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One reason I'm selling some #bitcoin right now: As a US citizen the long term capital gain rate for my status is $46,500 at 0%. If I do not take advantage of this, it's wasted.

So for example if I want to buy a house in 3years for $300,000 worth of bitcoin, I pay a lot of long term capital gains tax on that in the future when I want the house.

But if instead, in these years while I'm waiting, I sell $44,625 of bitcoin, take the 0% capital gain tax, and then immediately re-purchase the bitcoin, it adjusts my cost basis up by $44,625 per year. If I do this for 3 years, then when I'm ready to buy my house in 3 years, I have $133,875 of added cost basis, saving me 15% (or more) tax on all that.

If instead I ignore this opportunity and just hodl until I need the $300,000 I will pay dramatically more taxes.

Something to think about.

SonHunDon 1y ago

Or just use your BTC as collateral to get a loan & use that money to get you a home. Unchained.com specializes in BTC backed loans.

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BitcoinStu 1y ago

it's not quite as simple as that. For starters the interest rate on a bitcoin loan is not favorable at all. Maybe someday in the years to come that changes, but right now it's quite expensive. Add to that the fact that you need to post a considerable amount of capital to get the kind of loan you would need to buy a house. We're not talking about taking a loan for 2% of your net worth to live on so you don't get cap gains taxes. We're talking about a considerable outflow of money to by a property.

BitcoinStu 1y ago

to give you an example, a $300,000 home loan (which is what my post described) requires almost 8.0 bitcoin as collateral. And the annual percentage rate is 16.21%. That's an extremely expensive loan.

BitcoinStu 1y ago

that's the rate from unchain.com which you referenced.