Can You Use Bitcoin to Buy Real Estate?
I had a client ask me the other day if he could buy his condo with Bitcoin. The answer is yes, you can buy real estate with Bitcoin. In fact, you can buy real estate with just about anything, including cows, goats & chickens for that matter, - if the seller is willing to accept what you offer.
That’s the real problem with Bitcoin or any other cryptocurrency: who’s going to accept it. There have been Bitcoin real estate deals for a number of years. In August 2014, a secret buyer purchased a 1.4-acre piece of land for 2,739 Bitcoin. At the time, one Bitcoin was worth about $580 making the purchase about $1.6 million when converted to dollars.
Most Bitcoin real estate transactions involve the buyer liquidating their Bitcoins into dollars, just like a buyer might liquidate stocks for a down payment.
There have been deals where buyers simply transferred their Bitcoin to the seller without first converting it to cash. However, there are still parts of the transaction that require cash, such as recording taxes, title insurance, and settlement fees.
An all Bitcoin deal isn’t necessarily complicated. It works like an all-cash purchase except it is not routed through the settlement company. Bitcoins are simply transferred from the buyer’s digital wallet to the seller’s digital wallet.
Don’t think you will avoid paying any taxes on the transaction though. The taxes still apply. In addition, the US government recognizes Bitcoin as property, not currency, so any purchases made in Bitcoin have to be reported on your taxes and you can be hit with capital gains tax on your Bitcoin on top of that.
In 2008, Satoshi Nakamoto published a paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System”, which outlined the conceptual and technical details of a payment system that would allow individuals to send and receive payments without involving any intermediary financial institutions. This was the start of Bitcoin and other cryptocurrencies. To this day, the actual identity of Satoshi is still a mystery.
