Real Estate Investment: Using Crypto vs Investing in It

Hey folks! I’m a real estate developer and just dipping my toes into the crypto world, but I think I’ve got a knack for it. I’ve been looking into how I could use Bitcoin or other cryptocurrencies to fund culturally focused real estate projects. Most of what I find is about investing in Bitcoin or other coins, which just seems to be about buying them and hoping their value goes up. But I see this huge chance to actually USE these coins as currency, especially in ways that help diversify, bring more stability, and create income streams like real estate does. One big perk here could be for those who've made a ton from price increases to possibly avoid capital gains tax. From what I've gathered, you get taxed if you 1) swap crypto for fiat like USD, 2) trade one crypto for another, or 3) buy stuff with it. They tax you based on your cost basis depending on your tax bracket. But it doesn’t look like it covers actually using the crypto you have to invest in projects within the same crypto. I’ve successfully raised cash through a special purpose entity (like an LLC) multiple times in exchange for membership interests to fund real estate projects. I think I could do the same thing here, just raising a fund or cash for a specific project. If I manage to raise crypto, I believe I can convert that to cash without triggering taxes since the LLC’s cost basis would be what was raised. Does that sound about right? I’d really like to buy the development opportunity using Bitcoin or Ethereum, but convincing the seller to go for that is probably gonna be tough.

Not really sure what "invest the coins as currency" means.  People don't need to "invest EUR as currency", per se, right?  Do you mean build up reserves of BTC, etc., in order to be able to provide liquidity in a given (crypto-)currency (to a group of shareholders) without the fees associated with exchanging crypto for fiat? Yes, it does cover that.  That "investing" is the exchange of (crypto-)currency/asset for another asset, like membership interest / equity... ...just like this. No, that's wrong.  If I swap a house for someone else's LLC membership interest, it's a taxable event (IANAL non-accountant but I've paid enough to lawyers and accountants to know the answer). This is a different business proposal, if you'd still be willing to do that despite it being a taxable event.  I'm sure you could find people to do this; PM me. There are other ways besides 1031 exchanges.  Opportunity Zone funds & businesses (QOFs/QOZBs); anyone interested can PM me. Not sure about that. If it would make money regardless of the crypto aspect, I bet you could find plenty of investors.

Thanks for your response using quotes to follow easily. I’m not that sophisticated yet on here to do that. The most important issue is your premise that “exchanging” is the same thing as “investing” - I don’t think that’s true. I’m not saying that BTC would get exchanged into membership interest. It would be invested as BTC into the LLC. I know you would be getting membership in “exchange” but your asset denomination is still BTC. That’s what I mean about investing in that currency. Exchanging would be going from BTC to ETH for example (different currency). If it stays BTC and gets invested as such into the LLC, I really don’t think that’s a taxable event. Although, it might be. That’s the key though. If it’s not than you should be able to invest gains tax free given it would be like kind. I’m asking CryptoTaxGirl right now - https://cryptotaxgirl.com/ Any follow ups to that specifically? It’s a really important distinction and comes down to interpreting the tax code.

Firstly let me welcome you onboard, I see a great future in the blending you chose to take in combining bitcoin along with real estate development, why is because the two were among the top best three investments that one could use in this current digital economy dispensation and i think you've got it right by being on a smooth path. You're right, some buy for day to day trading while some for investment or for a store of value (asset). but people just don't buy but they speculate the price to determine when to buy or sell, remember bitcoin is unlike gold or real estate, it is volatile.

I'm not sure why the same "asset denomination" affects anything.  If I "invest" USD into an LLC, and get a membership interest, by your logic I would still have an "asset denomination" (of the LLC membership) of USD; and this is obviously a taxable event despite that perspective.  I don't think tracking whether the "asset denomination" is usually relevant to this type of discussion. No, unfortunately I don't think your chain of reasoning makes sense.  By your logic if I "invested" USD into a LLC and then "invested" USD into a different LLC this would not be taxable. That's the right path.  Interested in whether she say's it's not taxable on its face (I mean, if it's a tax-advantaged entity doing the "invest"ing, then something is different, but even then it's still not at all obvious there would not be potential gains / transfers).

This is too complicated. If we want to get cash without trigger a capital gains tax we have a much simpler option which is to borrow against our Bitcoin. There are several entities that offer this type of loans and it is a system that has been popularized by Saylor and others, explaining how the rich never sell their prime assets and what they do is borrow against them, and as the price of the asset rises, refinance.

You should get the repetition from forum member by doing many transaction.Or else you will be blindly eliminated,because you are just a newbie with few posts.First build your profile with the local boards.Their people will buy you in direct meet.Only deal done,ask them give you a feedback on forum.Once you get good trust,you will get huge business.