For many people, it’s a dream come true. You get in early on a promising crypto project, HODL till the price goes to the moon, then cash out and buy a house.
Of course, it’s not always that easy, yet there are plenty of people who have pulled it off.
But what about actually buying a house using crypto? Well, there are plenty of people who have done that too, although fewer – and that could be about to change fairly soon.
Let’s take a look at some of the finer points of turning ones and zeros on the internet into brick and mortar in the real world.
Due to its pseudo-anonymity, many people still believe that crypto gains are tax free. In most jurisdictions, this is absolutely false, and people who believe that could find themselves in hot water when the taxman comes knocking.
With that said, let’s imagine one of your crypto investments was very successful, and you wanted to use the gains to buy a house outright. You’d have three main options:
This is the route that many early crypto investors chose. Since most lived in countries where crypto is treated as a CGT asset, they naturally had to pay capital gains tax on their crypto profits, but the process is pretty straightforward. You send your crypto to your local exchange, sell it for your local currency, and then send the fiat to your bank account. Not too tricky, but maybe not the best option if the crypto were to keep going up in value.
Depending on where you live, this could prove quite tricky, or quite easy. A quick online search will likely reveal several local companies who can help, and many mortgage brokers are gaining experience in facilitating these sales. However, there’s one important thing to point out – when you dispose of your crypto by sending it to someone else, you will almost certainly have to pay CGT on your profits, even though you’re not cashing the crypto back out into fiat first.
OK, now we’re talking! Imagine selling your crypto just before it did another 2X or 3X or 10X – you’d be kicking yourself with ‘seller’s remorse’ for years. But if you borrow against your crypto, you’re able to extract the value you need (to buy the house, for example) while still retaining ownership of your appreciating asset.
This is what Liquid Loans allows you to do with your PLS – collateralize it and extract value in USDL stablecoin. With Liquid Loans, YOU are in control of your collateral level, there’s no middlemen or third parties taking a cut, it’s just you and the code.
Another potentially attractive aspect of this strategy is that, in most jurisdictions, loans are not taxable.
At the time of writing, major banks don’t accept crypto for mortgage repayments, but if you borrow against your crypto using the strategy above, you can sell your loaned stablecoin for fiat and use that to pay your mortgage.
With this strategy, you don’t have to wait for your crypto to be worth the outright value of the property before you can get started (which is handy), and it can help with maintaining a collateral ratio you’re comfortable with. And, as stated above, in most jurisdictions, loans are not taxable.
The meteoric rise of crypto has given investors an entirely new asset class to invest in. But unlike investing in property, DeFi passive income opportunities like the Liquid Loans Stability Pool or the Liquid Loans Staking Pool have zero overheads once set up.
There’s no body corporate fee or strata to be paid, no council rates, no maintenance, and no risk of problem tenants trashing the place or not paying their rent.
If you’re not already familiar with these impressive yield-bearing opportunities, we recommend you take the time to watch the highly educational video below.
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Disclaimer:Please note that nothing on this website constitutes financial advice. Whilst every effort has been made to ensure that the information provided on this website is accurate, individuals must not rely on this information to make a financial or investment decision. Before making any decision, we strongly recommend you consult a qualified professional who should take into account your specific investment objectives, financial situation and individual needs.
Connor is a US-based digital marketer and writer. He has a diverse military and academic background, but developed a passion over the years for blockchain and DeFi because of their potential to provide censorship resistance and financial freedom. Connor is dedicated to educating and inspiring others in the space, and is an active member and investor in the Ethereum, Hex, and PulseChain communities.
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