How to Buy a House or Apartments with Cryptocurrency

Many crypto holders prefer using their assets for big significant purchases. Here appears the question: can you buy a house with your crypto? We answer this question in this article.

Cryptocurrency As A Payment Method

In the last few years paying by cryptocurrency has become more and more popular. Initially created to be a decentralized alternative to fiat currencies, now many businesses and individuals accept crypto as a payment method. We researched the key aspects of crypto payments and present you a complete overview.

Сrypto operates on decentralized networks using blockchain technology, which eliminates the need for intermediaries such as banks or payment processors. Сryptocurrency transactions often have lower fees than traditional payment systems, especially for cross-border payments. Сrypto payments also can be faster than traditional bank transfers, especially in the case of international transfers. And even being not entirely anonymous, cryptocurrency transactions can provide a higher degree of privacy than traditional payment methods.

It’s important to note that, while being a good and comfortable payment method, cryptocurrency also has some challenges like volatility, not so wide acceptance, regulatory uncertainty and environmental concerns due to the technology used for its mining.

Can You Really Buy A House With Bitcoin ?

Yes, you can buy a house with Bitcoin, but it requires careful planning.

Over the past few years, some sellers, real estate companies and platforms have started accepting Bitcoin and other crypto as payment. However, the process is not as straightforward as with traditional currencies and has certain challenges and nuances. It demands cooperation between the buyer and the seller, and sometimes intermediary services. The practice is still niche, but it is becoming more feasible as cryptocurrency gains wider acceptance in real estate markets.

NOTE: It’s important to know that not all jurisdictions accept cryptocurrency as a payment method for real estate, with regulations varying widely across countries. In crypto-friendly places like the United States and Switzerland, property purchases using cryptocurrency are possible, though tax and legal considerations have to be addressed. However, in countries like China and India, cryptocurrency transactions for real estate are either banned or highly restricted.

Ways To Buy A House With Cryptocurrency

There are several ways to buy a house with cryptocurrency, though the process can vary depending on the preferences of the buyer, seller, and regulatory landscape. Below are the main methods for buying a house with crypto.

Direct Cryptocurrency Payment to Seller

In this method, the buyer pays the seller directly using cryptocurrency, without converting it to fiat currency. Here’s how it works:

1. The buyer and seller agree on a price, either in fiat currency or directly in cryptocurrency.
2. The buyer transfers the agreed amount of crypto from their wallet to the seller’s wallet.
3. Both parties should consult legal and tax professionals to ensure compliance with local regulations and to handle the legal documentation correctly.

Besides Bitcoin, stablecoins like USDT (Tether), USDC or DAI also can be used for real estate payments. Here’s how it works: the buyer uses stablecoins instead of volatile cryptocurrencies like Bitcoin or Ethereum, and some sellers or real estate platforms accept stablecoins directly, or they can be converted into fiat using an exchange.

Selling Cryptocurrency for Fiat and Then Purchasing the Property

This is the most common way for crypto holders to buy real estate. Here’s how it works:

1. The buyer sells a portion of their crypto holdings on an exchange and converts it into fiat currency.
2. The converted fiat is transferred to the buyer’s bank account.
3. The buyer uses the fiat to purchase the house through traditional means like bank wire or cashier’s check.

Using Crypto-Specific Real Estate Platforms

Several real estate platforms specialize in performing cryptocurrency transactions, helping math crypto buyers with sellers willing to accept crypto payments. Examples of the platforms include: Propy, Crypto Real Estate and Cryptohomes.io. There’s how it works:

1. The platform allows users to list properties for sale that can be purchased with crypto.
2. It also provides escrow services, manages the transaction process and can handle crypto-to-fiat conversions if necessary.

Obtaining a Crypto-Backed Loan

Instead of selling crypto, some buyers choose to take out a loan using their cryptocurrency holdings as collateral. Here’s how it works:

1. The buyer deposits cryptocurrency as collateral with a crypto-lending platform such as BlockFi or Nexo.
2. The platform lends fiat currency based on the value of the crypto collateral.
3. The buyer then uses the fiat to purchase the house and repays the loan over time. If the loan is not repaid, the lender can liquidate the cryptocurrency collateral.

Hybrid Approach: Partial Crypto and Partial Fiat

Some buyers use a combination of cryptocurrency and fiat currency to complete the purchase. Here’s how it works:

1. The buyer and seller agree to accept a portion of the payment in cryptocurrency and the rest in fiat.
2. This can be useful in cases where the buyer wants to use crypto, but the seller is hesitant to accept 100% of the payment in that way.

Pros And Cons Of Buying A House With Cryptocurrency

Here are some of the most important advantages and disadvantages of buying the real estate with crypto:

Pros:

1. Faster Transactions: cryptocurrency payments can be processed more quickly than traditional bank transfers, especially for international purchases.
2. Lower Fees: crypto transactions often have lower fees, particularly for cross-border deals, as they avoid intermediaries like banks.
3. Global Accessibility: cryptocurrency allows buyers to make purchases across borders without currency conversion or exchange rate issues.

Cons:

1. Volatility: the value of cryptocurrency like Bitcoin can fluctuate significantly, which can affect the value of the transaction.
2. Limited Acceptance: not all sellers or real estate markets accept crypto, making it harder to find properties for sale using cryptocurrency.
3. Legal and Tax Complexities: crypto transactions may trigger capital gains taxes and face regulatory hurdles, adding complexity to the process.

Do You Need To Pay Taxes ?

Yes, typically, you do need to pay taxes when buying a house with cryptocurrency. The main tax implications include:

1. Capital Gains Tax: In many countries, cryptocurrencies are treated as property for tax purposes. When you sell or use cryptocurrency to buy a house, you may owe capital gains tax on the difference between the price you paid for the cryptocurrency and its value at the time of the transaction.
2. Property Taxes: Regardless of whether you use cryptocurrency or fiat, buying a house usually involves property taxes, which are assessed by local governments.
3. Sales Tax (if applicable): In some jurisdictions, there may be additional transfer taxes or fees that apply to real estate purchases, though they typically apply to the property itself, not the form of payment.

It’s essential to consult with a tax professional to understand the specific tax obligations in your jurisdiction when using cryptocurrency for a real estate transaction.

In conclusion, it’s safe to say that day by day the real estate market accepts cryptocurrency more willingly. However, it’s vital to consider all the details, pros and cons of the process and choose the right method for you personally.