CGT

crunchyeyeball

Where are you that this *isn't* legal? Your post history suggests Greece, but as far as I'm aware, [online gambling is perfectly legal there](https://www.softswiss.com/gambling-regulation-map/greece/). Sure there may be taxes to pay, whether CGT or others, but that goes for many/most countries.

The-maulted-One

Spending your btc is the same as cashing it out. CGT applies.

Bred_Slippy

Well spending it (even directly) in the UK is still considered a disposal for CGT purposes (as with most other countries, though there's some that don't apply CGT/don't apply it if it's been held a while). Bit longer term, but an option would be to take out a loan against it and then refinance that loan when it becomes due. As loan proceeds are considered debt, there's no tax on them. This is what the rich often do with their assets. The problem is there's not really what I'd consider decent providers accepting BTC as collateral at the mo (not one's I'd want to use anyway). It seems you're already aware of the UK's small CGT annual exemption etc.

viper2097

Both the Libs and One Nation have come out saying they'll repeal this. I'd like to think they've got a good chance of getting back in now. The next election isn't for 2 years, We've still got the 50% CGT discount up until July 1st 2027 and then we'll only have 10 months to wait. Plus we're at least grandfathered up to that point right? Sit tight brother, There's a VERY good chance this gets reversed.

WhoIsYourDaddyNow

The new rules screwed every holder who didn't sell when was the best time to do it (at ATH, or cycle peak) due to the naive thought "the CGT discount will make me save in the long term". They changed the rules mid-game and this is pretty much theft but looks like in Australia the government can get away with anything. Good luck building any wealth with a government that takes basically half from every of your profit, after you took 100% of the risk and used savings that were already taxed. The only hope is that this gets reversed at some point but I seriously doubt that would happen in the foreseable future.

ShoddyRelationship58

Probably right, but the CGT would be lower in the case, because your realized gains would be much less than they were at the time than you pledge it as collateral.

Medical_Link_691

So you're definitely certain you won't die within the seven years after you pass it on? That's quite the confidence. The thing is, mate, if you die within seven years of passing it down, they've got to pay that tax bill anyway. No one knows when they're going to die. Depending on how much you hold in your crypto, it's either a gamble you're willing to take or one you're not to take. Only you know that but those are the rules, mate. I'm just giving you the heads up. The other thing to consider is you need to reverse engineer when you eventually convert that to fiat. You may leave it to them without a tax bill but they're going to have a CGT bill of 24%. That's something to consider as well because if they suddenly turn up with thousands, millions of crypto, HMRC are going to know when it was bought and with what wallet it was bought. As you know wallets are completely traceable because on the blockchain there's no getting out of it pal. You just need to reverse engineer where the money ends up to realise that actually there are no grey areas anymore. Now the beauty about it is that you've got until 2027 to sort this out because that's when the FCA regime goes live. That's when they're going to start going hard at crypto holders.

Kie_ra

Taking out a loan and using that money for whatever purpose you have, including reinvesting portion of it elsewhere (eg. cash generating assets) is better than selling BTC, triggering CGT, paying huge tax and only then getting to use the money.... 

TheresNoSecondBest

Two more options then move to a place where you don't have to CGT or change the law in the place you're living in. No, crying on Reddit won't help.

TheresNoSecondBest

Not wash sale. You buy $100 worth of bitcoin. Buy your burger the same day. Zero capital gain, zero CGT.

viper2097

Huh? I said in my OP that the current system with the 50% CGT discount was the better system. Where did I say people benefited more on the new system over the current system?

throw12345away12345

increases tax -> benefit? It is strictly an increase in CGT paid for anyone with low cost basis. Low cost basis means that it was bought many years ago. For purchases over 1 year old, the previous tax was 24.5% MAXIMUM (half of 45% plus 2% Medicare levy) and now it's 30% MINIMUM

procabiak

ianal but if someone has a liability to return an asset to you, then ownership hasn't changed. otherwise something as basic as an exchange wouldn't work because mere act of depositing to an exchange "would cause a CGT event" since you've given the exchange your coins = "ownership changed" in the technical sense. but that's not true in the legal sense.

GranzJ473

AU CGT changes affect anyone holding BTC across multiple jurisdictions because of the residency-and-source rules that determine which country's CGT applies. for travellers spending parts of the year in AU, the 183-day test becomes the operative variable, and there are anti-avoidance provisions around departing-resident status that can apply CGT on unrealised gains. worth running the specific scenarios past an AU-licensed tax pro rather than relying on summaries, since the rules around digital-asset holdings have been changing

Fantastic_Ad_2704

I'm not quite sure what the OP is getting at with this post. Nothing has changed for any gains made up to 1st July 2027. The 50% CGT discount still applies. The cost base doesn't get 'reset' on that date. Your cost base remains the same but you only pay the higher 30%+ rate on gains made after 1st Jul '27. So it's just a snapshot to determine where the higher tax begins. There is no benefit whatsoever for early Bitcoiners. CGT tax is going up for everyone! As for borrowing against your Bitcoin, the ATO makes clear that two things likely trigger CGT: 1) 'Wrapping' or pooling your Bitcoin with others. 2) Not owning the key to the collateral address. Take a look at [https://www.surge.credit/](https://www.surge.credit/) They have solved both of these problems so worth a look for Australians wanting to borrow against their stack.

submarinefarm

If ownership technically changes it triggers a CGT event. 

Bel_Air_Fresh

I thought borrowing against btc or other assets was tax free? You're acquiring fiat debt as a loan against an asset, not liquidating the asset itself. Why is it a CGT event to borrow against btc?

viper2097

Yes but I've got bad news for you brother. You're gonna have to pay an exit tax. It's the same as if you sold all of your bitcoin and paid tax on it! At this point, It might not be a bad deal. You'll only have to give up a maximum of 23.5% of your stack but at least you'll keep 100% of your gains after that if you go to a country without CGT. It's a DAMNED good question and well worth some thought. Upvoted!

viper2097

That works as long as you don't care about the government taking away what you bought. I bought a house recently, Paid over 1m in CGT. What's the point in owning a house if they can take it from you at any time?

viper2097

Not in Australia, It's a CGT event when you borrow against your crypto! We're special here... (When I say "Special" I'm talking "special olympics" like special)

viper2097

haha that's exactly what I thought initially but no. You still have to FIRST pay the tax from the old system. You'll still take your ORIGINAL cost base and 50% cap gains tax and pay that bill... Then after that you're in the NEW system with the new cost base. It's funny you said that because this was the hardest part for me to get my head around and I thought I'd found a 100% CGT discount haha

viper2097

I'm not sure what any of this has to do with Australia's CGT system. Having coins in cold storage doesn't EXEMPT you from capital gains tax when you sell BTC. If you're implying (and I'm not saying that you are) that you choose to just not pay tax when you sell coins, Then you go ahead and do that! I've been in Bitcoin for a long time, I sold some recently to buy a house and had a tax bill of over $1,000,000 dollars! It made me sick but I paid every sense because of a simple reason. There's no point in having the security of a home if you're constantly worried that the ATO (Australia's version of the IRS) will some day knock on the door and kick you out of it. You want to avoid tax, You go do that, I won't judge you! Me personally? I pay every cent!

__Ken_Adams__

There is one scenario where you can pay 0% CGT in the US, but many won't qualify. If you're income is under ~$48,000 for single & ~$96,000 for married, any long term CGT that *when combined with your ordinary income* is under the 48k or 96k is at 0%. In other words, if you had 40k in ordinary income (for single), you could have 8k in long term CG at 0%. It's actually not bad when you consider that the 0% is on the *gain*, not the proceeds. To illustrate, I'll use an example with the 8k figure from above... If you had bitcoin that had doubled in value (which could also be described as your cost basis being half of its current value), you could sell 16k worth of bitcoin at the 0% tax rate because the *gain* on that 16k would only be 8k.

crunchyeyeball

I'm in the UK, so your tax rules may be different, but under current UK tax rules, the first £3K of annual gains are tax-free, though that allowance used to be *way* higher. If I spend enough to realise >£3K of gains now, I'd need to file tax return and pay CGT. Aside from the tax itself, the paperwork would be a pain, so I try to keep BTC spending below that threshold.

crunchyeyeball

I was forced to sell a portion in 2017 due to some unplanned expenses hitting all at once (house moving expenses, & my car died and needed replacing). By pure luck I sold within 24h of the (then) ATH. Felt pretty smug for a while, but ended up buying back in higher, and vowed not to make the same mistake again. Been topping up for a while, but still don't have close to the amount of BTC I had back then. I do still spend some from time to time, but only enough not to trigger CGT, and I always replenish what I spend as soon as possible.

Short-Shopping3197

Personally I’m going to start moving it into more stable investments at the next ATH, within my CGT allowance each year. I’ve held for about 7 years now, it’s been a good investment and I think it’ll always have the role of digital gold as countries move towards digital currency, but I’ve got 15 years till retirement and i don’t want to pay tax on it all.

viper2097

You’re right! The 1980’s CGT treatment was completely tax free and investors with assets bought then were grandfathered when the pre 1999 treatment came in! Bill Shortans Negative Gearing changes that lost him the election were going to allow grandfathering. The thing to remember is that neither of these changes needed the Greens support to get it through. The Greens “green lit” Labors superannuation changes recently and while they wanted them to be much harsher, they still pushed it through and said it was a “Down payment” on future tax reform that the Labor would bring in down the line! Well here we are… I’m not sure why you’re asking me for evidence as it’s YOU who’s making the a claim! I’m not claiming there’ll be grandfathering or not, My post was directly related to how my assets would be treated under the pre 1999 rules, No claims of grandfathering were made. So my friend… since you’re the one making the claim, Where’s your evidence. 

Other_Importance249

Yes, I've always been sceptical of that method because the interest rates aren't that great on BTC backed loans, even though the loans are fully secured. But if the tax rate on realised gains effectively doubled, as OP suggests, then taking out loans against BTC might become more attractive. ThevGovt. would actually lose tax revenue because people just wouldn't realise their gains & borrow against them instead (the "billionire method" you referred to.) These reforms, if they happen, could end up being another disaster for the ATO, just like the Gillard Government's ill conceived "mining super profits tax." What the geniuses in Canberra never seem to factor in is that when Government tries to grab ever more tax from people who took intelligent risks to generate wealth, those same people will find ways to use that intelligence to also lawfully minimise their tax. Best left alone IMHO. Also I bet they'll grandfather aany CGT reforms in on residential property, thereby exempting themselves (all the pollies seem two be going the property investment system themselves.) Bet they don't extend the same leniency to long term bitcoiner with lo cost base.

FunkyGrass

CGT over 1 mil? Fucking robbers lol… There would absolutely no problem with paying tax on YOUR OWN MONEY if the system was fairer. But it’s not. It’s geared against the same people who keep it up. Also, good part of your tax is going to fund the killing and direct/indirect abuse of many innocents, just because someone up there, owning half of the world, hasn’t got enough. When are we going to stop being the doormat.

Romanizer

If it's a large enough amount to make that relevant, you could probably just keep it inside Australia's CGT net and take out loans against it, even if leaving.

FunkyGrass

Lol. Just do not comply. That’s it. If all of us do this they can stick their CGT up their arse.

seraph321

I really hope you're right, but as I've said, I think most aussies just *assume* it's targeting housing because they don't even tend to remember that there are other assets that CGT applies to. The entire country is obsessed with real estate. They seem to think the only people who hold any significant amount of other assets must be rich, and they hate rich people, so who cares.

viper2097

The ATO taxes Bitcoin as property. The government is looking at reforming the WHOLE tax system, Not JUST housing. I can assure you that the capital gains system is under review, Not just real estate. I'll tell you what I think is going to happen? I think government will enact the pre 1999 CGT reform (this will be for ALL assets) EXCEPT for new house builds. My prediction is that the extra tax gained from this reform will make it affordable to allow investors a 100% capital gains tax discount on new homes and that will BOOST housing supply as it will be the most tax advantageous investment. I'm not trying to spread panic. I have no reason to do so. Things are going to change. Mark my words.

mrstarfish3

This post is just spreading panic. The changes are geared for property only. No other assets are being touched for CGT. By this so mean, they have not been modeled or even hinted at. The focus for the Australian Government is property and intergenerational wealth.

viper2097

The latest insider reports are saying it applies to all assets as it's CGT reform.

Primary_Ice3005

Thank you - I know nothing about this area - 65f - but thanks to everyone’s generosity I have learned a lot. Stablecoins is an excellent suggestion and it would appear to get round the CGT issue because there is no change in value

Lonely_Bumblebee8934

If you convert BTC to GBP you would trigger a CGT event.

SaltyYou1035

Sorry for your loss. You're mostly right that possession of the wallet and seed phrase is what matters. Bitcoin doesn't have an ownership registry tied to identity the way a bank account does. There's no "title" to transfer. If you hold the seed phrase, you control the coins. That said, a few things worth knowing. The executor wanting to put it through properly isn't wrong, it's just that most solicitors haven't dealt with this before and default to treating it like a bank account. In Australia, crypto is considered a CGT asset by the ATO, so probate may need to account for it as part of the estate's value even if no "transfer" happens on-chain. The cost base would be whatever your father originally paid for it, and you'd inherit that cost base. One practical tip: if the solicitor asks for proof of ownership, the closest thing you can provide is a signed message from the wallet's public address. That cryptographically proves control without moving any funds. Most solicitors won't know what this means, but it's the Bitcoin equivalent of showing a bank statement. Also, since your dad originally had it on Swyftx and moved it to the Ledger, Swyftx may still have transaction records showing the withdrawal to that address. That creates a paper trail linking him to the wallet if the executor needs one. The will referencing the Swyftx account specifically (not the Ledger) is a minor complication but shouldn't be a real problem since the intent is clear. Your aunty sounds like she's being thorough which is honestly the right approach even if it feels slow.

Creative-Iguanna

In Australia 'spending' it is treated as a CGT event exactly the same as if you sold it.

crunchyeyeball

There's nothing *technical* linking ownership to him if you have the seed phrase. That's also why it's *vital* not to share those words with *anyone*, *ever*. They should also not be stored *digitally* in any way - whoever has those words can move the funds if they wish, whether they were acquired legitimately or stumbled across by hackers or malware. The only *potential* issues I can imagine are likely to be *tax*-related. Not sure of the rules down-under, but I suspect there'll be either CGT or inheritance tax to pay.

DwightsShirtGuy

If that’s what works for you I have no argument against that. For me, I’d rather just pay off the loan. That interest is costing you more and more over time. BTC returns are unpredictable, and add capital gains into the mix. I’d be curious to see a mortgage statement (balance remaining, interest rate, amortization table) and run a comparison of taking the money you plan on using/have used to buy BTC, including CGT, compared using that money to pay down the loan. If it’s close, I’d ditch the risk and tax burden. But everyone has a different situation.

jc456_

100k would incur a CGT. Are you bearing that in mind?

Disastrous-Archer-86

My exit plan is already in action and has been for a few years now. Keep selling £3k per year, every year, no matter the price, so I don't have to bother with any tax reporting or calculating average costs (I'm UK based) until my stash runs out, CGT allowance increases/decreases, or I die. Simple. I've already made gains I'm more than happy with, now I'm just off ramping the remaining and moving into ISA tax free wrappers or booking a holiday. I don't really care how long it takes either. I just think of it as an extra little bit of bonus income or investment each year

docherino

No CGT and will go up more from the lows

crunchyeyeball

Depends on lots of factors. Emergency fund: You should always have an easily-accessible emergency fund ready for life's little unplanned expenses, and you don't want to be forced to sell bitcoin during cycle lows. Time horizon: If you're confident you won't need to sell within 4 years, I'd lean towards more bitcoin. Tax issues: Especially CGT rates in your country, and what tax-free options you have available. If CGT rates are especially high, but you have wrappers like ISA/SIPP/401K/Roth IRA, you might lean towards them, whether through regular index funds or bitcoin ETFs (if available), depending on time horizon.

jsh63

If you use an exchange they will report to HMRC (also possibly you bank will also). HMRC may contact you to "remind" you to report your capital gain. I sold 0.34 BTC in Dec 2024 and this happened to me. I have just the paid £6k CGT at the end of Jan based on a cost base of £14K and a sell price of £75K. HMRC have a department now that tracks crypto transactions in New Bailey St, Salford

crunchyeyeball

Yup, just using bitcoin for purchases counts as a "disposal" for tax purposes. However, in the UK the first £3K of capital gains are exempt from CGT, and you don't typically need to file a tax return for gains under this threshold. It's still annoying since it means you typically can't use bitcoin for *everything* without incurring CGT (assuming you *have* a gain), but as long as you keep annual realised gains under £3K there should be no tax implications.

Kie_ra

Look at it this way; You have no fiat to pay X. You really need X. You have three options: * Take an expensive, high interest loan from the bank. * Sell BTC and trigger CGT. * Use BTC as collateral to get access to significantly cheaper fiat. What sounds like the best option?

Forsaken-Welcome-709

The goal is NOT to make money ( fiat cash garbage ;) ). Many of us go through a "what even is Bitcoin" phase, and it forces us to ask and answer hard questions about "what even is money". Once you get through that, you change your frame of reference. Cash is not money, Bitcoin is money. Cash is just what everyone out there wants to use as money. And wall street is willing to even lend this cash thing to us so we can use that instead of buying this cash thing. What's the benefit of that? Well asset appreciation. But it isn't appreciation to us, its just stepping away from the massive constant debasement of what everyone else is calling money. So sure, you will give me a loan so I can use this "cash", and then ask for the money back later on after it has been debased to hell? What a deal, what a steal! The trick of course is that there are many variables to consider. APR, time, liquidation levels, and Bitcoin's perceived and traded volatility in the market. These things, that the finance industry uses as the basis of their rules when lending to you, affect your ability to safely borrow. So we have to over compensate. This is why it isn't the right thing for EVERYONE to do, but for many it is beneficial. The TLDR; is that if the CAGR (compound annual growth rate) of Bitcoin is higher than the APR of the loan, then by the time you have to pay off the loan, you end up selling less of your bitcoin for the amount that you borrowed. But even better, you can borrow more and roll over the loan. Well now we are starting to see the benefits of that "compound" word. The loan compounds, but the CAGR does too, and since it is higher than the APR, it compounds faster than the APR. Then there's the volatility of Bitcoin: CAGR is a smooth straight line, Bitcoin doesn't trade like that, so there needs to be a lot of precautions taken. People recommend keeping below 15% LTV (loan to value) when you take out your loan(s) at all times. This way it should theoretically survive any bear market, even if Bitcoin crashed 80%, you wouldn't be forced to liquidate and settle the loan, so you can continue to let TIME do its thing. Over time, you debt grows into tens, hundreds of thousands, or a million or more, but.... percentage wise, it goes down. Your LTV goes from 15% to 10% to 5% to 1%. That means when you finally decide to pack it up, you sell 0.01 BTC instead of 0.15 BTC. The other important reason is that governments demand CAPITAL GAINS TAXES. If you sell your bitcoin now, you pay the market value, and you pay high taxes on top of that. If you do it after you retire, you pay less taxes potentially because you don't earn a salary anymore, plus the value grew higher, so Bitcoin right now is for many, a savings play, not a make a quick buck play. In the future, if the climate changes and governments decide that Bitcoin is money and that it shouldn't be subject to capital gains taxes, then even better! Time is on our side, even if CGT goes up, it is very likely that the value of the asset appreciated enough that we still made out the winner. CGT applies whether you buy paper money, or buy a house or buy a wedding, whatever. Anyway, all the while, you just keep stacking and keeping money to yourself until everyone else catches up and starts to ask for your bitcoin money instead of the toilet paper. Now, even with all that I have said, playing with loans is still dangerous, still feels like gambling, and so people like myself just stack and/or hodl, and don't over invest so that we can live off our salaries and keep that bitcoin for emergencies or retirement, or for some big expense that we were saving for... like a wedding, or a house or something we need in the future that we otherwise couldn't have afforded. I think of those who take loans, half of them will do magnitudes better than us, and half of them will get rekt because it takes much more discipline to manage loans like this without getting into trouble and undoing all your hard work in a moment.

crunchyeyeball

For now I still need to pay my bills and buy my groceries with fiat, plus my country imposes Capital Gains Tax on any gains over a certain threshold. Therefore I treat bitcoin as long term savings. I'll keep accumulating and only cash out as little as possible if/when needed, keeping tax to a minimum. If the rules change to e.g. eliminate/reduce CGT on bitcoin, or dramatically raise the exemption threshold, I'll react accordingly and move as much as possible out of fiat.

devilkin

You can buy gift cards online for crypto. But the exchange rate tends to be pretty shitty. But better than the amount of CGT. Other than that, you'd need to open a bank account with a foreign country that allows it, and that doesn't report taxes to Australia, and that had not CGT for crypto.

eenthebean

Didn't account for CGT in this. Do you think it's worth on purchases worth less than or around 100 dollars annually? I can't imagine the tax bill would be incredibly high but I'm moreso thinking about the complications to filing.

crunchyeyeball

Probably depends on the tax rules in your country. I think most of us want wider adoption, but in my country I have to report any disposal which results in a gain over a certain amount (CGT). Therefore, although I use it for *occasional* purchases, I don't use it as the *default* option, though I probably would if tax wasn't an issue. I'd suggest getting a hardware wallet. Ideally one of the options listed in the [Getting Started](https://bitcoin.org/en/getting-started) link here or the [FAQ](https://www.reddit.com/r/BitcoinBeginners/comments/g42ijd/faq_for_beginners/) over on /r/BitcoinBeginners You can then buy some bitcoin at a reputable exchange (same links), transfer to your wallet, and learn the rest as you go.

andys811

What country is this? In UK where I'm from, you pay CGT on the profit each time you make a disposal, disposal counts whether it's from BTC to USDC, BTC to ETH, BTC to GBP, it doesn't matter it all counts

eiretaco

Switzerland is an outlier. Most European countries have CGT. There may or may not be 1 or 2 more in Europe, I am unaware of any others however as it's not typical. Here in Ireland it's 33.5% for CGT and we have a deemed disposal tax as well. The only asset that escapes this really is property, providing it's your main residence and you lived in it for at least 6 months before sale, then it's tax free. Oh, and lottery/gambling winnings are tax-free. Everything else though is taxed to the hilt.

oh_danger_here

not sure where you are based, but CGT-related losses can be offset against annual tax credits. As for CGT's it's not a tax on risk, it's a tax on the difference between what you price you paid for an asset and what price you disposed of it for. It can go both ways..

Brilliant_Pound1304

CGT is such a ridiculous concept. Your investment goes down? Tough luck. Goes up? Government wants their share

Blade_Runner_69

Not if you use peer to peer, defi and only spend within your CGT allowance. Sounds like you have a skill issue!

Other_Importance249

So does that mean you didn't make any gains, you live in a jurisdiction where they don't have capital gains tax, or you just didn't think about CGT?

saltyru

I guess the Dutch government isn’t bothered about euthanising the very system of wealth generation that the country brought into the world four centuries ago? Catastrophically poor decision that makes the British government’s own brainlessness in raising the base CGT rate from 10 to 18 percent last year look like a work of genius in comparison.

TheMuel7

Take into account the CGT that Australia applies to crypto.

crunchyeyeball

I basically just use premium bonds as a convenient tax-free place to store funds while waiting for the ISA limit to reset. Sure, the effective interest rate isn't great, but any winnings are exempt from tax, and every month I get a little thrill when I check for prizes. The main reason is that I *hate* paperwork, so I'd rather avoid the hassle of filing a tax return if I can avoid it. Unfortunately we have precious few tax-free options open to us - ISA, premium bonds, SIPP? (exempt from CGT, but not income tax as I recall, plus no easy access). All the other obvious options (savings account, GIA, etc.) would be subject to either CGT or income tax (or both), at least above some threshold.

crunchyeyeball

If diversification is important, bitcoin ought to play a role, but it needs to be long term. I'd suggest 4 years minimum, but preferably a lot longer. I was recently made redundant, but when I had a steady paycheck, my plan was: * Every payday I'd set aside £2K per month which went straight into premium bonds (tax-free) * Every April I'd withdraw £20K from PBs to max out my S&S ISA (also mainly all-world funds) * No SIPP, but a certain % of my paycheck went into my workplace pension * Spare cash at the end of each month went into bitcoin, with buys spread out over the month to make bigger buys during dips As it turned out, bitcoin outperformed both the ISA and pension, even after accounting for CGT, so it now forms the majority of my investments (even after the recent dip). I'd suggest checking the rules for holding bitcoin ETNs in an ISA too. They were recently changed so although we can now hold the ETNs in a S&S ISA, it's only allowed for a limited period before it needs to be moved to an "innovative finance" ISA instead, which seems a little pointless.

spatchi14

Same in Australia, even with the CGT discount.

Berg_turdler

I would have considered 10BTC at the last ATH very much FU money. Sell it all, pay your CGT, invest it and return 8% annual on it, earn twice equivalent of the Australian median income without having to every lift a finger. No one can make you do anything.

Starkey18

I believe the vast majority of crypto is bought and sold within countries with CGT hence the post

rgnet1

Put $100k of btc at risk to have $10k to spend? I think I’d rather sell $14k, pay the CGT, have the same result and $86k of btc secure in my wallet.

Kie_ra

Sell all the garbage and use the loss to offset the CGT

Froz3n_Cornchip

Not sure where you’re from but yeah you pay CGT but that still doesn’t eat all your profit. Otherwise no one would invest in anything. You’re not wrong about timing and holding though.

Kie_ra

How do you deal with tax? Surely this can't work? if I touched my stack, I'd be paying CGT so massive that it makes absolutely no sense to even attempt this, not to mention the risk of timing it wrong Still convinced just holding is better 

Unusual-Piece-93

OP is clueless. Thinks he’s walking away with 26% profit later this year. By his calculations dollar will have lost 10% during the year. He’s still needs to pay CGT and exchange fees. I couldn’t be bothered doing calculations, but maybe he is $2000 up if his predictions come true and he sells this year. Good chance he gets it wrong and sells for a loss or waits much longer. Like others have said, if you need money back this year, don’t buy.

Short-Shopping3197

About 50% in a world index tracker ETF, 25% split between gold and Bitcoin, and 25% in a zero-risk national bond scheme as my emergency fund. In the UK the ETF, gold and bonds are all tax free, I’ll start drawing the BTC out from age 50 at my annual tax free CGT allowance.

Resident-Quality1513

You can cash in £3000 and not pay CGT (and not have to think about how much your gain is!) every year. As soon as your accumulated BTC starts putting on more than £3k/year that's the end. You have a passive income of £3k/year. Thanks very much HMRC. I would rather it was a bit more than that, but that's where we are.

GuildfordAI

Don't mess around and just use something like Summ to calculate the taxes due as it gets really complicated (for example making a BTC->BTC transfer between your wallets is not a taxable event, but the MINING FEE you pay may be subject to CGT if you held it for a long time). It obviously gets even more complicated if you're using an exchange that uses USD/EUR or other forex as that's another CGT start/end event to determine when withdrawing. Feel free to use my ref code so we both earn some dosh, [https://summ.com/?via=b0haquqv](https://summ.com/?via=b0haquqv) or just go to their site directly if you don't want the referral [https://summ.com](https://summ.com) I haven't tried the other tax systems but heard Koinly is good too.

dave5526

There is some bad advice on this thread. Capital Gains applies to investing, not trading. Trading falls under income tax. If you are buying and selling tokens over short periods for profit, and try to claim these are investments and only subject to CGT, HMRC will take a dim view of that if they ever look at it. How likely they are to pay attention is difficult to say, but with increased use of AI by HMRC to analyse submissions, I would not want to risk it. Also - it's almost certainly not worth it. Very few people manage to day trade successfully. Almost all who try would have been better off (financially and mentally) just investing that money in an Index fund, gold, BTC etc over a long period.

crunchyeyeball

That's not really how it works, at least not in the UK. Any sale of bitcoin counts as a *disposal*, and may be subject to CGT if the capital gain exceeds £3K: https://www.gov.uk/guidance/check-if-you-need-to-pay-tax-when-you-sell-cryptoassets#when-you-need-to-pay

crunchyeyeball

Depends on the total gain. In the UK, the first £3,000 of gains are tax-free. Any gains above that are subject to CGT (Capital Gains Tax). Only exceptions are ETNs held within an ISA.

-5H4Z4M-

This doesn't work in UK. Selling crypto into fiat triggers a Capital Gains Tax (CGT).

Any_Ice1084

unless youre running it like a business HMRC usually treats trading as CGT. staking and rewards are income tho, thats where ppl get tripped up

Big-Finding2976

Airdrops aren't necessarily subject to income tax. Stuff you receive in exchange for doing something, like staking or lending your assets, is treated as income but if you receive an unearned airdrop you can record it as a gift with a 0 cost basis and then just pay CGT on any gains when you sell it.

Threemonkeys123

Centralisation has already occurred in some ways (regulations, CRAF, CGT) but if you don’t sell you don’t lose. I plan on waiting until it will fund my retirement goals (20 years+ yet) and then I’ll cash it all out and emigrate to a tax haven, while I’m at it I’ll mace all my CC’s too! Hehe

parkway_parkway

From your comments is this what happened? You buy some coins for say 10k. They rise to 68k in the 24/25 year and then you swap those coins for some dog coin creating a CGT event. That means you have gains of 58k and a bill of 18% of that (if you're a lower rate tax payer). Then the dog coin crashes in value to 10k and you sell it in the 25/26 year creating a 58k loss for that year? Is that basically what happened? You definitely did a trade in 24/25 that realised the gain? As unfortunately I don't think you can carry the loss back. One option is to write a letter to HMRC and explain what happened and explain that the money is lost and you want to offset the loss backwards. They are most likely to say no, but the potential of saving 10k is worth it. You can carry the 58k loss forwards with you and offset it against future gains which is at least something.

Reception_Available

same shit, i still have to pay even with that shit low CGT of 3000 .

Amber_Sam

I don't have to pay CGT from bitcoin, yet still prefer to buy bitcoin without KYC.

Leithm

Did this happen before or after October the 30th 2024 which was budget day. Doesn't normally matter but they changed the CGT rate. Also you rate will depend on whether you are a higher or basic rate tax payer. If you are a basicc rate taxpayer and it was before October the 20th your CCGT rate might only be 10%.

FatFettle

So you can't carry back capital losses, meaning this year's position is moot. One method I know of to negate (by deferring it) a previous CGT liability is to use an Enterprise investment scheme (EIS), but that's something of an esoteric investment Effectively you invest the tax bill instead of paying the tax man, however if you ever sell the investment the gain is then realised in that tax year (with the option to defer it again). Obviously this isn't advice and may be totally unsuitable for you.

Reception_Available

Yes, 10.500 with that CGT 3000 already excluded.

FatFettle

That's subject to CGT, not income tax mate. I'm probably being a bit pedantic but it's important to be specific in tax matters. I take it your gains exceeded £3k for the tax year in question?

FatFettle

How did you create an income tax liability? I'm assuming you were staking cryptocurrencies. Losses will presumably be capital losses, subject to CGT so different tax treatment.

ObligationSea2667

late to this - but this achieves nothing if you either sell or swap another coin to tether in < 12 months and hold tether for 12 months. The second you swap to tether or sell whatever crypto you sold -> immediately taxable and no 50% CGT discount can be applied

Threemonkeys123

I wasn’t aware this could be done except through a mixing service (which carries its own risks - flagged up by exchanges, chance of loss, being classed as disposal triggering CGT etc) If anyone knows how to combine the UTXOs please let me know 🙏

Hit4Help

And even if you establish residency elsewhere you may still be liable for the CGT on the assets held while aquired in the home country. For example I couldn't leave the UK and go to tax haven to cash out any currently held funds. The UK would still wants it cut of 18%

alexkey

You do trigger a cgt event even in us, but if you sell your USDC for USD and to US bank account, the tax on that would be 0 since no gains. FYI Australia uses AUD, not USD, and exchange rate to USD is not fixed, so you do trigger CGT event and it will be either gain or loss depending on where the exchange rate goes. And any legitimate exchange reports transactions to ATO if you link it to AU bank account (or otherwise mark Australia as your place of residence).

alexkey

USDC has no special status. It is a cryptocurrency and therefore its disposal (changing to fiat) is a CGT event. You can easily google that yourself on ATO website.

Unusual-Piece-93

Re-read the ops question. They have just started buying bitcoin (newbie). Good idea to mine? **No** Better to just buy bitcoin with the money? **Yes** I was a newbie when I bought the miners 6 months ago, I am still learning. Whilst tax can make the equation better by claiming costs with KYC, CGT becomes worse (no discount for 12+ months held on mined BTC, at least in Aust). If you’re not KYC, you can’t claim electricity and machine depreciation against the cost of the BTC mined. CGT cost base would be zero if you ever try to sell for fiat on a KYC exchange. **The OPs question was surely about most cost effective**. In 4 months, my rewards reduced by 23% and getting sats that the miners cost back looked unlikely. Add to that the electricity cost and I would be well underwater. Rewards advertised are NOT guaranteed, they are more likely to go down every month. So I sold the miners and will DCA what I would have paid in Electricity. I was mining on a hosted platform to a mining pool and therefore not running a node. An efficient miner requires 3 phase power which most people don’t have at home. Consider repair costs and downtime not hashing. Look at the global hashrate always going up, rewards going down; except in a dip when mining for fiat becomes unprofitable as it’s cheaper to buy the sats on an exchange. Cost of miners has also gone down with BTC price, meaning I lost money on the miners. Once the halving happens, there will be more efficient ASICs available so the ones you bought now will be scrap metal in 28 months. Not profitable to mine with and cannot be used for anything more than an ugly door stop. If you want more sats, buy on exchange. If still interested in mining and securing the network, buy a lottery miner and run a node. IMO, the only way you make money from mining is if BTC hits new ATH, but you would still likely have more sats if you had spent the miner cost and electricity costs buying sats on exchange. Just my 2c worth from my experience.

Amber_Sam

>With BTC spending having to pay capital gains taxes, I'd hate to be your tax advisor. Who said I have to pay CGT? There are exceptions, countries with zero CGT out there. >Not to mention, every exchange operated in the US... It might surprise you but about **95% of the global population is living outside of the US**.

Rude_Adeptness_8772

CGT :(

crunchyeyeball

This is really something you need to talk to an accountant or the tax adviser about. I'm assuming you're just looking at CGT (Capital Gains Tax). The price in 2012/13 varied a lot, from ~£4 to ~£800, but in any case it would have been a tiny fraction of it's current value. As I understand it, if you can't (or prefer not to) provide proof of purchase, you could either just *estimate* its value when you received it based on the date & historic price data (& hope HMRC accepts that), or just use a *zero* cost basis. If you use a zero cost basis instead of the accurate price, you'll pay a little more tax, but the difference will be dwarfed by the gain (& therefore the CGT) anyway.

Professional-Bend-69

Do you think zero CGT is realistically where we’re headed?

Fancy-Snow7

In my country it's even more complicated. We are either taxed at CGT rates (17% of gains) or your marginal tax rate (up to 45%) depending on how long you held their bitcoin (3+ years for CGT normally). Keeping track of how long you hold each bitcoin if you buy monthly is a nightmare.