Before i dive into this...I need to rant for a second...I first learned about the tax implications that come with cryptocurrencies in the US earlier this fall (about September time frame). At the time, I was down around $32,000 total from when I first got involved in crypto about a year prior (yes I did buy the hype and I'm paying for it now).I was blown away after I learned that because the stuff is treated as property for tax purposes, I somehow needed to report EVERY SINGLE trade that I have ever made to the government. I also needed to know the US dollar value of the cryptocurrencies that i was trading at the time of each individual trade to properly report everything. For someone like me who has done A LOT of trading, this is literally IMPOSSIBLE. Seriously there has to be a better way to tax this stuff cmon... (later on I found out that their are now sites that automate this process like cryptotrader.tax and cryptotaxhub)Okay initial rant over....So as I started to dive into it more (and after discussing things over with my Uncle who is an accountant) I found out that because it's classified as property, I can actually write off my losses in crypto on my taxes if I can sort through the giant mess. My enormous losses can then actually be used to offset other income and GAINS that I have made in other areas of my life.This whole process got me thinking...I realized that if I sold off a property that I bought about 3 years ago that has accrued in value quite a bit (it's a piece of land in Minnesota), I could use my losses from crypto to offset my huge gains from selling the property. So, I did exactly that and sold the lot at the end of November. This is where it gets awesome.I made about $50,000 in gain from the sale of the land. I would typically owe a tax on that entire 50k gain; however, because i offset those gains with my crypto losses (32K of loss) I only have to pay taxes on 18K of gain from the land sale!I essentially saved $10,000 on my tax bill by filing my crypto losses. Take that government!!It's the one bright spot in an otherwise terrible year for crypto... but it's pretty awesome because your crypto losses can potentially save you a good amount of money on taxes.
Submitted January 31, 2019 at 02:09AM
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