As the end of the year approaches, there’s a noticeable uptick in the use of platforms that provide tax-loss harvesting services for NFT holders. This surge in activity is driven by collectors who are keen to reduce their capital gains tax burden, particularly in light of declining NFT values.
Turning Worthless NFTs into Tax Deductions
Despite a recent resurgence in NFT trading, volumes are still trailing behind the highs of early 2022. This downturn has created a window of opportunity for platforms like Unsellable. Unsellable was established in 2022 by Skyler Hallgren, David Sawyer, and Zach Miller, and it offers a unique service to collectors. For a nominal fee of around $2, it purchases NFTs that have lost their value, often due to abandoned projects or rug pulls.
This innovative startup offers a lifeline to holders of illiquid NFTs, enabling them to transform their losses into tax deductions. The company has seen a significant increase in usage, with daily NFT purchases averaging 1,000, compared to zero to 10 in August.
Preparing for Tax Write-Offs
Unsellable has reportedly facilitated a total of $4.2 million in realized losses for its customers. According to Hallgren, the average user has been able to write off $4,200 in losses on NFTs that have significantly depreciated in value. The company has accumulated approximately 26,000 NFTs, from rug-pulled projects to derivative works like Wealthy Ape Social Club and My Banana Fucko.
While Unsellable has managed to flip around 300 NFTs for modest profits, the company’s primary objective is not flipping. Instead, it aims to amass the world’s largest collection of NFTs over time. Hallgren has hinted at the possibility of selling the platform to a crypto tax firm or software company, and some potential buyers have already shown interest.
Exploring Other Tax-Loss Harvesting Platforms
Unsellable is not the only player in the field of tax-loss harvesting services for NFTs. Other platforms include Harvest.art, Sol Incinerator, NFT Loss Harvestooor (a free service associated with CoinLedger), and The Junkyard, which incentivizes users with Junkcoin tokens for offloading their NFTs.
While these platforms offer innovative solutions, users are advised to proceed with caution. Not all of these platforms have been audited, so due diligence is essential before interacting with any blockchain service or platform.
For a comprehensive view of your crypto and NFT investments, consider using applications like cryptoview.io. It provides a consolidated view of your portfolio, helping you make informed decisions.
Explore cryptoview.ioRemember, the world of NFTs and cryptocurrencies is complex and rapidly evolving. Always stay informed and make sure to use tax-loss harvesting services wisely to maximize your benefits.
