TL;DR
This article explains how to record loan and repayment transactions in CoinTracking, covering coins received or loaned through staking, lending, or other DeFi activities (e.g., Aave, Lido, EigenLayer, MakerDAO, Nexo). The method you choose depends on how you and your country’s tax laws view ownership during the loan process.
1) You Loaning to Others
a) You remain the owner of the coins
If your coins remain legally yours, record the loan as a transfer:
Withdrawal from your account (OUT) to the loan address or platform.
Deposit back (IN) when the loan is repaid.
Enter interest as “Income.”
This method keeps your coins in your original purchase pool (FIFO) with their original cost base and holding period.
b) You don’t remain the owner of the coins
If you are considered to have parted ownership:
Record the loan as “Spend” (triggering capital gains on the value difference since purchase).
Record repayments as “Income.”
Repaid coins will have a new cost base from the day you receive them.
2) You Receiving a Loan
Steps to record:
Send collateral: record as “Send Collateral.”
Receive the loan: record as “Receive Loan.”
Repay the loan: record as “Repay Loan.”
Enter any interest or charges as “Borrowing Fee.”
Receive collateral back after repayment.
If liquidation occurs, record the portion liquidated as “Liquidation.” For example, sending 5 ETH as collateral but only receiving 4 ETH back means 1 ETH is recorded as liquidation.
3) Special Tax Considerations
Asset remains unchanged:
If you repay the exact same cryptocurrency received in the loan, no taxable event generally occurs (value changes during the loan term do not matter).
Asset changed:
If you repay with different coins from your original holdings, it’s a taxable event. For example, repaying a BTC loan with BTC you purchased earlier triggers capital gains based on your FIFO cost basis.
Loan-related activity:
Using the borrowed coins for trades or other activities also triggers a taxable event. Any profit/loss from these actions must be reported.
Summary
- Determine if ownership changes for tax purposes.
- Use “transfer” if you keep ownership, “spend/income” if you don’t.
- For loans received, track collateral, loan amounts, repayments, fees, and liquidations accurately.
- Same-asset repayments are usually tax-neutral; different assets or economic activity make them taxable.
- Always check your country’s tax rules and consult a tax advisor for individual cases.