by Mike Colpitts 
The nation’s two largest insurers of home mortgages, Fannie Mae and Freddie Mac are close to including cryptocurrency as an asset to qualify for mortgages. Crypto for homes is being pushed by the Trump administration.
“After significant studying, and in keeping with President Trump’s vision to make the United States the crypto capital of the world, today I ordered the Great Fannie Mae and Freddie Mac to prepare their businesses to count cryptocurrency as an asset for a mortgage,” William Pulte, the director of the two mortgage insurers wrote on X, sharing the directive issued by the agency.
The policy announced by Pulte would be revolutionary for the U.S. housing market, reversing the course taken under the Biden administration by the two borrowing giants, when they issued guidance stating that a homebuyer’s income paid in cryptocurrency could not be used on mortgage applications. The reason behind this decision, Fannie Mae and Freddie Mac stated, was “the high level of uncertainty associated with cryptocurrency.”
Trump Pushing Crypto
Cryptocurrencies remain highly volatile and sustain huge swings in prices, with Bitcoin suffering a 16 percent drop in February—the biggest weekly fall in two years. It is something that the Federal Housing Finance Administration (FHFA) has taken into consideration.
In the document shared by Pulte, the FHFA called on the two housing giants to prepare a proposal for considering crypto as an asset for reserves in their respective single-family mortgage loan risk assessments, without conversion to U.S. dollars. Only crypto assets that can be evidenced and stored on a U.S.-regulated centralized exchange subject to all applicable laws would be taken into consideration.
The directive, however, did not specify which type of cryptocurrency Fannie Mae and Freddie Mac should consider.
Crypto for Homes
Use of crypto for home buying has been limited so far. Only 1 percent of those who made a down payment said they used crypto, a National Association of Realtors (NAR) survey of people who bought a home between July 2023 and June 2024 found.
Under current laws, selling Bitcoin or other crypto and using the proceeds to buy real estate in Florida involves tax considerations. Federal taxes are due on the sale of crypto currency profits since they are not treated as real estate but as personal property. Not paying taxes on profits made on crypto is recognized as the big Bitcoin lie. Trump pushing crypto for homes under new qualification guidelines would be historic.
One common strategy to defer taxes on the sale of appreciated assets is doing a Section 1031 like-kind tax deferred exchange. However, it’s important to understand that the Tax Cuts and Jobs Act (TCJA) of 2017 has limited the applicability of this strategy, particularly concerning cryptocurrency.
Section 1031 of the Internal Revenue Code allows taxpayers to defer paying capital gains taxes on an appreciated real estate investment when it is sold. The code requires another similar asset, namely real estate to be purchased with the profit gained by the sale
Trump Pushing Crypto
When you sell crypto the transaction is considered a taxable event by the IRS. The capital gain or loss is determined by the difference between the sale price and your adjusted basis in crypto. If the Bitcoin or other cryptocurrency was held for more than one year, the gain is subject to long-term capital gains tax rates, which are lower than short-term rates.
Once crypto is sold and the capital gains tax is paid, you can use the remaining funds to purchase real estate. Florida is known for its favorable tax environment, particularly its lack of a state income tax, which can be advantageous for investors.
However, Florida’s property tax rates are relatively moderate compared to other states, but they can vary significantly depending on the county and municipality.
Before proceeding with a real estate purchase, it’s advisable to consult a tax professional or financial advisor to understand the full scope of tax obligations and financial considerations involved.