Borrowing To Hold Long Term

As described above holding an asset for longer than 12 months reduces the capital gains tax owed by 50%. What if you run into a scenario where you need some of your portfolio gains but don’t want to sell and owe tax?

One option would be to borrow against the crypto as collateral, this way you can access funds from your portfolio without selling. You can hold 12 months and get a tax benefit when you do decide to sell while getting access to Australian dollars in the short term.

Of course, the downside is that you have to pay interest on the loan, but if it means reducing your capital gains by 50% and giving you access to funds immediately it could be worth it.

Conclusion

As you can see there are quite a few simple and complex ways to help reduce your tax obligation depending on what you want to do in the crypto space. Whatever you’re doing Summ can help keep track of your tax obligations. Whether you are holding long term or using some more complex DeFi products Summ can help keep track of all of this for you.

The information provided on this website is general in nature and is not tax, accounting or legal advice. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this information, you should consider the appropriateness of the information having regard to your own objectives, financial situation and needs and seek professional advice. Summ disclaims all and any guarantees, undertakings and warranties, expressed or implied, and is not liable for any loss or damage whatsoever (including human or computer error, negligent or otherwise, or incidental or Consequential Loss or damage) arising out of, or in connection with, any use or reliance on the information or advice in this website. The user must accept sole responsibility associated with the use of the material on this site, irrespective of the purpose for which such use or results are applied. The information in this website is no substitute for specialist advice.

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Borrowing To Hold Long Term

Of course, the downside is that you have to pay interest on the loan, but if it means reducing your capital gains by 50% and giving you access to funds immediately it could be worth it.

Conclusion

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Frequently asked questions

How is crypto tax calculated?

You can be liable for both capital gains and income tax depending on the type of cryptocurrency transaction, and your individual circumstances. For example, you might need to pay capital gains on profits from buying and selling cryptocurrency, or pay income tax on interest earned when holding crypto.

I lost money trading cryptocurrency. Do I still pay tax?

The way cryptocurrencies are taxed in most countries mean that investors might still need to pay tax, regardless of whether they made an overall profit or loss. Depending on your circumstances, taxes are usually realized at the time of the transaction, and not on the overall position at the end of the financial year.

How do I calculate tax on crypto-to-crypto transactions?

In most countries you are required to record the value of the cryptocurrency in your local currency at the time of the transaction. This can be extremely time consuming to do by hand, since most exchange records do not have a reference price point, and records between exchanges are not easily compatible.

How can Summ help with crypto taxes?

You just need to import your transaction history and Summ (formerly Crypto Tax Calculator) will help you categorize your transactions and calculate realized profit and income. You can then generate the appropriate reports to send to your accountant and keep detailed records handy for audit purposes.

Can't I just get my accountant to do this for me?

We always recommend you work with your accountant to review your records. If you would like your accountant to help reconcile transactions, you can invite them to the product and collaborate within the Summ web app. We also have a complete accountant suite aimed at accountants.

Does Summ handle non-exchange activity?

Summ (formerly Crypto Tax Calculator) handles all non-exchange activity, such as onchain transactions like Airdrops, Staking, Mining, ICOs, and other DeFi activity. No matter what activity you have done in crypto, we have you covered with our easy to use categorization feature, similar to Expensify.

Do I have to pay for historical tax reports?

Our subscription pricing is per year not tax year, so with an annual subscription you can calculate your crypto taxes as far back as 2013. The process is the same, just upload your transaction history from these years and we can handle the rest.

Can I use my own accountant?

Yes, Summ is designed to generate accountant-friendly tax reports. You simply import all your transaction history and export your report. This means you can get your books up to date yourself, allowing you to save significant time, and reduce the bill charged by your accountant. You can discuss tax scenarios with your accountant, and have them review the report.

How does payment work?

Summ has an annual subscription which covers all previous tax years. If you need to amend your tax return for previous years you will be covered under the one payment.

What if my exchange is not on the list of supported exchanges?

Summ covers thousands of exchanges, wallets, and blockchains, and DeFi apps, but if you do not see your exchange on the supported list we are more than happy to work with you to get it supported. Just reach out to [email protected] or via the in-app chat support feature and we will get you sorted.

Does Summ support NFT transactions?

We do! Summ integrates with many NFT marketplaces and offers categorization options for any NFT-related activity (minting, buying, selling, trading).

How does the free trial work?

Summ is free to use immediately upon signup, allowing you to import your transactions and take advantage of our smart suggestion and auto-categorization engine, portfolio tracking, DeFi and NFT support. For access to reports, the tax loss harvest tool or chat and priority support, you will need to upgrade to the appropriate paid plan.

How Investing vs Trading impacts tax

How is crypto tax calculated in the United States?

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