Can You Buy Real Estate With Crypto in Canada?

Before I start, this is a gentle reminder that this post is not a financial or tax advice. Before proceeding with any real estate transaction with crypto, consult your lawyer and financial advisor.

So let’s get right to it!

With the resurgence of interest in using cryptocurrencies for purchases every year, and more and more investors are adding crypto to their portfolios, it’s no surprise that this question on whether we can purchase real estate with crypto gets asked all the time. With the continuing affordability issues in the country, however, some Canadians look at various creative options to fund their real estate purchase. So…

Can you indeed buy real estate with crypto in Canada?

The short answer is… yes, it is possible to use cryptocurrencies to purchase real estate in Canada. However, there are several important considerations to keep in mind and it is not as straightforward as you might think:

Legal and Tax Implications

Cryptocurrencies are not recognized as legal tender in Canada, and transactions involving crypto are considered high risks by regulatory bodies. In Canada, transactions involving digital assets can have tax consequences. Converting cryptocurrency to Canadian dollars (CAD) may trigger capital gains tax, as the Canada Revenue Agency (CRA) considers such conversions a taxable event. You can read more about this here: Information for crypto-asset users and tax professionals

Cryptocurrency transactions are also subject to strict Anti-Money Laundering (AML) regulations. You’ll need to provide proof of the source of funds to ensure compliance. Buyers may be required to disclose their identity and verify the legitimacy of their cryptocurrency holdings.

Crypto Volatility

Cryptocurrency prices are also volatile. Values can change dramatically on a day-to-day basis which can lead to significant fluctuation during the transaction process, potentially affecting the agreed purchase price. Because of its unpredictability, using it in any transaction can be risky especially if the price fluctuates below the desired value in fiat or traditional currencies by the seller. Bear in mind, too, that when transferring or converting cryptocurrency to fiat, blockchain network fees are charged. Cryptocurrency transactions may involve higher legal and administrative fees due to their complexity.

Financing Challenges

Traditional mortgage lenders, including major banks and credit unions, typically do not accept cryptocurrency as a source of down payment or collateral. Some alternative lenders might consider it, but they often charge higher interest rates and fees. Therefore, many buyers choose to convert their cryptocurrency holdings into CAD to facilitate the purchase.

Some private or alternative lenders might accept cryptocurrency-backed financing, but these often come with higher interest rates and fees.

Seller Acceptance

While some sellers and real estate developers in cities like Toronto and Vancouver have begun accepting Bitcoin for property purchases, this practice is not yet widespread. Most transactions still occur in CAD, so finding a seller open to crypto is crucial. The property seller must be willing to accept cryptocurrency as a form of payment. The terms of the transaction must outline the specifics of the cryptocurrency exchange, including the type of cryptocurrency, the amount, and how it will be transferred.

Fiat (CAD) is Preferred

In recent years, several companies have also been formed to facilitate this type of transaction. However, in these websites, it’s noticeable that for the asking price, both the fiat and bitcoin prices are both displayed on the listings.

At the end of the day, Fiat currency (CAD in this case) remains a better option for purchasing real estate due to its stability, widespread acceptance, and regulatory clarity. Unlike cryptocurrencies, fiat money is not subject to extreme price volatility, ensuring that the value agreed upon at the start of the transaction remains consistent. Additionally, fiat is universally accepted by sellers, lenders, and legal institutions, making the process smoother and more straightforward. Its established infrastructure, from banks to legal systems, provides greater security and transparency, minimizing risks like fraud or disputes. These factors make fiat currency a more reliable and practical choice for real estate transactions. While it is possible to trade crypto for a house, one must be extra careful and fully informed when making decisions to proceed.