Why Real Estate Transactions In Cryptocurrency Is Not So Simple?
Real estate transactions in cryptocurrency, such as buying and selling with digital money, inspired many crypto enthusiasts. But this is not as easy as we would like. Some points complicate these processes, thanks to traditional mortgage lenders. The main difficulties faced by those who want to pay for the purchase of real estate are described further.
The first obstacle that stops from using digital currency in real estate transactions is the difficulty in identifying customers. Even enthusiasts are often not ready to get involved in such deals due to distrust of people unknown to them. It is very difficult to check the reliability of person in this case, and mistakes in this matter can not only deprive profits, but also cause losses.
Due Diligence transactions and cryptocurrency volatility
Is it needed to confirm the source of cryptocurrency funds? In most cases now it is not possible. Through buying or renting real property with cryptocoins, this issue makes possible to dishonest businessmen to launder money, received from illegal business and criminal activity. Of course, it does not mean that all buyers are criminals, but this is a very attractive way for money laundering, which will undoubtedly affect a large percentage of such people among buyers and tenants. Another legal issue confronting participants in real estate operations using digital currency, is declaring the proceeds from the sale of digital money to the tax authorities.
In addition to these legal issues, many are concerned about the high volatility of cryptocurrencies, which can significantly change the set price for a short period of time. However, according to experts, this problem can be solved by agreeing on prices in fiat currency, like US dollars or Euros, and making payments using cryptocurrency at the exchange rate, at the time of the transaction.
Another problem is a sum of real estate transactions. Typically, these amounts range from tens of thousands to several million dollars. Such large real estate transactions in cryptocurrency carry a high risk of losing digital funds due to hacker activity and the irreversibility of transactions.
Real estate transactions in cryptocurrency does not cancel tax liabilities
From different enthusiasts you can hear that real estate sellers do not have to pay taxes for the income, received from the sale. In fact, no one has canceled tax liabilities, no matter what currency was used to pay. Real estate is in any case located on the territory of a specific state. The fact of transfer of property from one owner to another cannot be hidden or somehow circumvented if you want to be the legitimate owner of the acquired property. In this case, the main thing is to properly prepare and arrange from a legal point of view all the documents for the transaction, that are necessary in a particular state.
Uncertainty in politics and economics
The rather complicated geopolitical situation in the world does not allow us to make any predictions for 2019 with sufficient accuracy. There are certain trends, both in politics and in the economy, but they are rather contradictory and often multidirectional, which does not allow us to specifically count on a certain result.
Anti-Money Laundering and Know Your Client
The fight against money laundering is especially relevant when it comes to the anonymity of the cryptocurrency wallets owners and anonymous transactions. In order to purchase real estate it is necessary to transfer large sums from cryptocurrencies to fiat currencies, and for this you have to go through KYC to check the source of the money. This of course complicates the process of buying and selling real estate using cryptocurrency, so not everyone is eager to conduct such transactions.