Discussion in 'world politics, current affairs and news' started by camouflage, Dec 25, 2010.
<Three Bitcoin threads merged>
If it drops below $9,000. I'm going to buy some
I bought £500 quids worth in late November. I just withdrew £500 and left £500s worth in there.
Gambling is well easy.
Who did you buy through?
Money laundering is where you obtain illegal income and then use a process to legitimise it.
Did he obtain his bitcoins through illegal activity? If not, it isn't money laundering.
He'd have a capital gains tax issue. That would be all.
Yep I see, makes sense that it’d just be a tax issue and nothing to do with money laundering. This just somehow makes bitcoin seem more real than it ought to, if he really can buy something like a flat out of them.
Yeah, when an asset goes up in value by five orders of magnitude, some people do astonishingly well. What's worrying is that they seem to be doing well now not just out of greater fools in the private sphere, but out of managed funds. The crash could be a very nasty shock.
If he sells the bitcoin at a profit, yes. But what happens if he pays for the flat in bitcoin?
It's a good point. If he can find somebody willing to accept bitcoin, he should be gravy.
Is that allowed though, would it be like selling a flat for bars of gold or in exchange for some beads?
You aren't allowed to make a capital gain without declaring it. He could possibly buy the flat for bitcoin but he would still get a tax bill for the capital gain.
It would be exactly like doing just that. To be fair, though, I didn't know you couldn't sell a flat for bars of gold or some beads. Can you not?
I don’t know! Would mess up zoopla.
Any shenanigans around buying property through barter would be a problem for stamp duty. So there must be some mechanism for capturing the cash value of the barter price paid for property. You could argue that at the point when this mechanism applies, a capital gain liability is created. I'd argue that, if I was HMRC.
Is it a capital gain, though?
If the initial investment in the bitcoin was say 5k and that bitcoin was swapped for a flat worth 500k then yes, to the tune of 495k.
To be picky, HMRC could theoretically obtain stamp duty in the same exchange mechanism as the sale. If the price was 10kg of gold, they could demand 500g of gold in stamp duty. Although, saying that, they would need a way to work out what their thresholds for % rates are in gold.
I suspect in practice, though, you are right. They would use today's price to convert to GBP and demand stamp duty in that exchange.
What if they bought the flat in USD? Would HMRC go back to see what the exchange rate was at the time the USD were obtained?
What if the initial obtaining of bitcoin was not for GBP transactions?
I'm sure (absolutely I'm sure) you're right, but it doesn't seem that straightforward to work out some of the problems.
I think it would be extremely difficult for HMRC to work out capital gains in this scenario (bitcoins held for years then sold at profit) because of the anonymity especially in the early days of it. But when you go to do a big cash purchase you do have to show, for anti laundering purposes, where the funds have come from. Will report back if he does decide to attempt buying a flat with his magic beans.
Whether any profit or gain is chargeable or any loss is allowable will be looked at on a case-by-case basis taking into account the specific facts. Each case will be considered on the basis of its own individual facts and circumstances. The relevant legislation and case law will be applied to determine the correct tax treatment. Therefore, depending on the facts, a transaction may be so highly speculative that it is not taxable or any losses relievable.. For example gambling or betting wins are not taxable and gambling losses cannot be offset against other taxable profits.
The onus is on the taxpayer to disclose the gain, and then HMRC decide whether they accept the sums.
Yes, thought so. With property its all very open but capital gains tax is confusing i think. Like what if the painting I bought for £2 at the car boot turns out to be a rare lost masterpiece do I pay the capital gains for the full difference between purchase and sale?
Yes, precisely that. The exemption for gambling and lotteries is odd, I think it's there so that you can't write off gambling debts against tax. The exemption for principal residences makes more sense, although in my view it should be withdrawn.
Man selling home for $135,000 in Dogecoins - CNN
A colleague of mine spent some time and money mining Bitcoins a few years ago.
He transferred all his coins to a single wallet and then realised he didn't know the password.
Current value of those Bitcoins? More than £200,000. He's engaged someone who specialises in recovering the password in exchange for a percentage.
He better trust that person and be offering them a good cut!
Else the person will just say he can't crack it after they crack it and move to barbados.
Isn't mining bitcoins trading for tax purposes? CGT if you buy and sell, normal tax if you make and sell. Hope your chum's doing that deal on a percentage of net rather than gross.
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