Home owners wanting to sell quickly are increasingly accepting payments in Bitcoin – even though governments are denying the virtual currency is money and taxing holdings as an investment.
The latest property deals to go through with Bitcoin are from a Sydney, Australia estate agent.
Forsyth Real Estate will accept deposits on homes paid in Bitcoin and say the online payment is aimed at encouraging overseas investors to buy homes as they do not have to worry about foreign currency exchange rate fluctuations.
Managing director James Snodgrass explained Bitcoin cut the cost of international transactions significantly.
“Before launching the service we had talks with financial advisers who explained the risks and advantages and we are pleased with the findings,” he said.
Blow from IRS
Meanwhile, the US Internal Revenue Service (IRS) has decided not to recognise Bitcoin as a currency, which means any exchange rate fluctuation is treated as a chargeable gain instead of a tax exempt gain.
This is a blow for investors who hold stocks of Bitcoin as they now face paying tax on any profits they make from the improving value of the virtual money.
“The same general principles of tax that apply to property transactions will also cover Bitcoin and other virtual currencies,” said an IRS spokesman. “These transactions will be taxed as income or chargeable gains depending on whether they are a speculative trade or an investment.”
Accountants PricewaterhouseCoopers estimate the current issue of Bitcoin is worth $8 billion and investors make around 80,000 transactions a day.
Bitcoin has caught the imagination of many online investors – one Norwegian who spent $14 on a few of the coins in 2009 realised $850,000 late last year.
Hackers hit electronic vaults
Lately, Bitcoin has come under criticism from governments and dealers as companies holding the currency in virtual safes have lost millions of dollars to hackers infiltrating their security systems.
One of the problems for Bitcoin investors is the risk of theft as dealers and traders are not regulated and any holding is outside of financial compensation processes.
Bitcoin exchange Flexcoin closed after nearly 900 Bitcoin worth £362,000 held in an electronic vault disappeared in an alleged hacking incident earlier this month. The company immediately ceased trading as the company did not have the assets to cover the loss.
Bitcoin firm MtGox also shut blaming hackers for the loss of 744,408 Bitcoins worth about £210 million.
Another exchange, Poloniex admitted that hackers had stolen 12% of the firm’s Bitcoin reserves.
