Bed and breakfasting: what it means for crypto tax

Bed and breakfasting is the UK term for selling and repurchasing an asset within a short window to realise a loss while keeping the position. Matching rules require such repurchases to be paired with the sale, preventing an artificial loss.

General information, not tax advice. Crypto tax rules differ by country and change over time, verify against your country's guidance or a qualified advisor.

An example

Sell and rebuy the same coin within the matching window and the rules pair the two, denying the loss.

Why it matters for your tax

It is the UK counterpart to a wash-sale rule, and the same lesson applies: the repurchase timing is what decides whether a harvested loss actually lands.

CryptaTax handles this automatically across your wallets and exchanges, so the concept is applied consistently without you tracking it by hand. Try the crypto tax calculator →

Related terms

• Wash sale
• Capital loss
• Tax-loss harvesting

See the full crypto tax glossary for every term, or the crypto tax guides for how they fit together.

Bed and breakfasting: what it means for crypto tax

Definition in context

Bed and breakfasting is a practice where you sell an asset and then repurchase it shortly afterward, typically within 30 days, to realize a capital loss for tax purposes while maintaining your position in the asset. In the UK, this technique was common with shares, but anti-avoidance rules (matching rules) now require that if you repurchase the same asset within 30 days, the sale is matched with the repurchase, so the loss is not recognized. Instead, the repurchase cost is adjusted. This rule applies to crypto assets as well.

Why it matters to crypto records

If you try to bed and breakfast with crypto, you need to be aware of the matching rules. When you sell and repurchase within the specified period, the loss is disallowed for tax purposes. Instead, the cost basis of the repurchased asset is adjusted to reflect the original cost. This means you can't create artificial losses to offset gains. Keeping accurate records of sale and repurchase dates is crucial to apply the correct matching rules and avoid errors in your tax calculations.

Record example

You own 1 BTC with a cost basis of $40,000. On June 1, you sell it for $30,000, realizing a $10,000 loss. On June 10, you repurchase 1 BTC for $31,000. Under matching rules, the sale is matched with the repurchase, so the loss is not allowed. Instead, your new cost basis becomes $40,000 (the original cost) plus the additional $1,000 you spent (since you repurchased for $31,000 but the sale proceeds were $30,000, the difference is added). So your new cost basis is $41,000. If you later sell for $35,000, you have a loss of $6,000, not a gain.

Distinctions and next steps

Bed and breakfasting is similar to a wash sale in the US, but the rules differ. In the US, a wash sale disallows the loss if you repurchase within 30 days before or after the sale, and the disallowed loss is added to the new asset's basis. In the UK, the matching rules are specific to same-day and 30-day repurchases. To avoid unintentional bed and breakfasting, wait more than 30 days before repurchasing the same asset. If you are considering selling and repurchasing to realize a loss, consult a tax professional to understand the rules in your jurisdiction. Always keep detailed records of your transactions, including dates and amounts, to ensure correct tax treatment.

A careful next step

Before acting on this term, return to the original record and write down the question it raises: what changed, which source proves it, and whether another related concept describes the event more accurately. Keep that note with the export or wallet evidence. It makes a later review faster and avoids turning a short label into an unsupported conclusion about tax, accounting or reporting.