A real estate loan with minimal payments and a Bitcoin savings plan will eventually pay off the remaining debt. The idea seems smart, but it poses extreme risks for buyers.
The idea: Bitcoin as a means of payment
Imagine taking out a real estate loan, paying only the interest for ten years – and instead regularly investing the amount intended for repayment in Bitcoin. If all goes well, your crypto assets will grow to such an extent that you can pay off the entire remaining debt in one fell swoop.
In a time of high real estate prices, rising interest rates, and persistent inflation, this sounds like a smart alternative to traditional financing. But how realistic is this model?
This is how the model works
With classic real estate financing, the borrower pays monthly installments of interest and repayment. The remaining debt decreases with each payment and the loan is paid off after 30 years or when you retire.
The Bitcoin model reverses this principle: only interest or minimum payments are paid over the years, and the remaining debt is only due at the end of the year. “Saved” payments flow into a Bitcoin savings plan – via a crypto exchange, regulated service provider, or to your own wallet. At the end of the term, the stored Bitcoins must be sold and the remaining debt paid off. Banks always accept euros; Whether repayment comes from a checking account, a life insurance policy, or from Bitcoin remains initially a personal matter for the borrower.
Similarities and differences with previous models
This principle is reminiscent of earlier models where quick loans were combined with life insurance or funds as a means of repayment – for example with the UK policy being considered “highly profitable”. However, in practice, returns often do not match expectations and many investors experience losses. Today, guaranteed benefit maturity is rare and capital markets are much more volatile.
Christian Hansen is a lawyer and founding partner at Steinpichler RAe in Munich. He handles tax-efficient structuring of international assets and companies.
Richard Lechner is a tax consultant in Munich and author of the bestselling book “In the Ring with the Tax Office” among others.
Returns and tax advantages as an opportunity
Bitcoin is considered “digital gold”: limited quantity, algorithmically determined replenishment, independence from central banks. Anyone who believes in long-term potential expects high returns – and in fact there have been spectacular price rises in the past, but also equally severe downturns.
One of the advantages: Anyone who holds their Bitcoins for more than a year and then sells them can receive tax-free profits – provided there is no commercial activity and general personal asset limits are adhered to. This offers opportunities that traditional means of payment such as life insurance currently struggle to offer.
Volatility, timing, and cluster risk
Bitcoin is not a savings account. Price losses of 50, 60 or 80 percent in a few months are not theory, but reality. Anyone who has to sell just before maturity and experiences a price drop faces a problem: the bank wants their money, whatever the price of Bitcoin. The time risk is huge.
There is also cluster risk: many property buyers have the majority of their assets tied up in that property. If the payout is also dependent on a highly volatile asset class, a double risk could arise – if property and Bitcoin values fall at the same time, there is a risk of financial stress from both sides.
This theory assumes that investors calmly weather falling prices and continue to save consistently. But in reality, many people panic when 80 percent of their saved payout capital suddenly disappears – and sell it at the worst possible time.
What do banks and their supervisors say?
Banks are obliged to check the feasibility of real estate financing. Income, current expenses, value and loan limits of property and other assets play a role. As a highly volatile investment, Bitcoin does not fit into this scheme and is not recognized by leading banks as a means of payment. The risk remains entirely with the borrower.
Internationally, the Basel standards regulate how much equity banks must hold for certain risks. Cryptocurrency exposure carries a very high risk weight, making it unattractive as a balance sheet item for banks. Therefore, real estate financing remains a classic real estate loan, secured by a mortgage. Bitcoin strategies run on customers’ personal assets – without official recognition by the bank.
MiCA, custody and protection of investors
With the EU MiCA (Markets in Crypto Assets) regulations, there has been a uniform European framework for crypto assets and related service providers for the first time since the end of 2024. Anyone who stores their own coins runs the risk of loss or theft. Anyone using a service provider should pay attention to the BaFin license.
BaFin has been warning for years about the significant risks of crypto assets – from extreme price fluctuations to total loss due to fraud, hacking or platform bankruptcy. Crypto assets are not deposits or protected by deposit insurance.
Tax aspects: opportunities and pitfalls
According to the current legal situation, Bitcoin is considered “other economic goods” within personal assets. Profits from sales are tax-free if there is more than one year between purchase and sale. However, if it has to be sold before the holding period ends – for example because the fixed interest rate has ended and the bank wants your money – the gain will be taxed and the loss will eventually be realized. Example: If you have to sell your last investment after less than 12 months, you pay income tax on the gain – and can no longer offset the loss.
Who is the model suitable for?
This model is very dangerous for the average home builder who is financing his own home on a limited budget. Such speculative construction is only suitable for people who can repay loans permanently even without a Bitcoin strategy, have widely diversified additional assets, truly understand the function and risks of crypto assets, and are psychologically able to withstand massive price drops.
A responsible alternative is to structure real estate financing in the classic way with ongoing payments and invest only a small part of the assets in Bitcoin – as a speculative addition, not as the only means of payment.
Legally possible – economically it is a high risk bet
Legally, there is nothing to prevent you from taking out a real estate loan and personally investing in Bitcoin at the same time. However, banks generally do not recognize these “means of repayment” for regulatory reasons. From a banking and regulatory perspective, crypto exposure for banks is intentionally treated strictly based on Basel standards, CRR, and national supervision. This makes it unattractive to include Bitcoin itself as a means of collateral or repayment into standard construction financing products.
Ideally, the model is economically and fiscally attractive. But in practice, it remains a risky gamble at the right time – where, in the worst case, your own house is at stake.
