Buying a house with Bitcoin in Australia

Bitcoin reached record highs in 2021, and all though it’s still bouncing around, you may have hung on to some. At the same time, you may, like many Australians, be looking to get into the property market. So, it begs the question: Can you buy a house with Bitcoin? The answer is, yes.

Bitcoin house sales are already happening

Although buying and selling for Bitcoin has not entered the mainstream in Australia’s property market, there have been several publicised sales where sellers said they would accept the cryptocurrency. In 2020, a home in Reservoir, Victoria was listed for sale by an owner who was open to the idea of selling his property for Bitcoin, because “Bitcoin, tomorrow, could jump to $20,000”. It has, in fact, surged much higher since.

This wasn’t the first, either. A beachfront property in northern NSW was put up for auction in 2019 with all bidding conducted in Bitcoin.

Of course, if you’re looking to purchase a home only with Bitcoin, it will certainly limit your choice of properties.

Is it better to hold on to your Bitcoin?

Bitcoin is a volatile commodity — one of the reasons why so many have been buying Bitcoin as an investment — and it’s impossible to predict the market. Whether to hold or spend your Bitcoin will depend entirely on your individual investing strategy.

Both the Australian housing market and Bitcoin see ups and downs, but property has never been as volatile as Bitcoin. Whatever happens to house prices, if you own a house you’ll always have something to show for it. The question is, are you happy to withstand Bitcoin’s (potentially very low) lows as well as the meteoric highs, or would you like to unload your Bitcoin investment into property?

How to buy a house with Bitcoin in 5 steps

1. Narrow your search to find the property you want to buy.
2. Start negotiating and agreeing on a price with a seller prepared to accept a specified quantity of Bitcoin, or an agreed AUD price paid in Bitcoin.
3. Find a solicitor or conveyancer prepared to work with Bitcoin, to help you transfer the funds from your wallet to the vendor’s wallet. Expect the cost of conveyancing to be higher.
4. Consult your accountant to check for any tax implications for using Bitcoin to purchase the property.
5. Finalise the sale by transferring an agreed quantity of Bitcoin, or agreeing to a current AUD to Bitcoin exchange price, and transfer the Bitcoin to the vendor’s designated wallet.

Other considerations before you go ahead

There are a number of additional things to think about if you intend to buy a house with Bitcoin. These are some of the main concerns:

• Stamp duty (title transfer duty). Currently stamp duty can only be paid for in Australian dollars.
• Taxes. Once you dispose of your Bitcoin in order to obtain property, you will almost certainly be liable to pay capital gains tax on the increase in value (in this case the value of the house in AUD minus what you paid when you purchased the Bitcoin).
• Volatility. If the settlement period is a standard 2-3 months, the price of Bitcoin could change dramatically during that period, a problem for either the buyer or seller if the sales price was agreed in Bitcoin. If the sales price was agreed in AUD, but to be paid in Bitcoin equivalent, it could be difficult to agree on an exchange rate on settlement day since it fluctuates minute-by-minute.
• Big upfront cost. if you intend to pay using Bitcoin you may need to pay the full amount upfront and in full, without the benefit of a home loan.

Is Bitcoin likely to become a common form of payment for houses?

It’s hard to say whether Bitcoin will ever replace cold hard cash for buying a house, although the number of sellers accepting cryptocurrency appears to be on the rise.

Economist Brendan Markey-Towler certainly thinks so, telling The New Daily that as blockchain technology improves it “will almost certainly allow cryptocurrencies a new burst of growth as they become more efficient to use”.

Aside from mainstream acceptance of cryptocurrency as a common form of currency, government regulation is also holding back banks and real estate agents from engaging in the ‘crypto-economy’, said Markey-Towler.

“The various Australian governments do not yet recognise the validity of blockchain-based ledgers on the whole. And so while cryptocurrency transactions might take place on the blockchain, the government needs to be notified in order for off-chain transfers of ownership to be registered in government ledgers, and so that they can take their cut of the proceeds in stamp duty.”

“That makes the process of selling the house more cumbersome than it might otherwise be.”

However, if you’re ready to operate outside the norm, and have some Bitcoin lying idle, a bit of inconvenience is probably not going to stop you.