With bitcoin’s increasing popularity, tenants are wondering if they may pay their monthly rent to the landlord with bitcoin as well. Rent payments using Bitcoin are theoretically viable, however, there are stumbling blocks and limitations when using the cryptocurrency in practice.
Bitcoin has long been more than a passing fad: the digital currency has made its way into daily stock market updates, and an increasing number of businesses are incorporating the main cryptocurrency into their payment systems. The topic of practical applicability in real estate transactions soon emerges for individual Bitcoin holders and investors: Is it conceivable and permissible to pay monthly rent in Bitcoin? If you have a particularly large wallet, you might even consider using Bitcoin to fund a real estate acquisition.
Can the monthly rent for the apartment be paid in Bitcoin?
In theory, there’s nothing stopping you from paying your rent in Bitcoin if you and your landlord agree on the amount and both of you have crypto wallets. However, landlords that are willing to accept Bitcoin (or another cryptocurrency) as payment for rent are still hard to come by. This is due to two factors:
- The Bitcoin exchange rate changes so much that calculating rental revenue, which must be done in euros, is impossible. Housing businesses are unable to participate in such experiments since the value of their real estate portfolio is determined by the property’s future income (cash flow). There may be issues with stockholders and/or financing banks. The vast majority of private landlords are in their forties or fifties, and they have a natural allergy to Bitcoin, the ostensibly new-fangled method of payment.
- The taxation of Bitcoin profits is complicated. The banking association specifies in general how investments and profits in Bitcoin are to be handled for tax purposes in the article “Cryptocurrency tax trap.” Because bitcoin is classified as “other economic property,” it must be valued (in euros) at the time of receipt, even if it is a monthly regular payment like rental income or flat rent. This necessitates a significant amount of effort on the part of the owner when it comes to arranging rental income.
In this regard, it’s possible that news of the first Bitcoin-based rent payment innovations is reaching us from Dubai. Because there are no taxes on rental income or property, the digital currency can be more easily integrated into daily life. By the way, forward-thinking real estate investors have been discovering the Dubai real estate market for quite some time – not just since the crypto money boom.
As a tenant, what do I have to do if I want to pay my rent in Bitcoin?
Finding a landlord who takes Bitcoin payments is thus a hurdle for tenants. Because Bitcoin is not a legally recognized form of payment, the tenant cannot insist on paying the rent in Bitcoin. However, because of the flexibility of the contract, a Bitcoin rental payment can be regulated within the scope of the rental agreement. The deal is most likely a barter transaction, in which the use of the residence is compensated by the exchange of another economic product.
The idea of accepting Bitcoin rent payments from international landlords who receive their revenue from other countries has a lot of potentials. In the case of a typical 2-room, 500-euro cold plus operational costs apartment in most European cities metropolis, finding a suitable landlord who would agree to a Bitcoin payment experiment could be tough. Other problems emerge as well, such as whether the rental price brake applies if the BTC price rises.
In most cases, there are enough potential renters for the two-room apartment stated, thus the (reasonable) owner should take the low-hanging fruit and refuse to rent to a bitcoin payment.
Rent collecting with Bitcoin could be appealing to owners of high-end flats or other high-value rental properties. For starters, these are frequently owned by multinational clients, and finding renters for high-priced apartments is still challenging. This could help the tenant get a better deal. The broker may also be proactive in enforcing and displaying the customer’s atypical contract. In addition, real estate brokers are required to identify customers who pay rent for flats worth more than 10,000 euros – this applies to all sales.
Rental agreement: Does it make sense to pay the rent in Bitcoin?
The economic factor is mostly determined by the lease’s contract time and your own judgment of Bitcoin’s worth development. Because bitcoin’s price fluctuates so much, it only makes financial sense for a tenant to sign a long-term lease in bitcoin if he or she believes the price will plummet. If the owner believes that prices will grow in the long run, it makes appropriate to sign a long-term lease that is handled in Bitcoin. It would be necessary to discuss a particular arrangement in the rental agreement, with the amount of the rental payment being routinely aligned and readjusted to the Bitcoin conversion rate. When a normal rental agreement is signed, this is standard procedure.
Protection against inflation: does it make sense for the landlord to conclude a rental agreement in Bitcoin?
Landlords who expect inflation to rise while also being hopeful about bitcoin’s progress may be happy about rental income in bitcoin. The “digital gold” could provide inflation protection; nevertheless, in this case, opening clauses must be avoided.
State regulation and restrictions on bitcoin payment flows are foreseeable
Regulators are getting increasingly interested in regulating the cryptocurrency as the crypto market and Bitcoin, its key currency grows in popularity. The focus appears to be on money laundering and tax evasion. In the second instance, governments and central banks (which should actually act independently) are concerned that shadow currencies, which they cannot control, will be justified – the central bankers’ concern is understandable, especially given the high inflation expectations. Interventions in this area are likely to increase in the near future. Tenants and landlords considering tying themselves to the currency as part of a long-term lease should take this into account. Regulatory interventions have the potential to cause significant fluctuations.
What is Bitcoin?
Bitcoin is a digital currency with a decentralized worldwide payment mechanism. Without the need for a central processing office, transfers are processed directly between users over the Internet. Bitcoins are transferred via transactions that function similarly to bank transfers, but without the use of a bank. To send money, all the payer needs is the payee’s bitcoin address (which is comparable to an account number). The blockchain, which functions as a sort of public register, keeps track of all transactions. Bitcoin’s price is determined by supply and demand.
Can I Pay The Rent Of My Apartment In Bitcoin? Summary
- With bitcoin’s increasing popularity, tenants are wondering if they may pay their monthly rent to the landlord with bitcoin as well.
- Rent payments using Bitcoin are theoretically viable there are stumbling blocks and limitations when using the cryptocurrency in practice.
- The topic of practical applicability in real estate transactions soon emerges for individual Bitcoin holders and investors: Is it conceivable and permissible to pay monthly rent in Bitcoin? If you have a particularly large wallet, you might even consider using Bitcoin to fund a real estate acquisition.
- The banking association specifies in general how investments and profits in Bitcoin are to be handled for tax purposes in the article “Cryptocurrency tax trap.” Because bitcoin is classified as “Other economic property,” it must be valued at the time of receipt, even if it is a monthly regular payment like rental income or flat rent.
- Because Bitcoin is not a legally recognized form of payment, the tenant cannot insist on paying the rent in Bitcoin.
- The idea of accepting Bitcoin rent payments from international landlords who receive their revenue from other countries has a lot of potentials.
- In most cases, there are enough potential renters for the two-room apartment stated, thus the owner should take the low-hanging fruit and refuse to rent to a bitcoin payment.
