Buying and Selling Real Estate with Bitcoin: Miami Gets Bit by the Bitcoin Bug

Buying and Selling Real Estate with Bitcoin: Miami Gets Bit by the Bitcoin Bug

Dec 21, 2017 December 21, 2017

Earlier this month, a single bedroom condo in Edgewater went on sale, and made headlines. “What’s so special about that?” you ask. Well, this Miami condo seller will accept Bitcoin only. This 480 NE 30th St. condo is listed for 33 BTC. With Bitcoin trading at around $16,600 at the time of this writing, that translates to a price tag of roughly $547,800.
 
This isn’t the first instance of Bitcoin making its way into real estate. There is a building in Manhattan’s Lower East Side that’s accepting Bitcoin for its upcoming condos. Another upcoming development worth £250 million in Dubai is priced in Bitcoin. In fact, Texas has already gone ahead to complete the first-ever Bitcoin-only real estate transaction in the U.S. this September (although dollars actually took part in it, as you will find out below . . . ). With more and more people getting ready to embrace this digital currency, it’s time we decoded this cryptocurrency and its future in Miami’s real estate.

Bitcoin

Why is Bitcoin important?

Bitcoin is no longer just digital cash lurking in the dark corridors of internet transactions. This cryptocurrency has made its way into real world transactions for retail, restaurant and art. People are already buying their morning coffee using Bitcoin. It is touted to be the currency of the future. And now, the Texas deal proves you can even pay for your next home using digital cash.

How does a Bitcoin transaction work and how safe is it?

In order to carry out a Bitcoin transaction, you would need an amount, a sending address, a receiving address and private keys. In order to make a payment, the user will enter the amount and receiving address of the person being paid along with the private keys associated with the digital cash. The transaction is then verified by miners who will confirm the block of exchange to be within the Bitcoin “blockchain” so it can be completed.
 
Advocates of this digital currency have utmost faith in the unique “blockchain” technology backing it. Firstly, the blockchain itself stands as proof of each and every transaction carried out since the inception of Bitcoin. And secondly, the entire system is secured via mathematics and complex algorithms - asymmetric cryptography to be precise.

Bitcoin Blockchain

How would a real estate sale be carried out using Bitcoin?

As of now, there are few ways we know to make a Bitcoin real estate sale happen in practice:

  1. Accept Bitcoin for Your Property, but Close in Dollars. If the asking price is listed in U.S. dollars, then the transaction can follow in on the footsteps of the Texas sale we mentioned above. According to a CNBC article, the Texas sale ultimately happened in Dollars. A Bitcoin payment service provider converted the Bitcoins to Dollars for the buyers, which enabled the rest of the closing to take place. We are guessing that the contract had at minimum a clause in it to allow for the closing to be postponed but not cancelled if the conversion rates weren't favorable to the buyer.
  2. Sell Real Estate in Bitcoin, and Add Volatility Protections. According to Carlos Casuso, a real estate attorney in Miami, if both the buyer and seller want to keep the transaction exclusively in Bitcoin, they can set an upper and lower limit for the US Dollar value of the bitcoin for the day of closing. Since Bitcoin prices vary on a day-to-day basis, if the value moves lower than the expected price of the property, the seller will have the upper limit as a cushion. On the other hand, if the Bitcoin value escalates, the buyer won’t feel cheated by paying the lower end of the limit. If the Bitcoin value falls out of those ranges for day of closing, the buyer and seller can agree, for example, to automatically modify the sale price based on the current dollar value on day of closing or simply agree to allow either party to cancel if they don't like the deal.

Feel free to comment below if you’ve heard of or come across any other innovative and practical ways to make real estate transactions using Bitcoin.


Why real estate buyers and sellers would want to use Bitcoin?

Selling your condo for Bitcoin definitely increases your client base in an instant. This digital currency almost dissolves borders. Since Bitcoin has its own value system and does not succumb to the inflation of fiat currency (read real world currency), it makes clients less sensitive to the fluctuations of their country’s currency value.

It also comes in handy for clients living in countries with stringent controls on the outflow of cash. Since these limits are not applicable on Bitcoin, foreign clients can go for higher value transactions. Even better, their government may not be able to track the Bitcoin purchases or even have laws governing out-of-country Bitcoin asset purchases, thereby allowing the buyer to completely fly under the radar of currency controls. However, buyers looking at very high value deals would need to check the transaction limits prescribed by their Bitcoin exchange such as Coinbase, BitPay or CoinKite, in case they intend to use one.

Another reason one might want to sell using Bitcoins is that you would have the choice to hold the Bitcoin in your wallet and use it for future transactions. You could also hold on to the Bitcoin till it hits a profitable value and cash it into dollars using the payment service providers/exchanges mentioned above. This seems pretty lucrative considering that the price for this cryptocurrency has surged 900% since its creation in 2009.


 

via GIPHY

Downsides and risks of selling real estate using Bitcoin

Just like everything else in life, selling real estate for Bitcoin has its downsides. One of the biggest advantages of this cryptocurrency is also its biggest disadvantage – price volatility. If Bitcoin prices can move up quickly to rake in a profit, they can also easily dive southward. So, setting an upper and lower limit (as mentioned above) can give sellers a cushion against this volatility. Also, sellers willing to take Bitcoin for property might want to convert it into cash or purchase something tangible like property or other items to lock in their profit.
 
Downsides and risks of buying real estate using Bitcoin

One of the most obvious downsides of buying real estate with Bitcoin is needing fiat (real) currency to cover ancillary costs. Purchasing a condo or home comes with additional costs involving inspections, title searches, transfers, legal fees, permits, agent fees, etc. However, not all of these service providers are willing to accept a Bitcoin payment – fiat currency is the only recourse in most cases.
 
Also, Bitcoin value moves on a day-to-day basis. So, if you’re planning to buy real estate using Bitcoin it would be safe to have extra (digital) cash in your wallet to cover for any last-minute changes that deviate from the price tag on closing day.
 
Another pitfall of buying real estate with Bitcoin is the lack of loans. While SALT is making loans available for the Bitcoin collateral, a majority of banks and financial institutions are still not comfortable with the idea of backing digital money. You may be able to your Bitcoin "asset" to convert to US Dollars for your down payment, for example, but ultimately you are paying in Dollars.

Bitcoin

Does a buyer or seller get any benefit of anonymity with a Bitcoin transaction?

Though Bitcoin is touted to be an “anonymous currency”, that is not completely true. Each participant of a Bitcoin transaction acquires a sending/receiving public address. Although these addresses run up to 30 characters long and are virtually incomprehensible, they can still be viewed publicly. The repeated use of an address can reveal patterns and ultimately lead to the identity of the owner.
 
While it is recommended to use a new address for every single transaction, and newer wallet software achieves that, it still does not make you 100% anonymous. Freely available analytical tools and blockchain explorers can link single transactions to form a chain and reveal the owner’s identity. So, while it does provide you with a certain sense of privacy, the Bitcoin user won't remain 100% hidden.

Are there any taxes on Bitcoin transactions?

The IRS prescribed some guidelines for cryptocurrencies such as Bitcoin in 2014. First of all, cryptocurrencies will be treated as property, and not currency, for tax purposes. So, in the eyes of the IRS, you are making two transactions when buying real estate with Bitcoin. First, you are selling property (Bitcoin). Second, you are using the proceeds of that sale to make your purchase. And, each time a property is sold, it has to be reported in your tax forms.
 
If, at the time of your purchase, the Bitcoins have appreciated in value from when you first obtained them (which most likely they would have), you are liable to pay a capital gains tax on the difference in value. Whether you pay a long term or short term capital gains tax relies solely on how long you’ve held them. If you held them for less than a year, you will be taxed for a short term gain and vice-versa.
 
Technically, the IRS holds you responsible for listing every purchase you make in a year using Bitcoins and pay taxes on your gains, no matter how small they may be. Even cashing out your Bitcoins makes you liable to pay a capital gains tax. What one must bear in mind is that each and every Bitcoin transaction is stored in the blockchain. This means a highly motivated IRS could end up finding every purchase you make.

via GIPHY

So, will you be willing to accept Bitcoin for your Miami condo? Or, if you are looking to buy a Miami condo for Bitcoin, you can find all Miami condos accepting Bitcoin here. Or just contact us directly, we will be more than happy to help!

Contact Us
Sep Niakan
Broker / Team Lead
Request Info
By sending you agree to CondoBlackBook's Terms of Use

Your Miami Condo Awaits

Recent Posts

Video: Inside Tour of The Residences at Mandarin Oriental Miami
Video Blog Video: Inside Tour of The Residences at Mandarin Oriental Miami
Eager to bring you an exclusive preview of the interiors, finishes, and other unique offerings available at The Residences at Mandarin Oriental Miami, we gathered our crew and headed straight to their newly opened sales gallery perched onsite surrounded by Biscayne Bay where the new residential tower will rise. Join us for an insider look at all the spoils and luxuries that await you in Brickell Key’s finest, most exclusive, and thoughtfully designed residences yet. In this video, Sep Niakan, veteran Miami real estate agent and Founding Broker of Blackbook Properties & condoblackbook.com, sits down with Adrian Gonzalez of the Mandarin Oriental Miami Residences for a quick chat and in-depth tour and review of the interiors, finishes and fixtures. Watch now to discover what sets this island sanctuary apart and why it deserves to be your prized residence.   — Sky Homes at The Residences at Mandarin Oriental With no more than five residences per floor and two-bedroom floor plans...
Brickell vs South Beach: Which Miami Neighborhood is Best for Luxury Living?
Lifestyle Brickell vs South Beach: Which Miami Neighborhood is Best for Luxury Living?
One is known for its legendary beaches and nightlife, the other for being the Manhattan of the South. But what’s it like to live these two famous Miami neighborhoods? Should you live in Brickell or South Beach? If you’re considering a move to Miami or the South Florida area, and want to know more about the basic differences between living in Brickell vs South Beach (SoBe), here’s our exclusive Insider review of these two iconic Miami neighborhoods to help you decide. — Lifestyle Differences Between South Beach and Brickell South Pointe - South Beach Of course, there is going to be some differences between these two neighborhoods, despite being less about 6 miles away from each other. The Brickell lifestyle is definitely more urban and corporate-chic compared to the laid-back beachy lifestyle of South Beach. Living in Brickell, like any metropolitan and financial district in a big U.S. city, you’ll see your fair share of Miami’s best-dressed professionals darting back and forth...
Q3 2024 Miami Luxury Condo Market Summary: Sales Down, Prices Up in Buyer’s Market
Real Estate News Q3 2024 Miami Luxury Condo Market Summary: Sales Down, Prices Up in Buyer’s Market
What’s Miami’s luxury real estate market been up to? Well, with an expected slowdown after a high-paced second quarter, Miami’s luxury housing market downshifted into a softer cycle in Q3 2024.  While there was a decline in sales volume, prices increased and the average number of days on the market remained consistent year-over-year. This indicates that Miami's luxury condo market remained steady even as it has transitioned into a buyer's market with moderate surplus of luxury inventory. But another trend has emerged, and that is the Miami market has established a new definition of luxury.   This third quarter, the combined neighborhood of Coconut Grove & Coral Gables, continued outperforming all other neighborhoods in our quarterly analysis by reporting the highest percentage sales growth, fastest time to sell/lowest days on market, and lowest levels of inventory.  As we head into the 4th quarter, which is historically known to be the slowest of the year, and with the...
Video Blog: Top 5 Luxury Condos in South of Fifth, Miami Beach
Real Estate News Video Blog: Top 5 Luxury Condos in South of Fifth, Miami Beach
Miami Beach attracts residents with its vibrant energy and stunning beaches, Art Deco architecture, and nightlife, but for those seeking an exclusive haven of luxury and tranquility, South of Fifth (SoFi) is the neighborhood to be in. This coveted area, nestled at the southern tip of Miami Beach, boasts pristine beaches, upscale dining, a beautiful park, and a collection of the most prestigious condo residences in the city. In our latest video, Sep Niakan, founding broker of Blackbook Properties & condoblackbook.com and veteran Miami real estate agent, gives you a rundown of the five most luxurious (and expensive) South of Fifth condos for your consideration. Take a look!   If one (or more!) of the buildings in the video has caught your eye, don’t hesitate to reach us by phone, email, or text and we’ll be happy to help you explore available residential options.  For a more detailed look, these are the most luxurious South of Fifth condos that make up our list: 5. ICON...
Video: Viceroy Residences Miami, Your Luxury Oasis in Brickell
Video Blog Video: Viceroy Residences Miami, Your Luxury Oasis in Brickell
Dive into a world of luxury at Viceroy Residences Miami, a new condo development redefining sophisticated living in the heart of Brickell. More than a high-rise, Viceroy offers a haven of tranquility and exclusivity, with a resort-style experience in the middle of the vibrant energy of Miami's financial district. In our latest video, Sep Niakan, veteran Miami real estate agent and Founding Broker of Blackbook Properties & condoblackbook.com, sits down with Valeria Lugo, VP of Sales for Viceroy Brickell to get an inside scoop on all the details that make this project one of the most anticipated in the city. Take a look! The new Viceroy Brickell will rise 45 stories and have 442 fully finished residences, including studios, one-, and two-bedroom units, with the penthouse collection featuring three bedrooms. Units will range from 485 square feet to 1,286 square feet, excluding penthouses. Also, the building will be part of a three-tower luxury complex which includes the opulent...
September 2024: Miami New Development and Pre-Construction Condo Update
Preconstruction September 2024: Miami New Development and Pre-Construction Condo Update
A total of six Miami pre-construction projects broke ground this September, of which three are located in Miami’s coveted Bay Harbor Islands – Solina Bay Harbor, the Bay Harbor Towers, and La Maré Signature Collection. After almost a year of inactivity, Abbhi Capital’s condo-hotel planned for Downtown Miami pushed for new permits. Midtown Development proposed a massive redevelopment of Coral Gables’ popular Sunset Place. And, three new condo projects secured key approvals. This month, we also had Midtown’s Standard Residences and Grove Isle’s Vita Residences top off ahead of their 2025 completion. Read on to find out which other condo projects broke ground this month, along with details on other updates, in our monthly Miami condo pre-construction news roundup for September 2024: September 2024 – Miami Condo Pre-Construction Market at a Glance Broke Ground Rivage – Bal Harbour West Eleventh Residences – Downtown Miami Residences at Six Fisher Island – Fisher Island Solina...