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Dubai property venture with homes to buy using bitcoin

The Knox Group of Companies, with headquarters in the Isle of Man, announced late on Tuesday it will launch a residential and commercial property development in Dubai valued at £250 million (Dh1.19 billion), with residences that can be purchased in the digital currency bitcoin.

The company said the 2.4 million-square-foot property venture called Aston Plaza and Residences, consisting of two residential towers and a shopping mall, will be the first major real estate development that will accept bitcoin as payment.

The Dubai project is one step toward efforts to push bitcoin into the mainstream. Maligned and ridiculed in its early days, bitcoin hit a record high of US$4,870 on Friday, surging more than 400 per cent so far this year.

The whole project is expected to be completed by late 2019.

“This a great opportunity for the cryptocurrency community to offload some of its significant gains, especially the early adopters, and actually deploy them in hard-core assets which I’m building,” said Knox’s chairman, Doug Barrowman.

Mr Barrowman, originally from Scotland, in 2008 founded Knox, which engages in private equity, property and wealth management. The company manages £1.5bn in assets, he said.

To read full article:

https://www.thenational.ae/business/dubai-property-venture-with-homes-to-buy-using-bitcoin-1.625987

 

Tips for buying a house with bitcoin

Bitcoin took a wild ride in 2017, reaching a record high above $19,800 in December and then plummeting below $11,000 in the same month.

The cryptocurrency isn’t just a risky investment opportunity for the adventurous; it’s becoming an alternative way of paying for regular things. Over 100,000 merchants worldwide accept bitcoin, including Microsoft, Expedia and at least one Subway sandwich shop.

You can also buy a house with bitcoin, and it’s not as hard as you may think. You just need one thing: For the buyer and seller to agree on exchanging bitcoin for the property.

 

Consider the first single-family home sale in Texas involving bitcoin, announced in 2017: “The challenge, which actually wasn’t all that challenging, was to figure out who would do an exchange that large,” J Kuper, broker at Kuper Sotheby’s International, told CNBC’s Diana Olick.

The parties involved completed the transaction with BitPay, which turns bitcoin into dollars, because the seller wanted U.S. dollars, Olick reports. BitPay has handled other real estate transactions, including a Lake Tahoe property that sold in 2014 for 2,739 bitcoins, or $1.6 million.

 

Bitcoin took a wild ride in 2017, reaching a record high above $19,800 in December and then plummeting below $11,000 in the same month.

The cryptocurrency isn’t just a risky investment opportunity for the adventurous; it’s becoming an alternative way of paying for regular things. Over 100,000 merchants worldwide accept bitcoin, including Microsoft, Expedia and at least one Subway sandwich shop.

You can also buy a house with bitcoin, and it’s not as hard as you may think. You just need one thing: For the buyer and seller to agree on exchanging bitcoin for the property.

Consider the first single-family home sale in Texas involving bitcoin, announced in 2017: “The challenge, which actually wasn’t all that challenging, was to figure out who would do an exchange that large,” J Kuper, broker at Kuper Sotheby’s International, told CNBC’s Diana Olick.

The parties involved completed the transaction with BitPay, which turns bitcoin into dollars, because the seller wanted U.S. dollars, Olick reports. BitPay has handled other real estate transactions, including a Lake Tahoe property that sold in 2014 for 2,739 bitcoins, or $1.6 million.

Buy a home with bitcoin? Here’s how one buyer did it

For one real estate owner and developer in Manhattan, BitPay won’t be necessary. Benjamin Shaoul of Magnum Real Estate Group says he has buyers who want to pay with bitcoin, and he plans on keeping it.

“I think it will become a long-term means to make payment,” Shaoul told Olick.

Sites like Open Listings are making it easier to find properties you can purchase with bitcoin with a search tool that allows you to look for the words “bitcoin” or “ethereum.”

All the same, since the idea of using virtual currency to purchase real estate is so new, there is a “still a lot of nervousness for newcomers to the currency,” Olick reports, adding “much of the concern may be around the lack of regulation so far in cryptocurrency and the lack of understanding as to how gains in bitcoin are taxed.”

Some experts warn that buying real estate with bitcoin won’t be simple in every case. As Open Listing notes, “Even if you are able to find a seller that’s willing to accept your offer in bitcoin, it can be tricky to find title insurance and escrow companies who feel comfortable handling virtual currency transactions. To take on your home purchase, they may require you to cash out your bitcoin so that your transaction can be treated more like a traditional house purchase.”

But at the end of the day, if you want to buy a house with bitcoin, there are ways to make it work.

Buying and Selling Property with Bitcoin Worldwide

When luxury brokerage Sotheby’s International Realty announced in September it had facilitated one of the first U.S. home sales for bitcoin, the dollar value of a single bitcoin equaled $3,429.

Since the sale of the home in Austin, Texas, for which the sales price was never disclosed, the value of a single bitcoin—a cryptocurrency backed by an online ledger called the blockchain—has quadrupled to over $13,800 and turned a swath of early adopters into millionaires in a matter of months. At one point earlier this month a single bitcoin was worth as much as $19,200.

One of the first purchases people make with their bitcoin windfall: A home, experts say.

“Real estate is the first impact I see for this nouveau riche,” said Joe Kelly, who co-founded Unchained Capital, a startup that allows bitcoin owners to borrow against their cryptocurrency.

The process is fairly straightforward for the homeowner involved in a blockchain currency transaction. It’s the buyer who faces more nuance as he or she weighs the tax implications and other considerations before trading their coins in for square footage, experts say.

In Miami, for example, a financier is seller a 950-square-foot Miami condo with a price of about 60 bitcoins, said Douglas Elliman broker Dean Bloch.
“My seller has been in finance for the past 25 years and he’s decided to sell this place just for bitcoin,” Mr. Bloch said.

The seller owns three other homes and is using the sale of the Miami condo as a way to acquire cryptocurrency, the agent said.

Once they get a suitable offer, the transaction works like an all-cash purchase, but instead of using bank accounts, the buyer transfers bitcoins to the seller’s digital “wallet,” which takes about 15 minutes.

The seller would also need a lawyer at the closing—who might accept fees only in dollars rather than bitcoin—and/or find a title insurance company to underwrite the sale, Mr. Bloch said.

A two-bedroom condo traded hands in December for 17.741 Bitcoin, or the equivalent of $275,000 in what Brown Harris Stevens agents Stephan Burke and Carol Cassis said on social media was the first “bitcoin to bitcoin” real estate transaction in the U.S. In past sales that involved bitcoin, the buyer converted the cryptocurrency to fiat through websites like Coinify or Bitpay before closing the sale.

Sellers accepting bitcoin, however, should keep a sharp eye on the daily fluctuations in the currency’s value due to its volatility. They can hedge against potential devaluation by adding a bitcoin premium to the asking price.

BUYING WITH BITCOINS

By contrast, the nouveau riche looking to get something tangible out of their cryptocurrency investment have a bit more to consider.

If a seller won’t accept bitcoin outright, then a buyer needs first to sell to a third party for U.S. dollars, euros or another fiat currency.

Property site Redfin reports that its brokers have facilitated a number of deals where buyers sold bitcoins to make the down payment. For instance, one buyer sold two coins, each for over $7,400, to make the down payment on a home in Carlsbad, California.

Not every exchange has gone so smoothly, however. Redfin Agent Carina Isentaeva, based in San Francisco, saw a deal for a luxury home in Silicon Valley fall through when the client couldn’t sell bitcoins in time to make good on his offer.

Even a direct exchange of property for bitcoins holds tax implications a buyer should consider, said Robert W. Wood, a San Francisco-based tax lawyer.

The U.S. government recognizes bitcoin as property and officially under the new tax law starting Jan. 1, 2018, anyone trading cryptocurrency would trigger a capital gains tax.

Mr. Wood compared buying property with cryptocurrency to trading IBM stock for a new home. The home buyer would pay roughly 20% in capital gains tax and another 3.8% net investment tax on the amount their bitcoins had appreciated since they first bought or mined for them. That could be one doozy of a tax bill if the trader got into the crypto game when infant bitcoins were worth less than a dollar.

 

To read full article:

https://www.mansionglobal.com/articles/84702-buying-and-selling-property-with-bitcoin