PSA: Selling your worthless NFTs can help you save money on your taxes!

The NFT market is down more than 90% from its peak.

That means that many investors are holding on to worthless JPEGs that they no longer want.

If you find yourself in this shitty situation, there’s a silver lining —By selling your NFT at a loss before the end of the year, you can potentially save thousands of dollars on your taxes!

What’s the point of selling my NFT at a loss?

Whenever you dispose of capital assets like NFTs at a loss, you can claim a capital loss on your tax return. Capital losses can be used to offset capital gains and up to $3,000 of income for the year.

Why do I have to sell my NFTs before the end of the year?

If you want to offset your capital gains for the 2022 tax year, you need to realize losses before the end of the year. This is probably a good move if you took gains in January 2022 back when the market was hot.

What if nobody wants to buy my worthless NFT?

If you can’t find a buyer for your NFT, don’t worry: there are tools that can help! For example, the Tax Loss Harvestooor is an open protocol that buys your worthless NFTs for a minimal amount of ETH so that you can claim a capital loss. (There are probably other tools like this too, but this is the only one I’ve tried for myself).

Is there a limit to how much losses I can claim?

There’s no limit to how much NFT losses you can claim.

If you still have a net loss after you offset all of your capital gains and $3,000 of income, you can carry your loss forward into future tax years.

TL;DR: If you don’t want them anymore, sell off your worthless NFTs and write off your capital gains!