Tax-loss harvesting
Tax-loss harvesting is selling an asset at a loss so the realised loss reduces taxable gains from other trades. It does not work the same way everywhere.
How it works
While an asset is merely down, the loss is on paper and does not count for tax. Once you sell, the loss is realised. In many countries you can subtract it from gains on other sales in the same year, and sometimes carry it forward to future years.
It is usually done near the end of the tax year: you look at the gains already locked in and the positions that are underwater. Some people then buy the same asset back to keep the position, but some countries have rules against this (such as wash-sale rules) that disallow the loss if you rebuy too soon. Whether those rules cover crypto depends on the country, and it can change.
This is not a way to make money, it is a way to avoid overpaying. Selling only for the tax effect makes sense if you are unsure about the asset anyway or have accounted for every restriction. It is best discussed with a tax professional.
This year you locked in a $3,000 gain on BTC. You hold an altcoin bought for $1,500 that is now worth $500. Selling it realises a $1,000 loss, which in many countries cuts your taxable gain to $2,000.
One mistake is selling at a loss and immediately buying back without checking local rules, then finding the loss was disallowed. Another is selling a good asset just for the tax saving and missing its recovery. Check your country's rules on loss offsets and repurchases first, then do the maths.
Questions and answers
What is tax-loss harvesting in simple terms?
It is selling a losing asset so that loss reduces the tax on gains from other trades.
Can I buy the same crypto back right away?
It depends on the country. Some allow it, while others have rules against quick repurchases that can cancel the loss.
When should I harvest losses?
Usually before the end of the tax year, when your gains for the year are clear. Exact deadlines and rules depend on the country.
Related terms
Read next
The big picture: when crypto may trigger a tax, how gains are calculated and which records to keep. This is not tax advice:…
Read →Taxable eventA taxable event is an action with an asset that can create a duty to pay tax: for example selling it, swapping it or…
Updated: 2026-10-19