Can I Buy A House With Crypto? 3 Ways to Buy Canada Real Estate With Cryptocurrency

More people are investing in cryptocurrency after seeing the surging prices and impressive profits made by the earliest Bitcoin investors. As interest in crypto rises, some real estate agents are receiving questions—many from first-time home buyers—about buying a house with cryptocurrency in Canada. It is, in fact, possible to purchase a home with crypto—also known as altcoins—and with the correct knowledge, home buyers can flesh this out-of-the-box idea out in more depth.

For informational purposes only. Always consult with an attorney, tax, or financial advisor before proceeding with any real estate transaction.

Key Notes About Using Crypto to Invest in Property

The short answer is yes, buying a home using cryptocurrency is possible, as there are no laws prohibiting doing so. That said, buying with crypto is not as straightforward as obtaining a traditional mortgage from a lender; it's currently much more simple to purchase a home, for example, with Canadian dollars than with crypto.

In standard purchase agreements, the selling price will be listed in Canadian dollars (CAD), and this currency is the basis for the traditional means of buying a home. Regulatory bodies such as the Real Estate Council of Ontario (RECO) are noticing an increase in interest concerning parties wanting to use crypto for real estate transactions.

However, RECO only has regulatory powers that extend to brokers, brokerages and salespeople, but not individual home sellers and buyers. This agency cannot restrict how individuals choose to sell or buy a property. It should be noted that those planning to buy or sell a home with altcoins will need a very detailed custom-drafted Agreement of Purchase and Sale.

Options for Buying a House with Cryptocurrency

The main ways to invest in a home using altcoins like Bitcoin are working with a seller that accepts crypto, exchanging them for CAD, or using a combination of both.

Selling Your Altcoins for Canadian Dollars

The easiest way to buy a home with crypto is to convert them into CAD when the coins are selling at a profitable margin. Crypto can be volatile, and prices fluctuate daily. This is one of the most significant issues with accepting altcoins for homes, as their value one day may not be the same once the home sale closes. It should be noted that the Canada Revenue Agency views any profit from the disposition of cryptocurrency to CAD exchanges as a capital gain and will be taxed accordingly.

Purchase a Home Directly with Crypto

The more complicated option is to buy a home directly with cryptocurrency. This might be easier if the seller is currently a crypto community member and understands the ins and outs of accepting coins for payment.

Some brokerages are currently promoting their ability to accept cryptocurrency for home purchases, but they convert the coins into CAD. The home isn't bought directly with crypto through the brokerage route. This is because banks and most real estate agencies work in CAD and are not integrated with altcoins yet on a widespread basis.

One potential drawback of directly purchasing with crypto falls into the area of trust accounts. A lawyer or broker is required to hold an agreed amount of the purchase price in a trust account to show good faith on behalf of the buyer. Currently, however, digital currency cannot be held in trusts, which makes these types of transactions riskier than other routes.

Use Crypto for the Down Payment and Finance Balance with CAD

A third option allows buyers to buy a home using a combination of crypto and CAD. Buyers can often pay the down payment in digital currency and finance the remainder with a traditional mortgage in CAD. This method is gaining traction as a viable option and is likely to continue as the mainstream population and industries begin embracing crypto-backed investments.

Make An Informed Decision About Buying Homes with Crypto

Digital currencies are highly volatile, making it pertinent for buyers to do their due diligence concerning buying real estate with crypto. Whether shopping for your first home or buying an investment property, it would be a wise move to talk to a financial expert to learn about any tax implications and to guide you through the process. While crypto is still a niche topic in the real estate market, it will indeed have a revolutionary effect on the industry soon.

For informational purposes only. Always consult with an attorney, tax, or financial advisor before proceeding with any real estate transaction.