Borrowing against your crypto instead of selling comes with a tax angle worth understanding. Here is a plain look at it, and one way to keep everything in one place. This is general information, not tax advice.

GalaxyOne Crypto Portfolio Line of Credit lets you borrow against your BTC, ETH, and SOL without selling, so you can access cash while keeping the assets you believe in. But here’s another consideration that might be worth paying attention to: taxes.

Borrowing is generally not a taxable event, which is part of why long-term holders may prefer to borrow cash against their crypto rather than sell their assets. But there’s a second, less obvious angle worth knowing about.

If you use borrowed funds to make investments, the interest expense may be tax deductible, subject to IRS rules and your individual circumstances.

A Closer Look at Investment Interest

The idea is straightforward. When you borrow money and put it toward investments, the interest you pay on that borrowing may be treated as what the IRS calls investment interest expense, which can be deductible. The treatment follows how the borrowed money is actually used.

One key factor is tracing: being able to clearly show how the loan proceeds were used. Cleaner records may assist a tax professional in evaluating the use of loan proceeds. As always, whether any of this fits your situation is a question for your CPA.

An Interesting Way to Use GalaxyOne

This is where having everything on one platform helps. Because GalaxyOne brings borrowing and investing together, you can keep the whole picture in one place:

1. Borrow against your BTC, ETH, or SOL with the GalaxyOne Crypto Portfolio Line of Credit

2. Keep the proceeds on GalaxyOne

3. Optionality to invest them through your GalaxyOne Brokerage account

Now your borrowing and your investment activity live on a single app, creating a centralized record your CPA can evaluate if an investment interest deduction may be available. Statements are made available through GalaxyOne, so there’s no reconstructing the trail months later at tax time.

This is an example of what a unified platform makes possible: borrowing, investing, and record keeping, all in one place.

Explore What Your Line Can Do

If you have been looking for a strategic reason to try GalaxyOne, this may be an interesting one. Your crypto stays yours, your borrowing and investing sit side by side, and the record stays organized for the people who need it. If you’ve been considering trying GalaxyOne, the GalaxyOne Crypto Portfolio Line of Credit, or a GalaxyOne Brokerage account, then understanding how investment interest expense works by speaking with your tax advisor could be helpful. 

To learn more about the GalaxyOne Crypto Portfolio Line of Credit, see here: https://www.galaxy.app/product/crypto-portfolio-line-of-credit

Important Disclosures: Consumer lending products are offered by GalaxyOne Lending LLC (NMLS ID: 2741667). Not all applicants may be eligible or approved. All loans are subject to market conditions, portfolio value, loan amount, and other factors. Collateral remains subject to market fluctuations and liquidation risk. Borrowing is generally not a taxable event. Consult your tax advisor.

Brokerage, digital asset, and other investment services are offered separately by GalaxyOne Holdings LLC and its partners.

This information is provided for general informational purposes only and is not tax or legal advice.