Such is the magnanimous presence of Bitcoin, that every single sector is wrapping themselves under its digital blanket. After making waves in restaurant and retail sector now it’s time for Bitcoin to make itself heard in the real estate segment. Starting from single family owned houses in Texas to Manhattan condos to Lake Tahoe land in California, Bitcoin is infiltrating into everything.
Ben Shaoul, the president of Magnum Real Estate Group was recently quoted as saying: “Our buyer has evolved, they’ve moved from mom and pops to young people who want to pay with various forms of payment. Cryptocurrency is something that has been asked of us — ‘Can you take cryptocurrency? Can we pay that way?’ — and of course when somebody wants to pay you with a different form of payment, you’re going to try to work with them and give them what they want, especially in a very busy real estate market.”
Shaoul is presently redeveloping a Lower East Manhattan building by turning it into plush condominiums priced within $700,000 and $1.5 million. He is hopeful that Bitcoin will help his company in achieving an extra edge over and above its competitors while operating in a market where inventory is easily available. Shaoul pointed out that: “I think the demographic of the crypto user is a younger millennial, but, that being said, you have a lot of people come over from other countries, who are buyers from different places, who like to trade in different types of currency. Not everyone wants to trade in dollars or yen or euros.”
He wishes to maintain stock of Bitcoins presently rather than proceeding with its conversion into dollars. Shaoul invests highly in the art market wherein Bitcoin has already made its presence felt in a large scale. He feels that there lies enormous potential waiting to be unleashed. However not everyone shares similar pro-Bitcoin feelings like that of Mr Shaoul. When the first ever single family house was put up for sale last month in Texas, the buyer agreed to engage into a Bitcoin activated transaction however the homebuilder wished for a dollar converted fee.
J Kuper working at Sotheby’s International Realty which acted as a broker in this deal stated that: “Austin is a really technologically advanced city, I’d say, so I was surprised we hadn’t heard anybody wanting to do this before. But, candidly, we didn’t know how to do it. It was a quick challenge and scramble to figure out all the moving parts, but we were instantly excited about the opportunity to figure that out.”
The parties to the transaction made use of a global Bitcoin payment service known as BitPay headquartered in Atlanta for facilitating the transaction. It aided the buyer by converting bitcoin into dollars. Given the recent scenario where Bitcoin value is on a constant up rise, the buyer was at significant risk of being overcharged as a result of which the seller agreed to fix a dollar specified price. Kuper was quoted as saying that :
“We found that on the day of the closing, we were kind of watching it [bitcoin’s value] through the day. The timing actually ended up perfect for the exchange, very well for our client, so there was really no hesitation, no need to postpone.”
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Kuper feels that the client bagged a “very fair” exchange rate however he could not rule out chances of further volatility. In spite of stabilising comparatively over the last six months, Bitcoin serves as a threatening plethora for newcomers. Neither the seller nor the buyer engaged in the Austin deal revealed anything about the transaction. The major cause of this confusion is lack of proper regulation in crypto sector and improper understanding of its taxation structure.
Jeremy Naylor, a partner at the firm Cooley expressed his thoughts regarding the guidance issued by Internal Revenue Service on bitcoin and cryptocurrencies in 2014, “What they said in that guidance is if you hold bitcoin or ethereum or one of these other convertible digital currencies as a capital asset, when you use that bitcoin to purchase goods or services — so for example, if I were to take $1 million in bitcoin to buy an apartment building or something — to the extent that bitcoin has appreciated since I acquired it, any of that gain, that built-in gain, would be taxed when I used the bitcoin to buy the building.” He drew a line of comparison in between the tax payment and stock selling for generation of cash. The inherent complicacy of real estate market is slowing down the Bitcoin advancement. The U.S. market has been comparative slower in adapting to Bitcoin empowerment.
“This industry of real estate is notorious for lagging behind in technology, and innovation. Now we are starting to innovate, so we’re very far behind. Bitcoin and payments with bitcoin have been around for years. Why it hasn’t touched down in real estate in the sale of an apartment is odd, quite frankly” expressed Shaoul.
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