Tax-Smart Spending

Why borrowing beats selling for crypto holders

When you sell crypto, you trigger a capital gains tax event. When you borrow against it, you don't. Understanding this difference can save you significantly on taxes.

Selling Crypto

  • Triggers capital gains tax on any appreciation since purchase
  • Permanently reduces your crypto holdings
  • Miss out on future price appreciation
  • Complex tax reporting requirements
  • May push you into higher tax bracket

Example

You bought 1 BTC at $20,000. It's now worth $100,000. If you sell, you owe taxes on $80,000 in gains—potentially $15,000-$30,000+ depending on your tax bracket.

Borrowing Against Crypto

  • No taxable event when you take out a loan
  • Retain full ownership of your crypto
  • Continue benefiting from appreciation
  • Interest may be tax-deductible*
  • Repay with stablecoins—no selling required

Example

Same 1 BTC worth $100,000. You borrow $50,000 against it. No taxes owed. Your BTC continues to appreciate. Repay when convenient with stablecoins or fiat.

Strategic Advantages

Keep Your Upside

Your collateral can continue to appreciate while you access liquidity. If BTC doubles, your collateral doubles too—you haven't sold.

Defer Indefinitely

Unlike selling, borrowing doesn't start a tax clock. Hold your position indefinitely while accessing funds you need today.

Interest Deductions*

Depending on how you use the borrowed funds, interest payments may be tax-deductible. Consult your tax advisor.

Common Use Cases

Real Estate Down Payment

Access funds for a down payment without selling appreciated crypto.

Business Investment

Fund your business operations or new ventures while maintaining crypto exposure.

Everyday Spending

Cover living expenses, travel, or major purchases without triggering taxes.

Education Expenses

Pay for education costs while your crypto continues to grow.

Important Tax Disclaimer

The information on this page is for educational purposes only and does not constitute tax advice. Tax laws vary by jurisdiction and individual circumstances. While borrowing against crypto is generally not considered a taxable event in the United States, your situation may differ.

*Interest deductibility depends on how loan proceeds are used (e.g., investment purposes, business expenses). Personal interest is generally not deductible.

Always consult a qualified tax professional before making financial decisions based on tax considerations.

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