flower-shilling

In need of guidance with bitcoin

Smithys Bullion - FINE GOLD AND SILVER
Cirt

Cirt

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Silveroo
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Morning all, I hope all are going well.
I've been lurking for years on both forums but rarely make comments. My stackers profile was mal so I did have an established feedback and history.

I'm needing some advice and ideas, I have a close friend wanting to cash in 1 bitcoin and I'm not really a crypto person. They are concerned with the tax implications and how it could affect their incoming child support and such.

They want to cash it in to use as a house deposit. I had the thought that moving it to a SMSF to minimise tax, can you live in a home as your primary residence if it's a part of SMSF? They were thinking of cashing it in directly with a bank that accepts bitcoin, for the purchase of a primary residence. I thought that maybe setting up an escrow trust account would open up choices for mortgages. Any ideas or guidance would be appreciated as I'm not up with crypto.

Warm regards

Cirt (mal)
 
Tax will be a killer if they use exchanges. But if they held it more than 1 year they should qualify for CGT discount. Even if they did manage to put it into their SMSF I think it would still qualify as a CGT event. So no tax would be saved.
 
Administrator said:
Tax will be a killer if they use exchanges. But if they held it more than 1 year they should qualify for CGT discount. Even if they did manage to put it into their SMSF I think it would still qualify as a CGT event. So no tax would be saved.
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Yeah they've held it for over a year. Afaik it is currently held in a private wallet so just trying to figure out the best way to move it
 
66rounds said:
Oh man can’t imagine the shit they will cop if caught. Even renting it out to family is a hurdle.
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They purchased a couple of hundred acres in a very rural area and put a shed on it. They fitted out and live in the shed, but it's not technically their registered address for obvious reasons.
 
They can consider taking a loan against their Bitcoin. Nexo.com

Im not fully across all the details though. My understanding is they can take out a loan of up to 50% of the value of their BTC holdings at a certain interest rate (quite high if I recall but still less than the tax they potentially cop if selling it for cash)
 
neonuke said:
They can consider taking a loan against their Bitcoin. Nexo.com

Im not fully across all the details though. My understanding is they can take out a loan of up to 50% of the value of their BTC holdings at a certain interest rate (quite high if I recall but still less than the tax they potentially cop if selling it for cash)
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The problem is if nexo.com goes broke then you've effectively lost 50%.
 
Thanks for all the great feedback, good food for thought. I'll have a chat with my friend, I'm pretty sure they want to keep everything above board to avoid any potential surprises down the track. I'll see if the financial adviser has any ideas, not sure what experience he has with crypto for primary residence purchase. Thanks again guys
 
I have heard that if you use BTC to buy stuff there's no tax issues. It's only when you convert BTC to dollars that tax may be an issue. It might be worth looking into this with an accountant or financial adviser.
 
Cirt said:
Thanks for all the great feedback, good food for thought. I'll have a chat with my friend, I'm pretty sure they want to keep everything above board to avoid any potential surprises down the track. I'll see if the financial adviser has any ideas, not sure what experience he has with crypto for primary residence purchase. Thanks again guys
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He could look at using his BTC as collateral by borrowing against it. He should be able to borrow 40%-50% of value.
This avoids CGT, keeps the BTC for future price increase, & possibly leads to tax deductable repayments (?).

Otherwise, sell the Bitcoin & wear the 50% taxable CGT which gets applied to your personal annual income.
If BTC is $100k when you sell, and was $1 when he bought, that's 50k taxable Capital Gains which gets taxed at his personal tax rate.
If he's on 40% personal tax rate then he pays $20k out of $100k (40% of $50k) on the sale of his one Bitcoin. Less if he is on a lower rate, or can do it in another family members name who is on a lower income tax rate.
 
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