With the positive outlook of the cryptocurrency markets, many investors may consider investing part of their profits into more tangible investment options. Among them, real estate seems to be one of the most luring options.
And while there were some rare instances where rich Bitcoiners bought houses with their profits, they had to go through many challenges to get there. In this guide, we will help you get a better understanding of the different methods you can use in order to buy real estate with Bitcoin in a secure and efficient way.
Different ways to buy real estate with Bitcoin
Let us start by saying that the process of buying real estate with Bitcoin is still relatively complex for those with no experience in crypto. Unless both parties are familiar with the concept of cryptocurrency and regularly buy bitcoins, you will probably need to utilize a third party to help you out with the process. This is where the following two options come into play. The methods outlined below will help the buyer pay using Bitcoin and the seller get paid in government-based (FIAT) currency.
Option #1 — Use the help of a broker. Real estate brokers are not a new concept, but the model has lately attracted specialized websites with a focus on cryptocurrency payments. It is hard to give a definitive list of brokers since most service a particular location. To give you an example, Bithome is a broker that helps Bitcoin investors purchase property in European countries.
Option #2 — Use a Bitcoin payment widget. Payment widgets became very popular when merchants started accepting Bitcoin in their e-commerce stores. There is no reason why people shouldn’t use the same widget when buying real estate. Among the most popular option is Bitpay, and the way it works is pretty simple:
- The home seller creates a Bitpay account and sends an invoice to the buyer.
- The buyer pays the invoice using Bitcoin at a locked exchange rate.
- Bitpay (or any other payment widget) converts the Bitcoin payment into a preferred FIAT currency.
- Bitpay delivers the amount to the seller and sends you a bank settlement the next business day.
Pay attention to taxes and legal frameworks
Aside from making a payment using Bitcoin, you will need to settle legal obligations, among which are multiple government taxes. In some states, these amounts can be paid using Bitcoin, but you will most likely need to use at least some form of FIAT currency.
Since the legal framework is so vastly different depending on the country and residential location, it is best that you acquire the help of a qualified lawyer or real estate broker.
The same advice applies to situations where both parties are willing to interact with each other using Bitcoin. If your funds do not become visible in any sort of financial institution, you will need to contact your local tax office and ask for further information. In most cases, you will need to show proof of acquired funds, which can easily be done by downloading your transaction history. Aside from that, you may need to provide all financial information of your Bitcoin holdings in your annual tax form.
What if I simply “cash-out” first?
Cashing out a significant amount of cryptocurrency holdings has its drawbacks. This is also why most crypto investors would rather pay using Bitcoin, instead of going through the process of selling and withdrawing their funds.
Among others, here are some of the reasons why “cashing out” may not be optimal:
- Large amount of fees when exchanging your BTC into FIAT currency.
- Additional fees when withdrawing the amount to your bank account.
- Depending on the country, you may lose a significant portion of your money due to tax regulations.
- If the amount is very big, you may need to go through an anti-money laundering (AML) process, which could temporarily freeze access to your funds.
In other words, paying with Bitcoin is both easier to do and a lot cheaper than its alternatives.
Resources to learn more?
The following resources can help you learn more about Bitcoin and its applications in real estate. The following three options are our favorites:
- Bitcoin Magazine has many interesting articles from industry experts. Some of their content, like the article titled “How the blockchain will transform the real estate market” is directly related to your interest. Therefore, it might be worth checking out and potentially subscribing to their newsletter.
- Anthony Pompliano’s “The Pomp” podcast (as well as his email newsletter) offers valuable advice on cryptocurrency trends and innovative ideas on the future of the industry. Check out his content to better understand when and how you should use your Bitcoin to buy real estate.
- Coindesk is one of the most popular cryptocurrency media outlets in the world. Read their news to stay ahead of the game, and get a better idea of when it is time to use your Bitcoin to invest in different investment options. The platform also several interesting articles that explain how Bitcoin is used for real estate purchases.
Bitcoin is slowly becoming a viable form of payment across different industries. Its influence and media attention has certainly played a role in its popularity and demand keeps increasing.
If you ever find yourself in a situation where you could use your holding to invest in real estate, you should definitely give it some thought. After all, taking profits is part of the game and you will likely be safer when diversifying your funds among different assets.
We hope this article helped you get a better understanding of what it takes to purchase real estate with Bitcoin. Pay special attention and conduct further research on legal frameworks and taxations. These could affect the amount of money you’re looking to spend and determine how fast and efficient you can conclude the transaction process. If you have any further questions on the topic, feel free to let us know so we can point you in the right direction.