Realised vs unrealised gain: what it means for crypto tax

An unrealised gain is a rise in value you have not locked in, you still hold the asset, and it is not usually taxed. A gain becomes realised, and potentially taxable, only when you dispose of the asset.

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

If Bitcoin you hold doubles but you do not sell, the gain is unrealised and untaxed. Sell, and the gain becomes realised and reportable.

Why it matters for your tax

This distinction shapes strategy: holding through volatility has no tax cost in itself, and you choose when to trigger a taxable event by choosing when to sell, swap or spend.

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

• Realisation
• Capital gain
• Disposal

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

Realised vs unrealised gain: what it means for crypto tax

Why the distinction matters

In crypto tax, the moment you sell, trade, or spend your digital assets, you trigger a taxable event. Until then, any increase in value is merely on paper. This distinction is crucial because it determines when you owe tax. Unrealised gains are not taxed; only realised gains are. Keeping accurate records of your transactions is essential to correctly identify when a gain becomes realised. Without proper records, you might overpay or underpay your tax obligations.

A self-contained example

Imagine you bought 1 ETH for $1,000. Later, the price rises to $2,000. At this point, you have an unrealised gain of $1,000. If you do nothing, you owe no tax. But if you sell that ETH for $2,000, you have realised a gain of $1,000, which is now subject to tax. Similarly, if you trade your ETH for another cryptocurrency, that is also a disposal, and you realise the gain. Even spending ETH on goods or services counts as a disposal.

Key distinctions and practical steps

The main distinction is the act of disposal. Holding is not a taxable event; disposing is. Practical steps include tracking the fair market value of your assets at the time of each transaction, using a reliable crypto tax software, and maintaining a detailed ledger of all your buys, sells, trades, and spends. Also, be aware of specific rules for different types of disposals, such as gifts or donations, which may have special treatment. Always consult a tax professional for advice tailored to your situation.

Next steps for crypto holders

To stay on top of your tax obligations, start by organising your transaction history. Use a portfolio tracker to monitor unrealised gains, but remember that only realised gains matter for tax. When you do dispose of assets, record the date, amount, and value in your local currency. Consider using a crypto tax calculator to estimate your liability. Finally, keep all records for at least the required period, as tax authorities may ask for them.

For a realised-versus-unrealised review, keep the holding record and the event that changed it side by side. Record the asset quantity before and after the event, what was received or surrendered, the source of any value used and whether the position remains open. A dashboard movement can show a gain even though no transaction has closed the position, while a conversion can close one holding and open another at the same time. A concise event note prevents a performance chart from being treated as a complete description of the underlying records.

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.