Bitcoin and real estate

[Oliver Martin]

Hello everyone,

I made a foolish mistake of buying bitcoin two years ago. An even bigger mistake was to not sell when I was up. Now, the bitcoin price has been low, and I want to liquidate all my cryptocurrency next year. I did relatively well in real estate in the last few years and my momentum in real estate increased my risk threshold at that time. Big lesson learned.

I am going to sell a couple of rental properties next year. One has an equity of 50k and the other one has an equity of 200k. I plan to sell all my cryptocurrency next year with a loss of around 35k. Would I be able to offset some of the capital gains tax with my cryptocurrency loss?

Thank you.

[Michael Plaks]

@Oliver Martin

Losses from crypto are capital losses, and gains from rentals are capital gains, so yes, they can offset against each other.

I want to mention that equity has absolutely nothing to do with capital gains. The property that has a $50k equity can produce $50k or $0 or $100k capital gain. Capital gains are figured on the difference between sale price and purchase price, minus closing costs and depreciation. Loan payoffs and equity are irrelevant for the calculation, 

The reason I'm mentioning it is that you might have a far bigger capital gain than you expect, and I recommend you have a tax professional estimate it for you and, if needed, suggest ways to deal with it. After you sell, it could be too late.