Something is only of value if they place a value on it and that’s the case with digital currency. Technically not backed by anything solid, digital currency is making waves at becoming more and more valuable every day. But can you actually buy something tangible with that digital currency? Can you buy real estate, property, and personal property with bitcoin? Yes! And here’s how.
What is bitcoin?
Bitcoin is an Internet-based, decentralized payment system. Each bitcoin owner has an anonymous address to trace every bitcoin transaction history. It uses blockchain technology, a database that connects several different locations and is shared by one community. This structure can make it incredibly resilient because there’s no one central point of failure that can be attacked.
Bitcoin or cryptocurrency (BTC) can actually make real estate transactions easier. The IRS has classified bitcoin as a form of real property so actually, real estate bitcoin transactions can reflect different layers of capital investment for tax purposes. And, real properties are being bought and sold with this cryptocurrency. The IRS considers bitcoin actual property so every transaction needs to be calculated as a capital gains tax.
All that is really needed to purchase real estate is an agreement between the buyer and seller that bitcoin is being used for the transaction instead of cash or financing. Both buyer and seller need to have bitcoin accounts and be familiar with how this type of digital currency works. Once the transaction is completed, bitcoin transactions are not reversible. There needs to be a mutual level of trust between the buyer and the seller to use bitcoin as a fair trade for real property. Many traditional escrow companies are not familiar with bitcoin or digital currency transactions so it is important to use an escrow company well-versed in bitcoin transactions.
The only thing that buyers and sellers need to do is to agree on the transaction, which technically can be traded for any type of product or service. Many bitcoin enthusiasts are purchasing a wide variety of items with bitcoin, real estate notwithstanding. Once everything is agreed upon and signed, it can take less than 10 minutes to transfer funds. There’s no banking system so you can literally pay for the property, the real estate agent services, and escrow all at the same time with the click of a button.
Pros and Cons to Using Bitcoin for Real Estate Transactions
The biggest benefit is that it is practically instantaneous. However, you must trust the second party. If you want to reverse the transaction due to any litigation, both parties would need to be compliant as bitcoin transactions are not reversible.
Another advantage is that there may not be any additional fees or multiple intermediaries that would need to be involved in a traditional flat currency deal. They can be much more streamlined to accommodate purchases of the property of any price including up to $10 million or more. As long as due diligence is carried out, a bitcoin payment can offer a smooth, quick, and less cumbersome way to purchase any type of property.
While this is a fairly new concept, it’s quickly gaining popularity, especially in more affluent real estate markets like Hollywood Hills, Beverly Hills, Malibu, and other luxury Los Angeles real estate markets. Many buyers are feeling more comfortable relying on this type of payment as they enter the mainstream real estate market with their financial portfolios and planning. Diversifying funds in both crypto current and real estate is broadening the horizon of affluent investors.
For more information on purchasing real estate with bitcoin or any type of cryptocurrency, contact me below. I am well-versed in handling real estate transactions with digital currency, and specifically bitcoin (BTC). I can help facilitate the transaction and communicate between buyer and seller with confidence, communication, and expert knowledge in this field.
Luis Pezzini | 1-310-275-2076 | Contact Me Now
Additional Resources for Home Buyers:
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- Buying and Selling Luxury Real Estate in Los Angeles
- 5 Useful Tips for Buying Luxury Real Estate in Los Angeles
- Buying Guide: How to Buy the Perfect Luxury Home in LA
- Common Mistakes to Avoid When You Are Buying a Luxury Hollywood Hills House
- 7 Brilliant Tips for Buying the Best Condo in the Wilshire Corridor
- 7 Things You Need to Know When Buying a Home in L.A.