In many countries in EU, real estate is the crypto. The only investment vehicle without capital gains tax. Maybe it's causing demographic catastrophe, but at least few people make a lot of money.
Crypto investors face tax crackdown as 70% non-compliant
41–50 of 92 posts
Re: Crypto investors face tax crackdown as 70% non-compliant
#42Earlier quoted context omitted.
You buy a bitcoin for 20,000. You sell it for 50,000. At this point you probably owe capital gains on 30,000. You then take the 30,000, use it to buy an NFT, and later sell the NFT for 0.01 (because NFT). At this point you have had gain of 30k and loss of 30k. Now, it's going to depend a lot on exactly when all this happened and in which jurisdiction, but in many countries you probably owe tax on the 30k.
That doesnt seem logical - the purchase of the NFT is a capital loss, which should offset the gains of the 30k of capital gains. Otherwise, it's an unfair tax regime.
I don't fully understand how NFT losses are treated (i.e. do you get a capital loss?) but the issue is with timing. THe tax man is not going to wait until you possibly convert to their currency to collect taxes; the gains and losses get attributed to the year when the transaction occurred. The high volatility in the investment is what makes the crazy swings possible - but this risk really should be priced into the expected return. I wouldn't be surprised if NFT gains are treated more like lottery winnings (in many jurisidictions); it's taxed at payout against the current year situation, regardless of what you do with it.
Re: Crypto investors face tax crackdown as 70% non-compliant
#43If a country gives you zero practical assurances when it comes to protecting your crypto assets, what is the tax for?
> zero practical assurances when it comes to protecting your crypto assets What would that look like?
If a crypto market fails with my money I'd like to be reimbursed. Like when the MtGox failed and Japan did a full bankruptcy process and reimbursed creditor to their best ability. I don't mind paying tax on my trades to Japan whatever it might be.
But paying a country I accidentally live in, just because I was lucky enough to get some gains that this country contributed nothing to, not even a legal framework, feels patently unfair.
Re: Crypto investors face tax crackdown as 70% non-compliant
#44Earlier quoted context omitted.
You buy a bitcoin for 20,000. You sell it for 50,000. At this point you probably owe capital gains on 30,000. You then take the 30,000, use it to buy an NFT, and later sell the NFT for 0.01 (because NFT). At this point you have had gain of 30k and loss of 30k. Now, it's going to depend a lot on exactly when all this happened and in which jurisdiction, but in many countries you probably owe tax on the 30k.
That doesnt seem logical - the purchase of the NFT is a capital loss, which should offset the gains of the 30k of capital gains. Otherwise, it's an unfair tax regime.
In the US, you can offset the gain, if the loss happens in the same year. If it happens later, then you're supposed to have paid the taxes in the year with the gain. The later loss can be used to offset gains after that.
It seems to be similar in New Zealand, where the article says that (like the US) there's tax due when you exchange one token for another without going out to fiat. A lot of investors didn't realize that and didn't pay their tax in that first year, and then didn't have the money later when the government came collecting.
Re: Crypto investors face tax crackdown as 70% non-compliant
#45In many countries in EU, real estate is the crypto. The only investment vehicle without capital gains tax. Maybe it's causing demographic catastrophe, but at least few people make a lot of money.
Also gold coins (they're "currency")
Re: Crypto investors face tax crackdown as 70% non-compliant
#46Earlier quoted context omitted.
For making profit or gains. The state doesn't give you protection on you buying shares either. And if someone would steal your bitcoin, shares or whatever, the state would allow you to use the legal system to get it back. Its your issue if you use something which is inherant intransparent, partially anonmous and globally unregulated. The tax is there to pay streets, kindergarden, schools, etc. btw.
> The state doesn't give you protection on you buying shares either. Of course it does. If somebody takes my money but doesn't give me shares they are going to jail. If you try that with crypto the police will laugh you off.
No they wont.
They probably struggle helping you but thats a problem of crypto not of the police.
But hey crypto is 100% save right? You don't need help with crypto anyway. It solved all trust issues right? right?
Re: Crypto investors face tax crackdown as 70% non-compliant
#47Article seems to suggest if you make gains but lost them later you still need to pay tax on the gain?! That's strange..
You buy a bitcoin for 20,000. You sell it for 50,000. At this point you probably owe capital gains on 30,000. You then take the 30,000, use it to buy an NFT, and later sell the NFT for 0.01 (because NFT). At this point you have had gain of 30k and loss of 30k. Now, it's going to depend a lot on exactly when all this happened and in which jurisdiction, but in many countries you probably owe tax on the 30k.
Usually if the loss happens in the same year, you can use them to lower your tax on gains. In your NFT example you'd first owe 7.5k (assuming 25% taxation), and with the 30k loss you'll be able to balance what you owe. The problem starts if you sell the NFTs in the next year, because then you can't use those losses to balance the already made gains, but only use it for future gains.
Re: Crypto investors face tax crackdown as 70% non-compliant
#48> Doyle says many crypto investors mistakenly think they can sell some Bitcoin to buy some Etherium, and that making that a switch like that did not trigger an obligation to pay tax. Make a stupid rule, be surprised people are non-compliant.
this isn't really a "stupid rule" as much as a fundamental principal of accrual accounting: things go on the books at the time of the event, regardless of when money actually changes hands.
Re: Crypto investors face tax crackdown as 70% non-compliant
#49> Doyle says many crypto investors mistakenly think they can sell some Bitcoin to buy some Etherium, and that making that a switch like that did not trigger an obligation to pay tax.
Okay, but what if you use stablecoin in between?
Re: Crypto investors face tax crackdown as 70% non-compliant
#50Article seems to suggest if you make gains but lost them later you still need to pay tax on the gain?! That's strange..
In America, the problem comes when the gain and the loss come in different years. If you make a big gain in 2024, but didn't pay taxes on that gain, then lose the money in 2025, they will come after you for failing to pay taxes in 2024 even though you no longer have the money in 2025. The lesson is to pay your taxes.
A bank will be happy to lend you the money to cover the spread since you have the collateral of a large tax refund in the future. It'll cost you a little bit of interest but it's generally not the catastrophe that people make it out to be.