Quick answer
Your BTC doubling in value is an unrealised gain — it only becomes a taxable realised gain when you actually sell.
Accounting
World
Realised vs Unrealised Gains
Only realised gains from actual disposals are typically taxable; unrealised gains from price appreciation exist only on paper.
WorldUnderstanding Realised vs Unrealised Gains on crypto
A realised gain occurs when you actually dispose of a cryptocurrency — by selling, swapping, spending, or gifting it — at a price above your cost basis. The gain is 'realised' at that moment and becomes a taxable event. An unrealised gain (also called a 'paper gain') exists when an asset has increased in value but has not been disposed of. Unrealised gains are not taxable in most jurisdictions under standard capital gains regimes — you only pay tax when you sell. This distinction has important planning implications: you can time your disposals to control when gains are realised and taxed.
A realised gain occurs when you actually dispose of a cryptocurrency — by selling, swapping, spending, or gifting it — at a price above your cost basis. The gain is 'realised' at that moment and becomes a taxable event. An unrealised gain (also called a 'paper gain') exists when an asset has increased in value but has not been disposed of. Unrealised gains are not taxable in most jurisdictions under standard capital gains regimes — you only pay tax when you sell. This distinction has important planning implications: you can time your disposals to control when gains are realised and taxed.
What this means for your crypto activity
Tax on disposal only
You owe no tax on crypto that has risen in value until you sell, swap, or otherwise dispose of it.
Strategic timing
Strategic timing of disposals — before or after the tax year end, or after the 12-month long-term threshold — can significantly reduce tax.
Mark-to-market exception
Mark-to-market accounting (used by some professional traders in the US) treats unrealised gains as taxable annually — a rare exception.
Portfolio app values
Portfolio value increases shown in your exchange app are unrealised — do not pay tax on these until you transact.
Loss harvesting
Loss harvesting works by converting unrealised losses into realised losses through strategic disposal.
- You owe no tax on crypto that has risen in value until you sell, swap, or otherwise dispose of it.
- Strategic timing of disposals — before or after the tax year end, or after the 12-month long-term threshold — can significantly reduce tax.
- Mark-to-market accounting (used by some professional traders in the US) treats unrealised gains as taxable annually — a rare exception.
- Portfolio value increases shown in your exchange app are unrealised — do not pay tax on these until you transact.
- Loss harvesting works by converting unrealised losses into realised losses through strategic disposal.
Seeing it in action
Example scenario
Tom holds 5 ETH bought at $1,000 each. ETH rises to $3,000. His unrealised gain is $10,000 — no tax owed yet. He sells 2 ETH at $3,000 each, realising $4,000 in gains — now taxable. He holds the remaining 3 ETH, retaining $6,000 in unrealised gains that remain untaxed until a future disposal.
How this works across jurisdictions
- World
Realised gains from disposal are taxable under standard capital gains regimes in all major jurisdictions. Unrealised gains are not taxable until disposal in all standard regimes. Exception: US mark-to-market election for professional traders (IRC 475) taxes unrealised positions annually.
Take Control of Your Crypto Finances
From crypto taxes to accounting, KoinX helps you manage, track, and stay compliant and to end.
![[object Object]](/_next/static/media/ISO_27001-2022_certification.ae776691.svg)
![[object Object]](/_next/static/media/GDPR_Compliance.a2dc5933.svg)
![[object Object]](/_next/static/media/SOC_2_Type_II_certification.dd69381e.svg)
