TO sell and buy property is often nerve wracking. To do the deal with Bitcoin seems like just ratcheting up the stakes.
But it has been an emerging prospect as the currency gains acceptance. In the past month, a handful of vendors across Australia have advertised their willingness to accept the cryptocurrency as payment. It seems mostly a marketing stunt to get publicity for their listing, so it has yet to become a market trend.
Indeed there’s no known Australian property sale where the buyer has actually accepted Bitcoin since the currency was launched in 2009.
The recent vendors have mostly indicated their preparedness since they already have one of the 13 million crypto wallets on Coinbase.
Back in 2013 there was a buyers’ advocate who accepted Bitcoin payment for services of $1300 which meant 10 Bitcoins were paid. One Bitcoin equalled A$130 at the time.
The current rush in Bitcoin-accepting vendors comes amid the seesawing surge in the value of bitcoin to over US$11,500, marking a 1200 per cent rise this year. It could, of course, become the Uber of the financial world with Finder.com.au insights manager Graham Cooke believing Bitcoin could revolutionise property.
But for it to become normal, it will have to get the official involvement of government along with the banking and conveyancing industries.
For starters, there is an issue with the deposit payment which is regulated by state governments. Yes, the deposit could be paid in Bitcoin, but it will need to be immediately cashed in and then paid in dollars into the selling agent’s trust account for safe keeping until settlement.
The financial expert Peter Switzer recently advised many cautions, but “suspects cryptocurrencies are like most things modern and seemingly illegal, think Uber, Airbnb, etc, they will be here to stay.”
Switzer noted in days gone by, the most asked questions he would get were, firstly, when will interest rates rise and should I fix now? And secondly, do I think there will be a house price collapse? “But now all I get is Bitcoin questions,” he said.
Anyone doing a deal involving Bitcoin and property has requirements of an increasingly vigilant Australian Taxation Office. They demand you record four things: date of transaction, value in AUD, purpose of the deal, and “who the other party was even if it’s just their Bitcoin address”.
There are state government stamp duties to be paid in regular currency based on the property market value and Australian currency.
Of course, there’s not just issues around the legalities. Bitcoin’s value has fluctuated dramatically so the initial and final value of any transaction could be up for dispute. The capacity of next day exchange and settlement might alleviate the issue, but what would happen over a typical settlement period? After all, an $800,000 property exchange in November cost around 100 Bitcoins, so would the buyer still be there when the value of their required Bitcoin outlay has gone up to $1.1 million?