Tax Rules For Buying And Selling Crypto

The tax rules for buying and selling cryptocurrency vary by country, but most tax authorities treat cryptocurrency as property or an asset, meaning that it’s subject to capital gains tax when you sell, trade, or use it. Here’s a general overview of tax rules you should be aware of:

1. Capital Gains Tax on Crypto

When you buy and later sell, trade, or spend cryptocurrency, you may have to pay capital gains tax on the profit (or loss) you made from the transaction. The taxable amount is the difference between the sale price and the purchase price (also known as the cost basis).

• Short-Term Capital Gains: If you hold the cryptocurrency for less than a year, the gain is usually taxed at your ordinary income tax rate.
• Long-Term Capital Gains: If you hold the cryptocurrency for more than a year, the gain may be taxed at a lower rate, depending on your jurisdiction.

2. Taxable Events

Certain events trigger a tax obligation, including:

• Selling Crypto for Fiat Currency: When you sell cryptocurrency for traditional currency like USD, EUR, or BDT, you owe taxes on any capital gains made from the sale.

• Trading One Cryptocurrency for Another: If you trade Bitcoin for Ethereum, for example, you need to report any gains or losses in value from the original purchase to the time of trade, as each trade is considered a sale.

• Using Crypto to Buy Goods or Services: Spending cryptocurrency to buy something is also considered a taxable event. You owe tax on any increase in value from the time you acquired the cryptocurrency to the time you used it.