Borrowing Against Crypto Assets to Purchase Real Estate #
If you’re holding significant Cryptocurrency and want to buy property, the straightforward move is selling crypto and using the proceeds. That triggers Capital Gains tax, potentially 20% to 37% depending on your holding period and income level. On a $5 million Real Estate purchase, you just lost $1 million to $1.8 million in taxes. Plus you no longer own the crypto. If it appreciates another 200% over the next few years, you missed that entirely.
Borrowing against your crypto position solves both problems. You access the capital you need, buy the property, and your crypto stays yours. No taxable event. No opportunity cost if the asset keeps climbing.
The structure matters before anything else. Holding crypto in a personal Wallet creates complications for collateralized lending. Most institutional lenders want to see proper entity structure. An LLC or trust that holds the digital assets cleanly separates them from personal holdings and creates the legal framework lenders need. This also helps with Estate Planning and liability protection, but for lending purposes it’s about giving the lender a clear legal relationship to the Collateral.
Custody comes next. Your crypto needs to be held with a Qualified Custodian, not sitting in a Hardware Wallet in your desk drawer. Lenders need assurance the assets are secure, accessible, and can be pledged properly. Qualified custodians provide the institutional infrastructure that makes collateralized lending work at scale. They handle the technical Custody, the legal agreements, and the coordination with lenders.
Once the structure and Custody are right, you pledge the crypto as Collateral. The lender values your position, applies a loan-to-value ratio, and extends cash against it. You receive dollars, wire them to Escrow, close on the property. The crypto never moved. It’s still yours, still appreciating if the market cooperates, still available for other strategies down the line.
Conservative loan-to-value ratios are non-negotiable. If a lender offers 50% LTV on Bitcoin, take 30% or 35%. Crypto Volatility means you need substantial cushion between your loan balance and any Margin call threshold. The goal is buying Real Estate, not getting liquidated because Bitcoin dropped 40% in a correction. Leave room for Volatility. You can always borrow more later if you need to and the Collateral has appreciated.
The loan typically has interest-only payments or flexible repayment terms. Some people pay it down over time. Others keep it outstanding and refinance periodically. Some never pay it back at all, holding the position until death and letting heirs inherit with a stepped-up basis. The flexibility is the point. You control the timeline instead of being forced into a specific repayment structure.
Exit planning means knowing what happens if things go wrong. If crypto drops significantly, can you add more Collateral? Do you have liquid reserves to pay down the loan if needed? Could you sell the property if you had to? These aren’t pleasant scenarios to think through, but they need to be mapped out before you borrow. You’re layering Leverage on top of a volatile asset. That requires planning for downside cases, not just assuming everything works out.
This strategy fits into a broader wealth structure where you’re optimizing for tax efficiency and long-term growth. You’re not liquidating appreciated assets unnecessarily. You’re accessing capital while preserving positions you believe in. You’re building wealth across asset classes without triggering tax events every time you need to move money.
A registered investment advisor operating under fiduciary standards can coordinate this kind of planning with your overall Portfolio strategy. Digital Wealth Partners provides wealth management and investment advisory services that include strategic planning for collateralized borrowing against digital assets. They work with qualified custodians, coordinate with lenders, and make sure your crypto borrowing strategy fits your broader financial plan.
For families or business owners managing complex wealth across multiple entities and asset classes, Digital Ascension Group offers Family Office services. This includes multi-generational planning, estate coordination, tax strategy oversight, and the kind of comprehensive financial coordination that makes sure your Real Estate purchases, crypto positions, business interests, and estate plans all work together instead of creating conflicts.
Borrowing against crypto to buy Real Estate is structurally straightforward once the pieces are in place. The key is setting it up right from the beginning.
Contact Digital Ascension Group to learn how our Family Office services can coordinate your complete financial picture, including collateralized lending strategies for Real Estate and other investments.
