You Can Now Buy Major Assets Like A Home Using Bitcoin 

Cryptocurrency like Bitcoin has made considerable advancement as far as functionality, applications, and security are concerned.

Besides the declared price of digital assets, those invested in them rely on an inherent value, which includes the technology and network itself, not to mention the integrity of the cryptographic code and the decentralized network.

If you’re considering the decentralized version of digital cash, there are a few different ways how to buy Bitcoin. Digital coin transfers can serve multiple industries, including real estate. 

Commercial enterprises and real estate professionals acknowledge the transformative impact of blockchain technology in the context of property sales, streamlining payments, and increasing access to funds.

Illiquid assets, such as land, buildings, and housing, have become an increasingly significant share of investments.

As tokens, real estate can be readily traded for fiat currencies through exchanges. It’s not necessary to wait for a buyer to afford the entire property to derive some value from it. 

No matter if you’re seeking a family home, a secondary residence, or a real estate investment, you can buy property with Bitcoin and other cryptocurrencies, including Ethereum, Litecoin, etc.

A few years back, saving for a down payment or buying a home with Bitcoin was beyond belief, but these days, it’s possible.

More and more private home sellers, real estate agents, and mortgage companies are accepting digital assets as an alternative form of payment. 

Buying a home is a momentous occasion – you exchange a volatile asset for a much more predictable one. The idea alone may be appealing if you don’t mind spending your cryptocurrency. 

How To Buy A Home With Bitcoin (Or Other Cryptocurrencies) 

You can use Bitcoin or any other cryptocurrency instead of paying with cash or getting a mortgage to diversify your investment portfolio, support your retirement, obtain a discount on the real estate purchase, or eliminate traditional wait times and intermediaries from the process.

If the transaction is structured using U.S. dollars, you can expect to pay conversion fees and capital gains tax when you cash out.

If you’re a crypto native/savvy or simply crypto curious, here are some options to take into account. 

Directly Transfer Bitcoin From Buyer To Seller 

Why don’t you go with a peer-to-peer trade? You can do a direct trade, transferring your holdings to another person or entity using a Bitcoin wallet.

Nevertheless, you must get your agreement in writing and reach out to a lawyer who is versed in real estate law and cryptocurrency.

Have a chat with the seller about the terms of the deal to avoid problems in the future. Bitcoin doesn’t leave much of a paper trail, so have an attorney by your side who knows all the common mistakes that could lead you to lose your funds. 

Buying your first home can be an intimidating process. Everyone knows what’s going on, so you might not feel comfortable asking questions.

The lawyer can review the paperwork and documentation to ensure your interests are protected. Any legal document can have a big impact on your finances, time, and responsibilities.

You can leverage your Bitcoin for real estate, but the buying process differs from seller to seller.

While some are comfortable with complete crypto transactions, others could ask for a split between Bitcoin and cash. 

Sellers unwilling to accept Bitcoin directly (or unable to enter such a sale) will request you to convert your holdings to U.S. dollars, which will be used to cover the down payment, remaining closing balance, and expenses, including insurance premiums.

Even if you can complete the entire transaction using Bitcoin, some cash payments are still necessary to be made to government agencies. 

Use Your Bitcoin Holdings To Qualify For A Mortgage 

Buying and owning real estate has the potential to generate passive income and serve as a path to building substantial wealth.

Still, the real estate market can be complicated, and the process of qualifying for a mortgage can become confusing at times.

Securing a conventional loan by working with a private lender can be challenging if you don’t have enough to cover everything or your credit score is too low, so think about using your Bitcoin as collateral.

You can pledge more cryptocurrency than the loan’s value, but be sure to look for the most up-to-date information. 

BlockFi, a digital asset lender, and Unchained Capital, a Bitcoin native financial services company, are two prominent examples of lenders that offer crypto-based loans, which can be used for major purchases like real estate.

To qualify for a mortgage, have documentation proving the original purchase, in addition to documented proof-of-sale.

You don’t have to liquidate your entire cryptocurrency holdings to access financing, so you can avoid creating a taxable event to buy a home. 

The problem is that crypto-collateralized loans aren’t available in all states, and it’s tough to determine the loan-to-value ratio because Bitcoin is highly volatile.

Unless you use stablecoins, the loan will vary wildly in price. A loan makes sense if you hold a substantial amount of Bitcoin and want liquidity without having to sell.

Nonetheless, if volatility in the cryptocurrency market is an issue, take into account less risky alternatives to reach your goals. 

Cash Out Your Bitcoin Using A Cryptocurrency Exchange 

Last but certainly not least, you can convert your Bitcoin into cash, but make sure to understand the tax implications. Cash out on a portion of your holdings to put forward the down payment.

Prior to selling, document every part of the process; otherwise, the bank or broker could refuse your mortgage application.

One of the simplest ways to cash out on your Bitcoin is to use a crypto exchange – you can quickly exchange cryptocurrency into cash, which you can access from your account balance or transfer the money to your bank account. 

Turning your digital assets into real-world currency helps ensure a smooth and efficient process.

Only the principal balance must be repaid, to say nothing of the fact that you can save money on closing costs by using cash.

If you’re making a profit on selling your Bitcoin, you’ll have to pay taxes on your income, so report your transactions for tax purposes. 

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Author at Huliq.

Written By James Huliq