I wonder if you can offset the interest paid?
Hello, trying to figure this one out with respect to FIFO
I bought some bitcoin in 2017, at around 2000 eur
Fast forward to this year and im looking to sell some - I understand that when I sell, the gains will be calculated from the cost basis of 2000 eur
My question is simply, does it matter in any way, shape or form how i bought the bitcoin that I now wish to sell? I'm probably answering my own question here :/
The bitcoin I am selling was bought with a loan/margin but is it just the case that the taxable gain will be .... 2022 price - 2017 price ... and that's it?
thank you
@MakersMark I would be interested to see how many trades they would consider actually trading
For example buying a handful of coins and flipping them should be ok as they can be viewed as individual investments but repeatedly buying selling eg Btc (on a daily to weekly, maybe monthly basis?) may be a different story
Their literature would support the idea of it being an investment so long as it isn’t your primary income but that’s not an official opinion
https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-02/02-02-06.pdf
On the basis that cryptocurrency is looked upon as taxable under CGT for investments, then it can be assumed that ‘traders’ will be taxable in the same manner as traders of stocks, other currencies or shares. That is, the profits from trading will be taxable under Income Tax rules.
Therefore, individuals that are trading in cryptocurrency are required to file an income tax return (Form 11 or Form 12) each year and declare profits made on trading. The profits will be subject to normal income tax rules i.e. PRSI, PAYE and USC Will apply at the relevant rates (Up to 52% tax).
Remember too that multiple trades per year can attract full income tax rates and not CGT...Revenue may consider you a trader.
Distributed hash chain - Extending blockchain to hashchain for scalability
Distributed hash chain or DHC is an extension of blockchain structure first implemented in Bitcoin. Bitcoin and many other blockchains suffer from scalability problem. Bitcoin on average can process only between 3.3 and 7 transactions per second which makes it unsuitable as a currency as people cannot do many transactions and transaction fees get very high. In comparison VISA processes thousands transactions per second. The main reason is that every node on the Bitcoin network needs to receive and keep a copy of every transaction. The goal of DHC is to improve scalability of a traditional blockchain.
One approach to improve scalability is to use sharding where instead of a single blockchain there are multiple blockchains that store different sets of transactions and they are synchronized between each other in some way.
DHC has a single blockchain, but each node only stores a subset of transactions in a given block so it can process them as quickly as possible without any bottleneck inherent in traditional blockchains. When more nodes join the DHC network the partitions of transactions split further so each node processes similar number of transactions as before the split.
Search github for "distributed hash chain"
Items 3, 4 and 5 are all disposals for CGT purposes. The base cost is the value of the coin in EUR on acquisition date and the proceeds are the market value of the coin received. CGT is assessed on a calendar year basis and losses can be set off against current year gains or carried forward but they cannot be carried back. I.e. if transaction 3 resulted in a gain in 2021 it was taxable then. If transaction 4 gave rise to a loss in 2022 then it can be set against gains in 2022 (e.g. on transaction 5) or carried forward. Any tax arising ont he gain at 3 (if it was in 2021) would have to be settled in cash even if you have never converted the coin to actual currency.
It's a small mans version of what Apple does. They have hundreds of billions in cash, but rather than spend it, some of which would involve transferring it from the 'still ovseas account' in their NY bank to the 'now in the US' account in the same bank, which they would have to pay tax on, they just borrow or issue bonds, because the interest they pay is a tax deduction against profits.
Getting a loan, using your crypto as collateral.
For defi loans, I've used Aave on Polygon. For cefi, I use Nexo. Not sure if these are the best options around, but they're the ones I've used. Nexo have 0% loans if you have a low enough LTV and enough of their own tokens. Could be a good option if you intend to pay back the loan soonish.
Different countries might have different options depending on what's available there, I know Celsius do 1% loans but they're not available to me anymore in Canada.
Outside of crypto, I borrow against my regular stocks with Interactive Brokers but that's a slower solution if you don't already have your shares there.
What's meant by '...borrow against your crypto'?
Any recommendations for lending platforms?
Many thanks
Thanks guys I assumed as much, pain in the butt to work out. Might try a loan against it instead.
Yeah they do it first in, first out.
You could always just borrow against your crypto if you don't want to have to deal with tax on it though.
No they don't. The base cost is that of the first quantity you bought, that matches the quantity you are selling. First in, first out.
Hi all
After years of hodling, I need to cash out a portion of my crypto
I admit I haven't had time to read this thread in full. What confuses me is assessing the base cost of the crypto, does revenue allow for 'average cost'? If not it will be rather laborious to work out
Thanks in advance
Omt
Sorry I dont get the question.
I do buy USDT on Kucoin. I buy it because it is one of the options available to trade to the ONE coin. I can't buy ONE coins directly from €
Why haven't you just being buying usdt on kucoin?
Question on book keeping for crypto tax purposes.
I keep an excel doc with a record of all my crypto holdings with the following info:
Cost price in €, Cost price in $, Amount & Date/Time of Purchase
In some cases I have to do multiple trades to purchase a particular crypto e.g.
1) On Coinbase Pro I purchase XLM with my €
2) I transfer my XLM to Kucoin
3) In Kucoin I trade all my XLM to USDT
4) In Kucoin I trade all my USDT to ONE
5) On viper.exchange I swap my ONE to WAGMI
6) I hodl the WAGMI token
In my excel tracker the only thing I am recording is the WAGMI token and it's cost price & amount etc.
I don't keep a record of all the intermediary transactions because these are all done within 30 minutes so there should be no taxable benefit to any of them. When I do come to sell or trade my WAGMI I will then calculate CGT based on the sale price - cost price.
Does this seem reasonable? Or should my bookkeeping track all those intermediary transactions and calculate their CGT even though there will most likely be zero.
Ask an accountant.
Have any of you lads set up limited companies? What sort of income do you need to be pulling in to make it viable I assume over about 120k? I'm a sole trader with a consultancy at present that's doing slightly less than that but maybe the crypto will give me that little boost to get up and over. Of course I think the trading may end up in my personal tax take anyway (or I'd have to limit my personal salary to 40k a year?). I've gotten a lot of mixed information and the people I'm taking to aren't doing crypto.
Volume of transactions is just one factor. Essentially, if you're carrying on a trade, you pay income tax on the profits of the trade, even if the trade is dealing in securities or other assets. But if you;re making investments, the gains from your investments are not the profits of a trade and are not subject to income tax. Until some time in the mid-1970s they were wholly tax-free, but it became politically embarrassing that some people were making obscene amounts of money from property speculation and paying no tax, so CGT was introduced.
So, if you make money by buying and selling assets, which tax you pay depends on whether your activity of buying and selling assets amounts to a trade or business (income tax) or doesn't (capital gains tax). In most cases the answer is perfectly clear - when you buy a picture from an art dealer you're making an investment, but he's carrying on a trade - but there are always going to be borderline cases. They are decided by looking at a range of factors - the nature of the activity the taxpayer is engaging in; how much time the taxpayer spends on it; whether he holds assets long-term or trades them actively; how frequently he engages in the activity; whether he does ancillary work to make the activity more profitable (e.g. if you buy, restore or enhance, and then sell assets that's more likely to be trading than if you simply bought and sold them in the same condition); his motive for the transaction (e.g. is he buying artwork to hang on the wall, or simply because he expects it to appreciate in value?); etc, etc. A holistic view of all the circumstances has to be taken, and circumstances are different in every case, so there is no simple universal rule that can be laid down as to when activity will be trading, and when investment.
It's worth pointing out that when there's a row between a taxpayer and the Revenue over this, nine times out of ten the taxpayer is claiming that his activity is a trade, and the Revenue is denying this. The reason is that the taxpayer has suffered substantial losses in his activity, and he wants to set them off against income from his day job so as to reduce his income tax bill; he can only do this if his activity is a trade.
You are into how long is a piece of string territory but the badges of trade is where you start. If your trading activity is numerous and material enough to have you thinking in those terms, then you need to consult a tax advisor.
"For some who are trading in huge volumes, they would possibly fall under the income tax regime not CGT."
What would be consider 'huge'?
No. For most people the activity will fall under CGT. That's 33% on their cumulative annual gain from selling, gifting or exchanging their assets. For some who are trading in huge volumes, they would possibly fall under the income tax regime not CGT.
So they'd take 33% CGT and also get you for income tax? What a hammering.
Totally different taxes. However if your trading activity is to such an extent that your trades would be considered taxable under income tax; then the normal income tax rules would apply.
Dude. Before you start booking your trip, I pointed out to you not too long ago on another thread (although maybe it was after the post I am quoting), that you will be taxed on gains from crypto in NZ.
I'm not telling you this to pis$ you off. I'm telling you just in case you actually arrive there and realise you might as well have stayed in Ireland as regards being taxed
Hi lads. Is capital gains tax entirely independent of income tax? Like if a person had a poor salary or was unemployed the entire year would they still have to pay the 33% or can be discounted against their (lack of) income?
Ta
Found this brilliant YouTube channel by two Irish lads who explain in detail how to file CGT and income taxes for crypto and everything else:
Quick one,
Does Koinly apply the personal exemption of 1270 when generating the tax report do you know or is that up to the user?
