Can I take a fiat loan and pay it with crypto revenue without incurring taxes?

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My plan is to take a loan from the bank in order to buy an electric vehicle. I intend to do so as I have some crypto assets earning passively, ensuring paying the rate from their proceedings. But the question is when I exchange crypto for fiat to pay the loan rates, do I need to pay taxes on that? I think yes, as there isn't a direct correlation between the loan and the crypto assets, but I still hope there is a way around it.

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I don't want to take a crypto loan as I don't want to put any assets as collateral and I am betting on the loan interest to be lower than the interest I am earning from my crypto assets. So this is a question for those involved with crypto law like @nealmcspadden, @khaleelkazi, @scaredycatguide, or others who might know this domain or have experienced it. So if you have any guidelines on this, that would be greatly appreciated.

Can I take a fiat loan and pay it with crypto revenue without incurring taxes?

While there might be different laws applying in such cases based on the country we are living in, if there is any way or precedence to do so and correlate somehow the fiat loan with the crypto income I am thinking that there should be some similitude to apply that regardless of the borders. Thus if you have any knowledge of this or some other way of bridging these financial instruments, please let me know. I am sure many others are interested of this subject as well.

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16 comments
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I would like to know the possibilities around this case as well. I will be back to see if you have answers in the comment section.

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Hopefully, people with more experience on this will engage and provide some good insight.

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In Belgium you wouldn’t pay any taxes, as long you are not day trading for a living…

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Hmmm... I am doing a little bit of consultancy in Belgium, I wonder if I can use that in any way...

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Yep, that’s indeed not a bad idea!

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I think there are other parameters to consider as to how long you have been holding your asset and the gains over it . In Ghana, it’s a tax free zone so I wouldn’t be of any help . But I’m eager to know what happens

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Definitely gotta ask a tax professional in your particular jurisdiction.

Good luck!

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Yeah, that would be the way to go to be sure. Still, those tax professionals might not be so grounded when it comes to crypto use...

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I believe it is possible and I have heard a lot of rich people do that to avoid paying taxes. However, I think it's risky because crypto tends to be volatile and it's easy for hacks or other accidents happen.

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I intend to use stablecoins revenue, but not sure how the fiat loan and stablecoin revenue (HBD) that covers it can be linked in order not to pay taxes.

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In the US, loan proceeds are not taxable income. You could run into issues if you borrow a token that you then have to sell for something else, creating a weird capital gains situation.

If you borrow in stable coin and then convert that stable coin to fiat you should be fine.

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Yeah, that is a good way to go with the stablecoins. But for example, if I can take from the bank a loan with 5% and pay it with the revenue from my HBD Savings which is at 20%, that will cover it and more. Can I link that HBD revenue to the FIAT loan and not incur any taxes on the HBD?

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Like everything, depends. If it's a personal loan, no. If it's a business loan and everything is structured right, yes.

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