New federal guidance has been issued by the Federal Housing Finance Agency (Fannie Mae and Freddie Mac) regarding the use of digital assets in mortgage lending. This change means that Fannie Mae or Freddie Mac will now recognize cryptocurrency holdings as assets on their mortgage applications. However, the Internal Revenue Service (IRS) has strict rules about what happens when you sell or exchange cryptocurrency, which can trigger a capital gain or loss based on the difference between your purchase price and the sale price. This means that selling or exchanging crypto to buy a house creates a taxable event, regardless of how you structure the transaction. Depending on income level and how long the cryptocurrency was held, it could be subject to federal capital gains tax ranging from 0% to 20%, plus any applicable state taxes. The tax rate on cryptocurrency gains depends on how long you held the asset before selling it for your home purchase.