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‘Don’t do it’: Four things to know before buying real estate with bitcoin – Article


Despite the recent fluctuations in cryptocurrencies, real estate listings with demand for bitcoin have appeared in recent months instead of traditional currencies.

"It is definitely becoming more popular", Ryan DeLuca, professional standard advisor for the Real Estate Council of British Columbia, told BNN in an interview in January.

Most recently a home in the Toronto area was listed for 34.62 bitcoin, which at the time of publishing went to about $ 490,000. But since the publication on 23 February, the real estate has not yet been picked up. There are also offers in other parts of the province and country – and reports of properties that sell for bitcoin in the US

Bitcoin has been on a wild ride in the last few months amid uncertainty about the regulations. After as high as US $ 19,511 per currency in December, the cryptocurrency acted on US10,852.87 from 12:10. ET on Friday.

Below DeLuca and other professionals give tips on what you need to know before you decide to jump on the bitcoin real estate car.

IT & # 39; S LEGAL

There is currently no law against the use of bitcoin to buy property purchase in Canada, but regulatory authorities such as the Real Estate Council of Ontario (RECO) are investigating the use of cryptocurrencies in real estate transactions.

"We are currently looking at cryptocurrencies in real estate transactions in terms of their potential. [the Real Estate and Brokers Act]" Joseph Richer, registrar at RECO, told BNN in an e-mail.

RECO arranges vendors, brokers and brokers, but no buyers and sellers, so it imposes no restrictions on how they choose to buy or sell real estate. Richer said, however, "we warn buyers and sellers to take proactive measures to protect themselves by seeking legal advice specific to the use of a cryptocurrency when considering their use in a real estate transaction."

Tannis Waugh, a Toronto-based real estate lawyer, said that while there is no problem with the use of cryptocurrency to buy real estate, other problems may arise.

"If both parties are satisfied, you can buy real estate anywhere – even a bag of potatoes," she told BNN via email. "The bigger problem is logistics."

DIGITAL COINS CAN NOT BE TAKEN IN TRUSTS

Digital currencies can not currently be kept in trust accounts, which makes bitcoin transactions much more risky.

"Trust funds are heavily regulated (as it should be) but the regulatory framework has not caught up with technology, we have created rules that have never considered the idea of ​​cryptocurrency," Waugh, who has had a cryptocurrency policy since the summer is engaged in the payment of fees, explained.

"When you pay your lawyer money on real estate transactions, you pay them in trust and the lawyer has to keep them on a special account statement," added Waugh. "If you agree that your lawyer keeps cryptocurrency out of a trust account, there is a lack of supervision and liability that generates more risk for the customer. "

DeLuca said that if a deposit is considered in the contract, the buyer and the seller would have to negotiate for a third party to keep that down payment

"That is risky, because in a trust account the funds are protected if the deal collapses. If the deal collapsed using a digital currency, the counterparty to the transaction would have to find the other party and prosecute them to get their money back. "

TAXATION MAY BE A ISSUE

There are uncertainties about how real estate transactions with bitcoin would work for tax purposes.

" If you buy a home for 20 bitcoin, what is the purchase price that you enter in transfer for land transfer tax? Furthermore, what if that 20 bitcoin drops to 18 bitcoins from the execution of the agreement to the closing date? What value do you use for capital gains, if any ?, "Waugh said.

DeLuca said that properties purchased and sold with bitcoin in Canada are still valued in Canadian dollars for tax purposes.

" So if the value of the bitcoin flights and the buyer has paid too much for the property, they can not resell that property when a buyer comes along and looks at the valued value. "

IT IS NOT FOR EVERYONE

John Pasalis, president at Realosophy Realty, has advice for anyone who wants to buy real estate with bitcoin:" do not do it. "

" Je must be pretty mastered to do this ", he said via e-mail to BNN." What happens when Bitcoin tanks or peaks before closing time – one of the two parties gets the feeling that they are scammed? Yes, you can protect yourself against this risk; but again, you should be a pretty smart person to do that. "

Waugh said that the volatility of cryptocurrency is too extreme for her to recommend this type of transaction to customers.

" There are many more questions than answers, "she said." Only time and policy development will do something about it. "

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