Take out a loan (with a great interest rate) against an asset. Maybe an art piece valued at $100k. Have someone you know appraise it later that year at $50k. $50k unrealized loss. Counteract a $50k unrealized gain with it. Pay the interest rate of the loan, but avoid the gains.
quoting⚡️🇳🇱 NEW - Dutch Parliament Member Michel Hoogeveen explains how the 36% unrealized capital gains tax, just passed by the House of Representatives, will work.
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Here is a more detailed example:
➥ Step 1. Starting position
You own 500 shares.
Value on Jan 1, 2028: €50,000
Value on Jan 1, 2029: €100,000
So the paper gain is:
€100,000 − €50,000 = €50,000 unrealized profit
You did not sell. But for tax purposes, that €50,000 is treated as income.
➥ Step 2. Apply exemption
You are married, so you get a €3,600 exemption.
€50,000 − €3,600 = €46,400 taxable amount
Tax rate: 36%
€46,400 × 36% = €16,704 tax bill
That bill is due in May, even though you never sold anything.
➥ Step 3. Market falls before you pay
Now suppose by May the shares drop in value.
New total value: €60,000
So your portfolio is no longer worth €100,000. It’s worth €60,000.
But the tax bill is still €16,704, because it was calculated based on the January 1 valuation.
➥ Step 4. You must sell shares to pay tax
To raise €16,704, you sell part of your shares.
After paying the tax, you’re left with:
€60,000 − €16,704 = €43,296
Originally you had 500 shares.
Now you have 360 shares left.
You were forced to sell 140 shares.
140 ÷ 500 = 28% of your shares gone.
➥ Step 5. What happened economically?
Before the correction:
Paper gain was €50,000.
After the correction:
Portfolio is worth €60,000.
Original cost basis was €50,000.
Real gain is only €10,000.
But you paid €16,704 in tax.
So instead of being up €10,000, you are now:
€43,296 − €50,000 = €6,704 below your original starting value.
You turned a €10,000 real gain into a €6,704 net loss.
And you lost 28% of your shares permanently.