Nyc real estate bitcoin

Despite being the alleged first real estate transactions in New York in Bitcoin, the concept of using the currency in such a transaction isn't new.
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Filed under: Upper East Side News. A model apartment at East 89th Street. Loading comments Please refer to the following table summarizing the findings of the UK Treasury :. The FinCen collects and analyzes information about financial transactions to combat domestic and international money laundering. The organization has been regulating virtual currencies and related activities since OFAC is a financial intelligence and enforcement agency of the US Treasury Department responsible for administering and enforcing economic and trade sanctions in support of U.

OFAC treats virtual currencies the same as fiat currencies USD when it comes to Specially Designated Nationals — a list of people affiliated with sanctioned individuals, organizations and governments. Under OFAC, US persons are obligated to comply with sanctions obligations in transactions involving virtual currencies.

The CFTC is an independent federal agency that regulates futures and options markets. The goal of the CFTC is to protect financial markets from fraud, manipulation, and abusive practices. CFTC has the power to prosecute fraud related to Bitcoin transactions. For federal tax purposes, a virtual currency like Bitcoin is property.

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General tax principles applicable to property transactions apply to transactions using virtual currency. A taxpayer who receives virtual currency as payment for goods or services must, in computing gross income, include the fair market value of the virtual currency, measured in US dollars, as of the date that the virtual currency was received. Additionally, each of the 50 states regulates the use of the virtual currencies. There are several regulatory tools that states use to supervise the use of virtual currency.


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These include licensing requirements and money transmission laws. The following table summarizes the main features of the 2 approaches to a real estate transaction using Bitcoin: all-Bitcoin transaction and Bitcoin-USD Transaction, as compared to a traditional USD transaction in the third column:. Feature of a Real Estate Transaction. All-Bitcoin Transaction. Bitcoin-USD Transaction. USD Transaction. Up to 14 business days depending on the country. Price volatility risk. Contract default risk. Exists: buyer needs to realize gain on the disposed crypto, as it is considered property.

Escrow of down payment. No title insurance company would insure a seller against these risks. Proper due-diligence is a must. The seller does not receive those funds immediately. Rather, they are held in escrow by a title company or attorney until closing. In New York, for example, any person who stores, holds or maintains custody or control of virtual currency on behalf of others must obtain a BitLicense. Applying for a BitLicense is a highly complex and expensive undertaking.

The statutory language does not expressly exclude licensed New York attorneys from the BitLicense requirement. The issue of custody, or how to safely store digital assets, has kept institutional investors on the sidelines. There are several out-of-state trust companies that provide escrow solutions for storing digital assets.


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This volatility makes it impossible to know at the time a contract of sale is signed how much a Bitcoin will be worth at closing. As a result, it would generally be imprudent for a buyer, agent, or others to commit to a fixed amount of crypto as payment. The parties to a sale could try to avoid this problem by closing immediately or promptly after the contract of sale , which may be problematic for properties requiring extensive due diligence or approval periods. However, if a buyer and seller are insisting on specifying the contract price in Bitcoin or tying the price to the Bitcoin exchange rate at the date of the contract, it may be critical to include a clause to address potential fluctuations in the price of Bitcoin between the contract and closing dates.

New York’s first bitcoin real estate transaction raises new questions

Taxable gains from exchanging Bitcoin for real estate. In most real estate transactions, a seller anticipates that he or she will have to pay income taxes on any gain realized from the sale. But in an all-Bitcoin transaction, if a buyer is a U. In an all-Bitcoin real estate transaction, both buyer and seller may face undesired tax consequences.

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As a result, either party may be unwilling or unable to enter such a sale. Below are some examples. The IRS treats virtual currencies like Bitcoin as personal property. That is, the sale of real property for Bitcoin is not a sale of property for money, but an exchange of one type of property Bitcoin or another cryptocurrency for another real estate. In such exchanges, both buyer and seller must pay income taxes to the extent the fair market value of the property received exceeds their adjusted basis in the property surrendered. Inability to qualify for a exchange.

Bitcoin used for sale Upper East Side retail condo sale

An all-Bitcoin transaction may also prevent a seller from deferring recognition of gain in a like-kind exchange. But, as discussed earlier, very few if at all exchange qualified intermediaries may be willing or know how to hold virtual currency in escrow, meaning that it may be impossible for a seller to complete such an exchange to satisfy the requirements for IRC Section In that event, the seller will have to recognize any gain from the sale of the property.

This complication makes it almost impossible for any seller interested in a exchange to accept cryptocurrency as payment.


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Transfer Taxes and Title Insurance. Sellers unwilling to accept Bitcoin for their real property can request a buyer to convert his or her Bitcoin to dollars that in turn would be used to cover the purchase price down payment, remaining closing balance, and expenses, including title insurance premiums and transfer taxes. Offering to accept Bitcoin as payment may provide sellers with an advantage among investors with substantial Bitcoin holdings and a desire to move those holdings into real estate. Engaging in such offerings will require the seller and his or her representatives to understand the options of executing real estate transactions using Bitcoin and the various methods for converting Bitcoin into USD.

With such an understanding, plus appropriate legal and tax planning, sellers can set their listings apart and attract purchases using the billions of dollars currently held in Bitcoin. This article is provided for your convenience and does not constitute legal advice. The information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

Prior results do not guarantee a similar outcome.