As cryptocurrencies mature and become more widely accepted around the world, people who use them to purchase large, valuable items like homes or even yachts will become less an anomaly and more commonplace. In fact, the normalization of these digital currencies may actually help to tame their historic volatility on the market. So, while they may become subject to more regulation, taxes, and more widespread acceptance, they’re also likely to achieve more stability, and that’s good news for crypto investors who want to use their assets as collateral or payment on costly goods and services.
Taxes
Cryptocurrencies, being effectively unregulated, can be frustrating at tax time. There is a capital gains tax that you have to be aware of any time you spend, trade, or exchange your crypto. If you plan to exchange your cryptocurrency for a home, you should definitely involve an accountant who is experienced with these types of crypto real estate transactions. Many CPAs are investing time and energy into understanding the ins and outs of crypto trading.
Volatility
One of the reasons you might be tempted to use your crypto to pay for a home is because of its volatile nature. Even as you decide to pay with crypto and begin your hunt for a house, your Bitcoin or other crypto’s value could rise—but it could also tank, forcing you to make other payment arrangements or to pay with more of your digital currency than you had expected.
Qualifying for a Mortgage with Cryptocurrencies
Your cryptocurrency is an asset. No, not all banks understand that asset, but they’re increasingly becoming obligated to do so. In fact, major mortgage loan companies have indicated that Bitcoin can be used as collateral to secure a home mortgage loan. This process can entail some standard KYC processes or sometimes putting up more BTC in collateral, but on the other hand the process is faster and you don’t need to qualify with credit score/tax returns/income, etc..
Is a Crypto Real Estate Deal for You?
When cryptocurrencies first came into use, few people dreamed they could be used to purchase real estate Today, we know they can, and some people have already opted to use theirs to buy a home or commercial property. Is this the right move for you? You’ll definitely want to weigh the pros and cons outlined here carefully. You might even want to consult with your crypt-experienced CPA before you rush into any real estate transactions. The good news is, using your crypto is definitely an option you can consider, and it might be the ideal option for you.
