SAN FRANCISCO - San Francisco real estate mogul and VC investor Leonard Perillo has always taken financial gambles. And his latest venture is no different: He’s putting up his Oregon ranch for sale for $4 million – in cash, or in cryptocurrency.
“It’s my nature to try things that I believe in,” Perillo, 60, said on Wednesday. “I can afford to take the risk.”
He’s not alone in venturing into this virgin territory.
Perillo, the grandson of the founder of the nutritional supplement Shaklee Corporation, is one a growing number of people buying and selling properties for cryptocurrency, such as Bitcoin.
He was inspired to offer his five-bedroom, seven-bathroom riverside estate in Grants Pass, Oregon for “cryptos” after seeing Alec Wang put an Oakland home on the market for the same thing earlier this year. Wang’s Realtor, Sean Beattie, told KTVU on Wednesday that the sale of the home on Oliver Street is currently pending and will be sold for a mixture of $740,000 cash and cryptos.
There are several hundred properties listed on one of the most popular cryto-home sites, Bitcoin Real Estate. And in California on Wednesday, there were nearly 20 properties being sold for Bitcoin, Ethereum or Litecoin. One of the properties is a sandy beach in Half Moon Bay that the seller was hoping would appeal to Google, Facebook and Stanford University employees. “Bitcoin or convertible stock is a possibility,” the seller wrote.
The crypto sales are certainly not for everyone. Cryptocurrency fluctuates wildly. Some people have made millions buy buying a few hundred dollars worth, but it also can dip very low. n the case of the Oakland home, Beattie said the seller didn’t accept Bitcoin because it has dropped 63 percent since its peak in mid- December, CoinMarketCap.com reported. The seller accepted another form of crypto instead.
Plus, it’s hard finding an escrow company to handle the transaction. Perillo said he hasn’t yet been able to find an escrow company in Oregon to take on his unusual offer. “But I’m optimistic, though,” he said.
Then, the tax piece of the puzzle can be difficult, mostly for the buyer. Robert W. Wood of Wood LLP, a tax attorney in San Francisco who is well-versed in this subject, said from the seller's viewpoint, whether he or she is paid in dollars or Bitcoin shouldn't matter.
But, he said, the buyer has to worry about the capital gains from the crypto if the value goes way up.
“If you’re a buyer, and you bought the Bitcoin for $1,000 and it went up to $8,000 when you bought the house, your gain is $7,000. The buyer has to wonder if it’s a good deal and what is the tax consequence.” Wood said. Some people might just go on with the transaction and “worry about the taxes later, he said, which isn’t necessarily a good idea” or not even report their crypto at all, which is illegal.
Perillo realizes that he’s in a pretty unusual situation. He’s comfortable enough financially to take a hit, just in case the crypto deal tanks. And even then, Perillo said that if he accepted the entire payment in cryptos, he'd then turn most of that into U.S. dollars. Or he’d be willing to accept $3.5 million in cash and about $500,000 in cryptos to invest and play around with.
He’s motivated to try out this brave new world after seeing a friend turn a few hundred cryptos into $1 million and by his son, who is urging him to test out new investment strategy.
“Technology is disrupting our world,” Perillo said. “C’mon, the Federal Reserve, around since 1913, is also riddled with problems. Crypto is not just used for drugs and illegal currency. It moves money faster and the government doesn’t like it because it can’t control it.”
As for Beattie the Realtor, moving to cryptos has been great. He said he’s been getting calls about representing sellers wanting to sell homes for with virtual currency since his debut sale in Oakland.
“It’s been opening more doors," he said.
That said, Beattie does not want his commission to be paid in Bitcoin.
“I want to be paid in regular green dollars,” he said.
To learn more about crypto tax tips:
- Crypto Tax Tips To Start 2018 Right
- Loophole Allows Tax Free Bitcoin Exchanges Into 2018
- Bitcoin Investors Hunt for Transfers that Aren’t Taxable
- Tax Bills Doom Tax-Free 1031 Exchanges of Cryptocurrency
- IRS Could Tax Loans of Bitcoin, Other Cryptocurrencies
- Bitcoin Sellers Cut Taxes By Moving Before Sale
- Are Bitcoin Tax Records Ever Optional With IRS?
- IRS Bitcoin Hunt Ramps Up, But Tax Amnesty Could Follow
FLUCTUATIONS OF CRYPTOCURRENCY:
Bitcoin: Since its Dec. 19 peak of $19,140.70, the cryptocurrency has dropped 63% according to CoinMarketCap, so that $1,000 is now worth $370.
Ethereum: Ethereum is down just 5 percent since Dec. 19.
Ripple: Ripple is well below $1 now. Since Dec. 19, though, it’s down just 8 percent.
Bitcoin Cash: Bitcoin Cash has dropped 71 percent since Dec. 19.
Cardano: Cardano coins are down 40 percent since Dec. 19.