Absolutely! Buying a house with bitcoin is possible … although there haven’t been all that many instances of it. Technically bitcoin is not recognised as a legal tender by the Reserve Bank of Australia but that alone doesn’t rule it out as a form of exchange for a significant asset such as a house.
Using Bitcoin, or any other crypto coin would be appealing to use due to their lower transaction fees and the fact that it is decentralised.
Pros of purchasing a House with Bitcoin
- Acquirement of a more secure asset
Because bitcoin is so volatile meaning it can fluctuate drastically, trading it in for a more secure asset such as a house can be beneficial. - Potential Discount
Sellers may offer a discount for using bitcoin as the payment method, this is because they may be confident that the value will increase. Bitcoin also has lower transaction fees which can reduce the total amount you would traditionally pay. - Increased Purchase speed
Similar to paying in cash it can speed up the process as it cuts through the typical hurdles that mortgages have. Using bitcoin to purchase a home could also make your offer stronger and stand out.
Cons of Purchasing a House with Bitcoin
- Volatile nature
Due to bitcoins highly volatile nature some sellers may not want to deal with the uncertainty of it. - Finding a seller
It may be difficult to find sellers willing to accept it and it isn’t normally advertised. - Unfamiliarity with digital currency
Many people are unfamiliar with cryptocurrency as it is fairly new and may not want to take the risk. Even insurance and escrow companies and those who don’t understand cryptocurrency still may not want to partake due to the anonymity that cryptocurrency holds.
Stamp duty consideration when using bitcoin
Bitcoin would complicate transactions that involve stamp duty as currently stamp duty can only be paid in Australian dollars and is calculated on the sale price of the property. Therefore stamp duty will still need to be paid in AUD even if you purchase a house with Bitcoin. It is important to note that certain states will not accept bitcoin as a payment of stamp duty such as the Victorian Government.
Can these transactions be done through PEXA workspace?
Currently PEXA only allows for transactions in $AUD, so that in itself rules out a crypto based transaction. Without using PEXA the property conveyance would need to be conducted through the traditional process of paper settlement. Generally paper settlements are done through the bank handing over a cash cheque. The cryptocurrency version of this would be via sending the cryptocurrency from the buyer’s exchange wallet or ledger to the sellers. This however does mean there will need to be a lot of prior preparations.
Key Takeaway
Purchasing a house with bitcoin is possible however not all sellers may be on board with it due to the highly volatile nature of cryptocurrency. The best possible way to purchase a house with bitcoin would be to sell it and use it as a deposit or use it to make a cash offer. For more information or help, get in touch with our team via the contact form or by calling 1300 337 997.
Fatima is a legal intern at Openlegal and is currently in her third year studying Law and Media and communications at Macquarie University. Her interests are commercial, property and international law.
Phil is a director at OpenLegal. He has over 16 years experience working in private practice and in-house counsel in Sydney and London, giving him expertise in employment law, IP, finance, leases, dispute resolution, insurance and contracts.
