Selling crypto at a loss before December 31? Read this before you buy it back.

Every December the same idea goes around: sell the coins that are down, book the loss against this year’s gains, then buy them straight back so you still own them. The first two steps are reasonable. The third is where a lot of people undo the whole thing without realising it, because of a rule most crypto investors have never heard of.

It is usually called the superficial loss rule, and in plain terms it is a 30-day rule. Here is how it actually works, who it catches, and what it leaves alone.

Why December matters at all

Your 2026 return is filed in the spring, but the 2026 tax year closes on December 31. A loss only counts in the year you actually sell. Sell on December 30 and the loss sits in 2026, where it can be set against gains you made earlier in the year. Sell on January 2 and it belongs to 2027 instead.

Remember too that swapping one coin for another counts as selling. If you traded Bitcoin for Ethereum in March and Bitcoin had gone up since you bought it, that gain is already part of your 2026 year, whether or not any money reached your bank account.

What the 30-day rule says

A loss is put on hold when all three of these are true:

1. You sell something at a loss.
2. You, or someone affiliated with you, buy the same thing in the 30 days before the sale or the 30 days after it. That is a 61-day window with the sale in the middle.
3. At the end of that window, you or that person still own it.

Miss any one of the three and the rule does not apply. Hit all three and you cannot claim the loss on that sale.

Who counts as you

The rule looks past your own account. Purchases by your spouse or common-law partner, or by a corporation you or your spouse control, count as if you had made them yourself. Selling in your account while your partner buys the same coin in theirs does not get around it.

What happens to the loss

This is the part that is often misunderstood. The loss is not destroyed. It is added to the cost of the coins you bought back. You get the benefit later, when you eventually sell those, rather than on this year’s return.

What counts as the same thing

The rule applies to the same or identical property. The same coin is clearly the same thing, even if you buy it back on a different exchange or move it to a different wallet.

Two different coins are not identical, and a fund that holds a coin is not the same as holding the coin itself. Where it gets less clear is with things that are close but not quite the same, like wrapped or bridged versions of a token. If your plan depends on something being treated as different, check it before you rely on it.

What the rule does not touch

• Selling at a loss and not buying back. If you are done with a coin, the 30-day rule never comes into it.
• Waiting it out. Buy back after the window closes, and the loss on the original sale stands. The trade-off is that you are out of the market for those 30 days.
• Selling at a gain. The rule is only about losses.
• Swapping into a different coin. That is a sale of the first coin, and since you are not buying the same thing back, the rule does not apply to it.

If you trade like a business

Everything above assumes your crypto is an investment. If you trade frequently enough that it counts as a business, your profits and losses are treated as business income and different rules apply. That classification is worth getting right on its own, because it decides whether half your profit is taxed or all of it.

A loss you cannot use this year is not wasted

Capital losses can only be set against capital gains, not against your salary. But if your losses for the year are bigger than your gains, the difference does not disappear. It can be carried back up to three years to recover tax on gains you already reported, or forward indefinitely to use against future gains.

What to do before December 31

1. Work out roughly where your year stands: what you sold, swapped or spent, and whether it was up or down.
2. If you are going to sell something at a loss, look back 30 days for any purchases of the same coin, including your spouse’s.
3. Decide whether you actually want to own it again. If you do, either wait until the window has passed or accept that the loss moves to next year.
4. Do not leave it to December 31. Give yourself a few days of margin.
5. Keep the records: dates, amounts, and the value in Canadian dollars at the time of each trade.

Dilan Ropero

Head of Crypto Accounting and Senior Accountant at MyBookly Accounting. He works with investors and businesses on digital asset reporting, reconciliation, and tax strategy.