We’ve recently been asked by clients about the steps to buy real estate with crypto in Florida. This new concept is quickly on the rise, with Florida in particular paving the way for investors to use cryptocurrency as a faster and potentially more lucrative method of payment.
Whether you’re looking to purchase using your cryptocurrency, have been sent a crypto offer, or are acting as a realtor for a crypto buyer, the information below can help guide you through the process:
Disclaimer: The information provided in this blog is for introductory purposes only. Always talk to a real estate lawyer directly before buying or selling with cryptocurrency.
Steps to Buying Real Estate with Crypto in Florida
There are various options you can choose for how you buy Real Estate with a digital currency in Florida:
Step 1: Understand How it Works
The first thing to do is to understand how crypto works.
- Cryptocurrency is a digital or virtual currency. It doesn’t exist in a physical form.
- Crypto is based on blockchain technology, which means it’s decentralized via a network of different computers.
- There are various cryptocurrencies and the values of each one can change wildly. This can be positive and negative, as you can quickly gain vast value compared to USD, or lose it significantly.
- Crypto transactions are publically viewable and trackable, not also anonymous. That can make it complicated when lenders need to verify where it came from.
You can read our more extensive guide on the positives and negatives of crypto in Real Estate here.
Step 2: Find a Seller Willing to Accept Crypto
You may struggle to find a seller willing to accept cryptocurrency. However, real estate agents, constructors and wealthy Floridians are rapidly changing their game to accept digital assets and currencies when selling property.
Step 3: Do You Want to Directly Transfer Crypto from Buyer to Seller?
One of the most common ways to buy real estate with crypto in Florida is to do it directly.
Both parties can create a private agreement to transfer the property, in exchange for a direct cryptocurrency transfer (wallet-to-wallet).
If this is your desired option, skip ahead to step 7.
Note that real estate agents are unlikely to be keen on this idea if they aren’t interested in receiving their commission via crypto.
Step 4: Consider Using Crypto as Collateral
One option is to use your digital currency as the down payment for the property. Various crypto lenders are offering products designed specifically for this intent, with annual rates around 1-6%. Crypto-backed loans can help you unlock new lending options, without the need to liquidate your crypto holdings to get financing. There’s no need to cash out your crypto or worry about taxable events.
The downside is that crypto-collateral loans have a hard-to-determine loan-to-value (LTV) because their value is volatile. Each lender has different LTV calculations. Volatility is something you should be very wary of.
Step 5: Consider Using NFTs
Real estate in Florida has also been bought as NFTs. NFTs (non-fungible tokens) are effectively digital receipts that can’t be replaced with something else.
They can be attached to real-world items such as real estate and open up new possibilities for real estate deeds and payments.
One option is to use an NFT to represent the ‘normal’ sale of real estate, act as a form of payment, collateral or both.
For example, in early 2022, a Pinellas County, FL property was bought in cryptocurrency as an NFT.
Experts say that doing so can boost property value, and prevent the deed from getting lost or create confusion in the future regarding value, history, size and taxes. An NFT will remain on the blockchain for as long as the blockchain exists.
Step 6: Consider Exchanging Your Crypto for Cash
Of course if you have crypto in your digital wallet, you can also consider cashing it out for USD.
If you need cash for financing, you can exchange a portion of your cryptocurrency into USD for the initial down payment – and pay the rest in crypto.
Remember to consider capital gains if you plan to cash out your crypto into USD.
Step 7: Talk to a Florida Real Estate Lawyer
It’s highly advised that you contact a Florida real estate attorney when buying or selling a property with crypto.
The real estate industry is new to cryptocurrency and there’s a lot of bad advice out there. You must meet all legal obligations when making a real estate sale, such as taxes, inspections, contracts and fees.
An attorney will ensure you complete every step smoothly and legally, thus avoiding liability.
Our Florida crypto real estate lawyers are quickly gaining authority in the area and would be happy to take your call for free today.
Step 8: Create a Contract
Even if selling or buying with crypto, you still need a real estate contract.
You need to protect yourself from potential liability issues and problems – such as liens, title issues, property inspection revelations, the seller backing out, deadlines being missed and much more.
It is highly advised that you work with an experienced Florida real estate agent to draft the contract, especially as it involves crypto which you’ll struggle to find a reputable DIY service for.
Step 9: Consider the Tax Implications
Crypto is subject to capital gains when you make a profit. The IRS considers cryptocurrency a capital asset.
- If you sell it and make a profit in the same year, you make a short-term capital gain.
- If you’ve held onto the asset for more than a year before selling, it’s considered a long-term capital gain.
Therefore, you will need to consider the capital gains tax you may have to face.
Step 10: Complete All Regular Real Estate Purchase Steps
Just because you’re taking an unconventional route of a real estate transaction with crypto, doesn’t mean you’re exempt from completing the following essential steps:
- Make an offer.
- Get a property inspection.
- Get a property appraisal
- Perform a title search.
- Ask for repairs or negotiate a reduction.
- Meet contingencies.
- Gain title insurance.
- Attend closing and meet the closing obligations.
Contact Our Real Estate Lawyers to Buy Real Estate with Crypto in Florida
If you are looking to buy real estate with cryptocurrency in Florida, then our Florida real estate lawyers can help.
We are growing in experience and authority in crypto sales and welcome you to receive a free consultation.
Our St Petersburg and Riverview real estate attorneys at Battaglia, Ross, Dicus & McQuaid, P.A. will review your circumstances and ensure your transaction goes smoothly.
Contact us today to schedule a free consultation.