Bitcoin holders have been given until the end of 2021 to be able to reduce their tax obligation, which affects them by selling all of their crypto assets at a loss and then buying them back. This is a loophole that exists within the crypto taxation system where someone can sell their entire crypto stash, thus reducing the tax obligation and then buying it back at some later point. But it is about to change as the authorities have detected this loophole and are going to try their best to mask it.
Many Investors Have Exploited This Crypto Loophole
The Ways and Means Committee is currently delegating meetings for the sake of closing this loophole for good, but it might have strenuous repercussions for crypto traders. Many crypto investors over the course of a few months have exploited this very loophole and have saved themselves quite the sum when it comes to giving taxes on the crypto assets that they hold. Currently, the House is all but ready to go after this loophole, and if a review is called on it, then investors would have to wait about 30 days before they can repurchase cryptocurrency, thus ripping them off from buying what they just sold a few seconds ago.
If this tax loophole gets patched, then it becomes a devastating scenario for every crypto trader out there. If this move goes through then, a wash-sale rule will apply to crypto-assets; this will make investors wait about 30 days before they can buy crypto assets that they had sold previously. They will not be able to buy their crypto at once, which is kind of a letdown and would conclude the existence of this tax loophole.
This whole thing also rules out the possibility of a crypto trader claiming tax benefits on the previously sold assets. No one knows when this thing will go live or how fierce it is going to be, so the only advice that crypto traders and holders should act on now is to take advantage of this crypto tax loophole when it is still ripe and available.