Bitcoin Holders Use Crypto Loans to Buy Real Estate Tax-Free

Bitcoin holders are increasingly leveraging crypto-backed loans to purchase real estate without selling their Bitcoin, thereby avoiding capital gains taxes. This trend is particularly popular among early crypto adopters, entrepreneurs, and high-net-worth individuals who may not meet traditional real estate financing criteria. Bitcoin-backed lending models enable borrowers to use their crypto as collateral without divesting their assets. Since taking a loan is not typically considered a taxable event in most jurisdictions, clients can access liquidity while retaining their upside exposure.

To secure a Bitcoin loan, clients lock up their Bitcoin at a typical 50% loan-to-value (LTV) ratio and receive fiat or stablecoins. These funds can be used for a down payment or to cover the entire cost of a property. The process is relatively quick, with an average funding time of 9.6 hours. The model offers flexibility, with interest and fees accruing over the loan term and no mandatory monthly payments. Repayment can occur at any time without penalties, and loans can be renewed if the LTV remains under 60%. Borrowers also retain the right to withdraw excess collateral if Bitcoin appreciates during the loan term.

Ledn, a prominent player in this space, has seen strong adoption of its Bitcoin loans in various regions, including Latin America, the US, and parts of Europe. The borderless nature of Bitcoin as collateral is a significant advantage. However, volatility remains a concern. As the Bitcoin price drops and the LTV increases, clients receive notifications to send additional collateral. If the LTV reaches 80%, the lender sells the necessary amount of Bitcoin to repay the loan, returning any remainder to the borrower. This process does not reverse the property purchase but simply settles the loan.

Traditional lenders often avoid crypto due to regulatory uncertainty and credit risk. However, Bitcoin loans can bypass the need for credit scores entirely. Borrowers post 2:1 collateral, and lenders can liquidate instantly if the value falls. Bitcoin is considered the world’s most pristine collateral due to its 24/7 trading, deep liquidity, and real-time global transactions. Ledn issued over $300 million in retail loans in the first quarter of 2025 and is on pace to exceed $1 billion by year’s end. In 2024, clients earned eight times more from Bitcoin’s appreciation than they paid in interest, with over 1,000 BTC withdrawn as excess collateral when prices climbed.

High-net-worth individuals are increasingly turning to Bitcoin-backed loans to access hard assets like real estate without cashing out their Bitcoin. They view Bitcoin as their best-performing investment and prefer to maintain exposure to it while enjoying the benefits of new property ownership. In May, the CEO of a private bank launched a lending product that allows users to borrow US dollars using their Bitcoin as collateral, with qualified clients able to access up to $1 million in loans while keeping their Bitcoin. This trend highlights the growing comfort and confidence among Bitcoin holders in leveraging their crypto assets for real estate investments.