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In Canada, buying/selling Bitcoin is subject to capital gains in the same way buying/selling stocks are. I wonder if you have to pay capital gains if using Bitc

In Canada, buying/selling Bitcoin is subject to capital gains in the same way buying/selling stocks are. I wonder if you have to pay capital gains if using Bitcoin directly as a currency- as in through the purchase of a house or other expensive asset.

tryingagainbro 9y ago
I think yes, might be wrong but it's logical (logic and taxes don't always mix, so I may be wrong). You bought Bitcoin at $1 and sell at $8000 to pay for a house, you need to declare income of $7999 for each Bitcoin at the end of the year or else...
- badloginagain 9y ago
  It makes sense, I guess the question is if there's language in the tax code for alternative payment sources. It's not unreasonable that someone could trade their car, and 300 shares in Google; in exchange for something of equal value. If there is, it sucks because you're getting hit doubly for taxes on the item you're paying and the capital gains you'd be taking.
  - tryingagainbro 9y ago
    In USA even if you sold cocaine...or your mom, you need to declare it on income taxes. They might not catch selling cocaine but if they catch you with undeclared cash, they'll Al Capone you. I'm almost certain that all countries have a catch all phrase to include any gains /income.
    - charlesdm 9y ago
      Not all countries have capital gains tax, so no.
- deleted 9y ago
  [deleted]
- matt_wulfeck 9y ago
  At the same time capital gains on such a stellar return is pretty amazing problem to have.
52-6F-62 9y ago
That's a good question. Would you be charged capital gains taxes if you wanted to make a straight-trade of real estate properties, or would there need to be a symbolic changing-hands of money on paper, and thus taxed on each side? I can't claim to be trading real estate properties, or even buying and selling them (long live Toronto real estate market...) so I have no idea. I know it's a weird scenario, but just in an attempt to find an analogue — anybody? edit: This question was an attempt to create a more relatable analogue scenario for a BTC <> Real Estate transaction. Thanks for the info.
- modeless 9y ago
  This is barter. Barter is taxed. You are required to estimate the value in dollars and pay the appropriate tax, whether or not dollars were actually involved in the transaction.
  - badloginagain 9y ago
    I can understand barter being taxed, that's fair, but would capital gains would be triggered if the item being bartered had appreciated in value before being used directly for purchase?
    - modeless 9y ago
      Yes
  - 52-6F-62 9y ago
    That fully answers my question, thanks. I wondered if there was a relevant term in taxation. It's not my strong point, so this is really helpful.
- bradleyjg 9y ago
  > Would you be charged capital gains taxes if you wanted to make a straight-trade of real estate properties In the United States there's something called a 1031 exchange that allows the deferral of capital gains recognition on a sale of one asset and the purchase of a similar one under some circumstances. But in the case of real estate in can only be used for investment properties not owner occupied residences.
moduspol 9y ago
I'm about to buy a house (US) and considered that very issue. I asked an accountant and the answer was that, yes, I'd need to pay capital gains tax on the gains. On one hand it makes sense, but on the other hand, it could be seen as a diversification into real estate. If instead of personally buying the Bitcoin and house, I bought shares of "moduspol mutual fund", and then that mutual fund bought the Bitcoin and diversified into part of my house, I presumably wouldn't be taxed until I sold my shares in "moduspol mutual fund." But it's a good problem to have, and probably not worth (legal) avoidance at smaller (< $1 million) values.
- kirkland 9y ago
  In that example, presumably "moduspol mutual fund" would need to pay capital gains taxes.
  - moduspol 9y ago
    Wouldn't its profits be coming from the fees it charges me, and not from the investments themselves? Do normal mutual funds pay capital gains taxes as the things they invest other people's money in are changed?
    - phil21 9y ago
      > Do normal mutual funds pay capital gains taxes as the things they invest other people's money in are changed? Yep! Tax efficiency of a mutual fund is quite an important factor to look at for your overall expenses as well. It's a large reason actively managed funds don't do as well as simple market-wide ETFs.
      - moduspol 9y ago
        Wow. TIL. Thanks!
hamstercat 9y ago
CRA (Canadian's IRS equivalent) says bartering creates a taxable event, be it Bitcoin or turnips. Whenever you do the trade, you're supposed to calculate the value of what you're offering in Canadian Dollars. So buying in Bitcoin is not very different than buying in US Dollars.

tryingagainbro 9y ago

I think yes, might be wrong but it's logical (logic and taxes don't always mix, so I may be wrong). You bought Bitcoin at $1 and sell at $8000 to pay for a house, you need to declare income of $7999 for each Bitcoin at the end of the year or else...

badloginagain 9y ago
It makes sense, I guess the question is if there's language in the tax code for alternative payment sources. It's not unreasonable that someone could trade their car, and 300 shares in Google; in exchange for something of equal value. If there is, it sucks because you're getting hit doubly for taxes on the item you're paying and the capital gains you'd be taking.
- tryingagainbro 9y ago
  In USA even if you sold cocaine...or your mom, you need to declare it on income taxes. They might not catch selling cocaine but if they catch you with undeclared cash, they'll Al Capone you. I'm almost certain that all countries have a catch all phrase to include any gains /income.
  - charlesdm 9y ago
    Not all countries have capital gains tax, so no.
deleted 9y ago
[deleted]
matt_wulfeck 9y ago
At the same time capital gains on such a stellar return is pretty amazing problem to have.

52-6F-62 9y ago

That's a good question. Would you be charged capital gains taxes if you wanted to make a straight-trade of real estate properties, or would there need to be a symbolic changing-hands of money on paper, and thus taxed on each side? I can't claim to be trading real estate properties, or even buying and selling them (long live Toronto real estate market...) so I have no idea. I know it's a weird scenario, but just in an attempt to find an analogue — anybody? edit: This question was an attempt to create a more relatable analogue scenario for a BTC <> Real Estate transaction. Thanks for the info.

modeless 9y ago
This is barter. Barter is taxed. You are required to estimate the value in dollars and pay the appropriate tax, whether or not dollars were actually involved in the transaction.
- badloginagain 9y ago
  I can understand barter being taxed, that's fair, but would capital gains would be triggered if the item being bartered had appreciated in value before being used directly for purchase?
  - modeless 9y ago
    Yes
- 52-6F-62 9y ago
  That fully answers my question, thanks. I wondered if there was a relevant term in taxation. It's not my strong point, so this is really helpful.
bradleyjg 9y ago
> Would you be charged capital gains taxes if you wanted to make a straight-trade of real estate properties In the United States there's something called a 1031 exchange that allows the deferral of capital gains recognition on a sale of one asset and the purchase of a similar one under some circumstances. But in the case of real estate in can only be used for investment properties not owner occupied residences.

moduspol 9y ago

I'm about to buy a house (US) and considered that very issue. I asked an accountant and the answer was that, yes, I'd need to pay capital gains tax on the gains. On one hand it makes sense, but on the other hand, it could be seen as a diversification into real estate. If instead of personally buying the Bitcoin and house, I bought shares of "moduspol mutual fund", and then that mutual fund bought the Bitcoin and diversified into part of my house, I presumably wouldn't be taxed until I sold my shares in "moduspol mutual fund." But it's a good problem to have, and probably not worth (legal) avoidance at smaller (< $1 million) values.

kirkland 9y ago
In that example, presumably "moduspol mutual fund" would need to pay capital gains taxes.
- moduspol 9y ago
  Wouldn't its profits be coming from the fees it charges me, and not from the investments themselves? Do normal mutual funds pay capital gains taxes as the things they invest other people's money in are changed?
  - phil21 9y ago
    > Do normal mutual funds pay capital gains taxes as the things they invest other people's money in are changed? Yep! Tax efficiency of a mutual fund is quite an important factor to look at for your overall expenses as well. It's a large reason actively managed funds don't do as well as simple market-wide ETFs.
    - moduspol 9y ago
      Wow. TIL. Thanks!

hamstercat 9y ago

CRA (Canadian's IRS equivalent) says bartering creates a taxable event, be it Bitcoin or turnips. Whenever you do the trade, you're supposed to calculate the value of what you're offering in Canadian Dollars. So buying in Bitcoin is not very different than buying in US Dollars.