Let's say I bought 1 BTC at $8k, and I am selling it for $10k.
My profit is $2k.
I have the option to declare $2k profit and pay taxes, or use it as collateral for a loan.
case 1: have 1
BTC bought at $8k, then sell for $10k.
action: selling
BTC to get cash and generate $2k income in the process
tax report: 35% of $2k profit
case 2: have 1
BTC bought at $8k, use for collateral to get cash US$8k (lets say this to make easy example)
action: take US$8k loan to generate income of $2k but have to pay interest $1,500 (just for example)
tax report: 35% of $2k profit (not on net profit $500)
you are still paying tax on the same $2k profit even if you have to pay interest
So let's say I have to pay 35% taxes for the $2k profit.
If I can take a 1-year loan for 19% APR, it would be better to take a loan, correct?
are you thinking to deduct the loan interest from $2k profit, so that you paying tax only on $500
I think you can't do that if you are doing it personally unless you are reporting tax as a business
Interest paid on personal loans is not tax-deductible. If you borrow to buy a car for personal use or to cover other personal expenses, the interest you pay on that loan does not reduce your tax liability.
...
Exceptions to the Rule
If you use a personal loan or credit card to finance business expenses in addition to personal expenditures, you may be able to claim the interest paid on those expenses on your taxes. You must be the person legally liable for the loan, and you must be able to itemize what portion of the interest paid is attributable to legitimate business expenses.
