How to buy a house with cryptocurrency

Cryptocurrency is proving to be less of a trend and more of a force that’s here to stay. Bitcoin (BTC) reached an all-time high of over $68,000 in November 2021 after starting the year at just under $30,000, and the crypto industry  as a whole grew to a total market cap of more than $2 trillion.

It makes sense that cryptocurrency investors are thinking big when it comes to tapping into the power of their crypto stashes.

Can you use cryptocurrency to buy a house?

If you’re considering using Bitcoin, Ethereum, Dogecoin, Litecoin or one of a number of other cryptocurrencies to purchase a home, you’re not alone.

It’s becoming increasingly common, but there are some challenges to be aware of, and the volatility of the cryptocurrency market can make some transactions complicated.

How do you buy a home with cryptocurrency?

There are a few options for using cryptocurrency to buy a home.

Convert cryptocurrency to cash

One of the simplest ways to use your cryptocurrency nest egg to buy a home is to sell the cryptocurrency for fiat money (dollars) using a service like BitPay, then use that money to purchase a home. However, keep in mind that you’ll need to keep the fiat money in an account in your name for at least two months before it’s considered an asset that can be used to purchase a home, and a deposit that large may get flagged by the IRS. Any money you make from selling cryptocurrency may also be subject to capital gains tax, so check with your financial advisor or tax attorney.

Convert your crypto to U.S. currency

Before it can be used to buy a house, cryptocurrency must be converted to U.S. currency.

MKG Enterprises Corp Third=Party Originator is beta-testing to accept cryptocurrency stable coins for its borrowers as a down payment and closing costs, that would be converted to U.S. dollars and offer its borrowers the ability to create a digital wallet to convert their crypto to fiat however much borrowers intend to use and have the money in their bank account prior to closing.

Seasoning

Your lender’s underwriting team will need to verify that the crypto assets were in your digital wallet or digital exchange account for at least 60 days prior to when you sold them

What are the cons to buying a home with cryptocurrency?

As enticing as cryptocurrency may be, it’s still something of an unknown entity in the real estate industry. When considering buying a home with cryptocurrency, watch out for these drawbacks:

Not all sellers accept cryptocurrency. While trust is growing in Bitcoin, Ethereum and  their competitors, few sellers are ready to go all-in and accept cryptocurrency as payment for a real estate transaction, so it may limit your home-buying options.

Cryptocurrency exchanges may be subject to capital gains taxes. The IRS considers cryptocurrency a type of property, property that must be sold in order for you to realize its value in dollars. Be sure to consult a tax professional to find out how using cryptocurrency to buy a home may affect your tax liability.

You may have fewer legal protections in a cryptocurrency transaction. For users of cryptocurrency, two of its main selling points are security and anonymity. But that means transactions are difficult to trace, so if anything goes wrong, you could face a sticky legal situation. Be sure to consult a legal professional to learn how to protect yourself.

Most mortgage lenders may not...