TAX ESSENTIALS FOR CRYPTO INVESTORS • STEP 3 OF 4
Try It: Crypto Tax Calculator
In investing, what is comfortable is rarely profitable.
Robert Arnott
Compare selling vs borrowing against your crypto. See how capital gains tax and loan costs impact your decision.
Your Learning Journey
Your Learning Journey
This Step Takes: 20 minutes
Use the interactive calculator to model your crypto tax scenario and explore the sell vs borrow decision.
What You'll Do
Calculate your capital gains tax, compare it to loan interest costs, and understand the trade-offs between selling crypto and borrowing against it.
Model your crypto tax scenario with our interactive calculator.
Sell vs Borrow Calculator
Enter your crypto position and see the tax implications of selling vs taking a loan against your holdings.
Investment Details
Results & Comparison
CGT on the Sell Leg⚖️ apportioned at MV at 1 Jul 2027
Pre-2027 Slice (50% disc.)
Brackets
Post-2027 Slice (indexed)
Brackets
Borrow Instead (No CGT Event)
Sell vs Borrow: Bottom Line
For reference: legacy 50% discount only: $6,400 CGT (+$3,596 difference)
Key Risk for This Asset Type
- Automatic liquidation if price drops below LTV threshold (typically 70-85%)
- Most providers are international; verify ASIC licensing
- Interest rates are typically higher than traditional assets (8-15% p.a.)
Educational Note: Budget 2026-27
How This Calculator Works
When Selling Makes Sense
Sometimes paying the tax and cashing out is the right move.
You've Hit Your Target
If you've reached your investment goal or price target, selling locks in profits. Pay the tax and move on with certainty.
Market Looks Risky
If you think the market will drop significantly, selling now (even with CGT) beats holding and losing value. Borrowing exposes you to margin calls.
You Need Full Amount
If you need 100% of the value (e.g., buying a house), selling is cleaner. Loans cap at 50-70% LTV, and you still owe the principal back.
No Long-Term Conviction
If you don't believe in the asset long-term, why hold it? Sell, pay the tax, and redeploy capital into better opportunities.
Pro Tip: Tax Loss Harvesting
When Borrowing Makes Sense
Crypto-backed loans can avoid triggering CGT and preserve your position.
You Expect Price Growth
If you think the asset will appreciate significantly, borrowing lets you keep exposure. You get liquidity now without selling the upside.
Short-Term Cash Need
For temporary liquidity needs (6-12 months), borrowing can be cheaper than the CGT you'd pay. Repay the loan and keep your crypto intact.
Under 12-Month Holding
If you've held crypto for less than 12 months, selling triggers full CGT (no 50% discount). Borrowing lets you wait for the discount.
Low LTV Required
If you only need 20-30% of your crypto's value, the LTV is conservative. Low margin call risk makes borrowing safer.
Borrowing Risks
- Margin calls if crypto price drops below LTV threshold
- Interest costs can exceed CGT if held too long
- Most crypto lenders aren't regulated by ASIC (counterparty risk)
- You still owe the loan principal. It's not "free money"
Key Takeaways
CGT Is Real
Borrowing Has Trade-offs
Check Lender Regulation
💡 The Decision Framework
Sell if: You've hit targets, market looks risky, or you need certainty. Borrow if: You're bullish long-term, need short-term liquidity, or want to wait for the CGT discount.
Tax-101 for Crypto - Try It: Complete
- Selling crypto triggers CGT. Calculate it before deciding to sell
- Borrowing against crypto avoids CGT but costs interest and carries margin call risk
- The 12-month CGT discount (50%) can make waiting worthwhile if you're under the threshold
Homework
Based on your current crypto holdings, would selling or borrowing make more sense? Why?
If you have crypto, run your numbers through the calculator above. Write down your sell vs borrow decision and the reasoning.
What's Next?
5 minutes
For educational purposes only. Treat this as food for thought for a constructive conversation with a qualified professional. Always consult a licensed financial adviser, accountant, or solicitor before making financial decisions — they can verify the latest laws and apply them to your circumstances. Full disclaimer