After many waves of doubt, ups and downs, Bitcoin has proven itself that it's most likely here to stay. It has been implemented in large tech companies, used as a method of purchase for goods and even became a recognized currency of one country, El Salvador. This adoption of the digital currency helps ensure use case and protection against governments banning it. Historically, this was one of the most primary concern. Governments want to protect the value of their own currency after all, and to be frank Bitcoin has been used for some controversial behaviors as well. As time goes on its becoming more and more accepted for purchasing items, even for purchasing real estate.
How to Buy Real Estate with Bitcoin
Before we get into how to buy real estate with Bitcoin, let's look at why how it can be used in such a way that normal currency can't.
Why Own Bitcoin to Begin With?
Some people have some serious wealth in Bitcoin and other crypto currencies. Many invested early and gained a large amount of wealth in Crypto, there are others who didn't have a choice, let's explain.
In 2015 Venezuela saw an overall inflation rise of 2,000,000%, that's not a typo, everything money can buy was now 2 million percent higher than the previous year. This make the Venezuelas local currency, the Bolivar, pretty much worthless to the cost of goods. To translate this into dollars, let's say a gallon of milk costs you $4.00 dollars, based on its new inflated price, a gallon of milk would now be $80,000. While this figure adjusts within the county, it doesn't outside of the country. In fact, it was such a shocking adjustment that people burned their own money.
This is where one of the use cases of Bitcoin came in, had you transferred your wealth into Bitcoin before the currency crash. You could have exchanged it for a more secure currency like the dollar. Now while you could have traded into another currency at an exchange, doing that is not quite as easy as you think, especially with large sums.
Venezuela isn't nearly the only country that has gone through this, some people in other countries fear they are next. Bitcoin is a unique currency in that way, your wealth can go into something less visible and controllable to governments, then convert into other world currencies at anytime.
Transferring Crypto into Hard Assets (Real Estate)
Bitcoin can have major swings, at one point in time bitcoin went from the $30,000 back to the $3,000 range rapidly. Having your wealth in Bitcoin, to most people, isn't considered stable at all. Having a good understanding of where your money stands for planning and comfort is important. Using Bitcoin as a currency converter is a good use case, but unless you planned to move it immediately, your net worth would have been down in the dumps during that period of decline. Some savvy investors avoided this using what's called a stable coin should they wanted to keep assets in crypto.
However, this is where actual hard assets come in, currencies tend to fluctuate, getting in a good stable currency is a good start. However, should inflation hit multiple countries, hard assets like real estate become a hot commodity due to them being inflation resistant.
In most desirable countries, real estate has good laws supporting foreign investors. The hard part though, is getting large amounts of bitcoin into a bank for local currency so you can buy real estate. A good amount of red flags can go off during that process depending on the country.
There is no law concerning what someone can sell their home or land for. You can sell your house in exchange for a cow if you wanted, or gift it for free. If something like Bitcoin is desirable for the seller, they are more than welcomed to accept that in exchange for their home.
So, now this makes for another interesting use case for Bitcoin. While you can't avoid things like taxes legally, you can now buy hard assets. A solid stable investment that you can then sell for dollars or hold as a way to hedge a rise in inflation.
How to Buy Real Estate with Bitcoin
The process for the most part only makes sense if you already hold Bitcoin, or maybe you would like to buy in another country using this method due to other complexities.
If you don't really understand the ins and outs of crypto, you should first and foremost know it's risky and dangerous to manage. It's not insured by the government and transactions with it can be complex. A wrong number or letter in a transaction address could mean everything is gone and there is zero chance of getting it back. It's not stored in traditional banking methods and subject to tons of scams.
In this article it would be impossible to run through all the buying, selling and holding crypto safely methods. Some exchanges like Coinbase make it easy, but many are holding crypto in cold storage wallets. These look like small usb drives and contain a complex passphrase security to get into. Unless you are pretty tech savvy, take major caution before jumping in.
So overall, the rest of this article will be for those who already understand the Bitcoin process and want to know how they can buy real estate with it.
1. Find Homes and Land for Sale
For real estate transactions in Bitcoin to be available, there needs to be a seller willing to take Bitcoin. These will essentially be for sale by owner transactions. Which means transactions could take place by simple agreements, handshakes or in best case scenarios an escrow agent. Once you move bitcoin to someone else you can't get it back, so keep that in mind to avoid a scams.
If you would like to take a look at some of the websites specific to homes for sale in Bitcoin, you can check these out.
When it comes to land and not homes you can still find people willing to sell in Bitcoin. As a company we looked into it years ago, however the website platform we use has never implemented the checkout system. But taking it as a form of payment shouldn't alarm anyone, if you're selling anything online, using the Coinbase checkout system is quite safe for both consumer and vendor and offered on many platforms.
2. Research the Property and Know the Transaction Process
The Bitcoin transaction process in real estate may not use the traditional methods of the banking system or agents. It may not even be done through a company at all, so you better make sure who you are dealing with or at least find a company to mediate the transaction. In some cases, staying out of the traditional closing process using Bitcoin is the goal. Figuring out you most comfortable transaction process with the seller is a big part of the puzzle and should be very carefully done.
The other big part of the puzzle is researching the property and title. With this part, you can use something like a title company. Not all countries where you may find a home that deals in Bitcoin will do this. However, it may surprise some but you can use title companies without a real estate agent or escrow office. No matter what was transacted the title company can research title and complete the deed transfer to the new owner. Some places require to list transaction prices with the local county but not always.
You may be able to find a real estate agent that knows the process with Bitcoin. They are few and far between but some do specialize in it making the process safe and easy. Either way, be careful of scams, check the agents background history and license.
3. Know the Local Taxes and Laws
Overall, you found the property you like, you are comfortable with the Bitcoin exchange and know the property for sale is real. The last part to understand is if there are any taxes or laws you may need to be aware of. When it comes to the taxation part of crypto currencies, things are in very early stages. Of course all governments want taxes, but due to the design of crypto, it can be hard to trace down who owns what. Some countries are better at it than others, however a home sale might be a hard thing to hide.
Buying a home when it comes to taxes is a whole different animal than selling a home for profits in the governments eye. So depending if you are looking to buy or sale, this part mostly impacts the seller. If you sell a home for a good profit regardless of in bitcoin or cash, the government most likely will want something.
There are tax strategies when it comes to real estate and we are no experts on that, consult with a tax advisor specific to your situation. However, when buying a home or land, most of the times the local county wants to know the sales price and gives you a base tax called a transfer tax. It's quite minimal in most places so the real tax to worry about is after selling a home for profit.
It's not a difficult process overall, similar to buying anything really. The main concern is the transaction. But as you can see, bitcoin can be used just like any other form of currency and buying property is a big leap for the future of it.
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