

Conclusion: Yes, it can!

This is one of the most appealing reforms of the New NISA! The New NISA's investment limit can be "revived" and reused.

Here's how its mechanism works:

Total Limit Management: The New NISA has a lifetime tax-exempt investment cap, totaling JPY 18 million.
Limit Restoration After Selling: When you sell stocks or funds held within your New NISA account, the portion of the limit that was used for the original purchase of these assets will be restored in the following year.
Reinvestment Capability: Once restored, you can use this "revived" limit to purchase new investment products.

Here's an example to help you understand:

Suppose you used your New NISA limit to buy JPY 1 million worth of stocks in 2024. At this point, JPY 1 million of your JPY 18 million lifetime limit would be used, leaving JPY 17 million.
In 2025, finding the market favorable, you sell these stocks for JPY 1.2 million (making a profit of JPY 200,000).
Then, in 2026 (the year following the sale), the JPY 1 million limit you originally used will be released again. Your lifetime limit will revert to JPY 18 million (assuming you haven't made other investments).

A key point: What is restored is the original cost basis (principal) of your purchase, not the market price at which you sold. Regardless of whether you sell at a profit or a loss, the limit that was originally consumed will be restored.

In Summary

Old NISA (up to 2023): The limit was one-time; once used, it was gone and could not be reused even after selling.
New NISA (from 2024): Highly flexible! After selling an investment, the corresponding limit (calculated based on the purchase cost) will be restored in the following year, allowing for recycling until you reach the JPY 18 million lifetime total limit.

So, if you are starting to use NISA now, congratulations! You are using the New NISA, which allows for the reuse of limits, making investment decisions much more flexible!