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You Can Buy a Home with Cryptocurrency: Here’s How

By Tanya Svoboda
June 2021

The popularity of cryptocurrency, like Bitcoin, is soaring. What may have started as a fringe investment for a select few, is now a trend making its way into the mainstream. Markets Insider reports approximately 106 million people world-wide are using cryptocurrencies. As more people invest in cryptocurrency, industries from retail to real estate are adjusting to customers’ desire to use this digital currency as real-world payment.

Cryptocurrency is a form of payment that has traditionally been used online in exchange for goods and services. Investors buy cryptocurrency tokens with fiat currency (government-issued currency like the U.S. dollar) and then use the tokens to access goods or services.

Many supporters feel cryptocurrency is the currency of the future. The rush to get in on the ground floor had the value of this investment steadily on the rise throughout 2020.

Cryptocurrency Has Its Own Tax Rules

Cryptocurrency is not the same as fiat currency in the eyes of the IRS. It is considered property and taxed as such. You must document and maintain a record for every one of your cryptocurrency transactions. Failing to correctly document and pay the taxes you owe on your cryptocurrency transactions can leave you open to penalties and possible criminal prosecution.

Consult a tax professional if you’re unfamiliar with the tax rules surrounding cryptocurrency.

Using Cryptocurrency to Buy a Home

The majority of homes listed for sale in the United States are listed in fiat currency. However, you may find some listings that advertise their readiness to accept cryptocurrency for full or partial payment.

Here are two ways you can use cryptocurrency to buy a home.

1. Converting your cryptocurrency to cash

If you’re planning to use your cryptocurrency investment for a portion of a traditional home purchase, you’ll first need to convert the digital currency to cash. To do that, you’ll need to sell your cryptocurrency on a cryptocurrency exchange. Two popular choices are Coinbase and Kraken.

When you sell your cryptocurrency with an exchange, you’ll need to withdraw to the same bank account you deposited with. This should take around 4-6 days. There are fees associated with the transfer that you’ll need to consider as well.

If you’re working with a lender, you’ll need to be diligent about providing a “paper trail” of ownership with your cryptocurrency. Since you don’t receive monthly statements, you’ll need to provide your own documentation and proof that you own the cryptocurrency. Some lenders will ask for a 30 or 60 day transaction history for the crypto account.

Once you’ve received the funds into your fiat account, you’re free to use the money as a down payment, to cover closing costs, or if it’s a large sum, to pay for the home in cash.

There are other ways to convert cryptocurrency to cash like peer-to-peer transactions or Bitcoin ATMs, but both have their downsides. Peer-to-peer transactions can be risky if you don’t know the buyer. And Bitcoin ATMs can only be used for small amounts of cash and typically have a high transaction fee.

2. Straight cryptocurrency transaction

According to Tony Giordano, president of Opulent Agency, “To buy a property using Bitcoin, you will have to find a real estate agent who works with Bitcoin, a crypto-real estate attorney, and a third-party escrow who can transfer and hold the token.”

Generally speaking, all that you need to complete a real estate transaction with a cryptocurrency like bitcoin is an agreement between the buyer and the seller. Both parties will need bitcoin accounts and you’ll need to have a mutual level of trust because there are still few escrow services that specialize in bitcoin real estate transactions.

If you’ve got some cryptocurrency burning a hole in your virtual pocket, it is possible to use that money toward the purchase of a home. Whether you’re converting it to cash or making a straight crypto purchase, it’s important to surround yourself with professionals who are experienced with the ins and outs of real estate related crypto transactions.


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