As Bitcoin is starting to be used in real estate transactions around the world, the Australian Taxation Office (ATO) shares its view on the crypto-currency and what buyers and sellers need to know, moving forward.
The ATO is aware of media reports of people offering to sell real estate for Bitcoin and of real estate agents accepting Bitcoin as payment for their services.
As Bitcoin is a form of property, a transaction to purchase or sell real estate for Bitcoin is a barter transaction. The seller of the real estate will need to account for any income tax obligations if relevant, as normal. The ATO’s views on this are set out in Taxation Ruling IT 2668 – Income Tax: Barter and Countertrade Transactions.
The owner of the Bitcoin may also need to account for any income tax obligations, typically a capital gain or loss on the change in value of the Bitcoin. Note that if the Bitcoin was worth less than $10,000 when acquired there may be a personal use exemption from capital gains.
The seller of the real estate will need to account for the relevant GST treatment in the usual manner, subject to the type of premises. If the owner of the Bitcoin is required to be registered for GST, the supply of the Bitcoin used to purchase the real estate will be subject to GST (although of course, subject to the particular circumstances, they may also be entitled to a credit for its acquisition).
The buyer and seller should keep the usual information about the real estate transaction, together with a record of the value of the Bitcoin in Australian dollars as referenced by one of the major Bitcoin exchanges or even one of the published indexes of the average price across a number of Bitcoin exchanges, and the Bitcoin address at which you received or transferred the bitcoins and the corresponding address of the other party.
Stamp duty and other similar taxes are a matter of State or Territory legislation and you would need to check with the relevant agency.
The ATO has published a guidance on Bitcoin, which provides links to all of the Bitcoin public rulings.