Buying a new home is one of the biggest milestones in a person’s life. Not only does homeownership mean you are no longer at the mercy of landlords, but it also marks a time when you’ve secured enough capital to get to this stage.
While there are many ways to go about purchasing a home, one of the newest is through cryptocurrency. If you’re an investor in this currency or are interested in using it for a property purchase, below are some tips to get you started.
What is Cryptocurrency?
Cryptocurrency is an online, decentralized payment system that uses blockchain technology. This type of 21st-century currency can be exchanged for all kinds of goods and services, much like hard, cold cash. However, the newness of cryptocurrency means that select vendors only accept it.
One of the most well-known types of crypto is Bitcoin, which was created in 2008. Since then, newer cryptocurrencies have emerged, such as Ethereum and Dogecoin, and these can be purchased on exchange apps or websites like Coinbase and Robinhood. The emerging popularity of crypto, and the fact that brokers are investing in it, means that this currency can also be used to purchase property.
Find a Realtor Who’s in the Know
Before you go about buying a home, it’s a good idea to find a realtor who is familiar with cryptocurrency and how it works. Although it’s in its infancy, some house listings indicate that they welcome Bitcoin as a form of payment. However, to ensure the transaction is on board, find a real estate agent who can guide you through the process and help you find appropriate listings.
Consider the Capital Gains Tax
It’s also worth knowing that cryptocurrencies like Bitcoin are considered property when it comes to tax purposes. In other words, crypto is defined as a capital asset by the IRS, which makes it subject to capital gains tax. Therefore, once you have gains on crypto and decide to withdraw your money, you are subject to tax. This is something to be prepared for ahead of time
Search and Buy
After everything is in place, you’re ready to start searching for a house. When you’ve found a property you like, both parties must agree to the cryptocurrency transaction. While this sounds logical, two-way compliance is necessary because crypto transactions are not reversible. This can create an issue if the seller changes their mind in a rare turn of events. If the seller has any reservations about this currency, it’s worth mentioning that one of its main benefits is speed: crypto transactions can be immediate — from 10 minutes to a day.
When all is said and done, you may still find yourself with a seller who doesn’t want to go the crypto route. In this case, if they want regular money instead, you can convert your cryptocurrency into dollars. Services like Bitpay are ideal for exchanging crypto for cash
On the other hand, if you are struggling to find owners who are compliant with cryptocurrency, you could also go the traditional route. Whether it’s taking out a mortgage, doing a bank transfer, or acquiring a bridge loan from creditors like Sachem Lending, there are multiple options at your disposal when it comes to purchasing a home.