Real estate has long been an attractive investment opportunity, It is not always easy to find the funds to acquire a piece of property, however. Fortunately, with a Self Directed IRA, anyone can be a land or property owner. The returns are significant if you’ve done your research!
A Self Directed IRA is similar to a traditional brokerage firm IRA.
Self Directed IRAs possess the same legal structure, contribution limits and tax advantages. Self Directed IRAs are really unique. They enable individual investors to leverage non-traditional (alternative) investments, such as real estate.
Investors choose Self Directed IRAs because they offer incredible flexibility and control.
Certainly that’s highly important in the realm of real estate investing. Self Directed IRAs are unique in that they make it possible to invest in what are known as “hard assets.” That makes a great solution for portfolio diversification.
The reason that most traditional IRA providers do not offer the ability to purchase real estate is simple: banks and financial institutions that offer IRAs cannot profit from doing so. Traditional brokerage firms typically generate revenue from transactions. Fortunately, The IRA Club allows their clients to make investments in alternative assets like real estate. The payoff could be immense.
If an investor purchased a $100,000 property with retirement funds and sold their property later on for $300,000, the $200,000 of gain appreciation would generally be tax free. If the property was purchased using personal resources (non-retirement funds), the gains would be subject to federal and state income tax.
Important Rules to Consider
There are, of course, several important rules that must be followed when using a Self Directed IRA to buy real estate. Funds within the IRA will be taxable if you purchase property in the wrong way. Some of the most important rules to consider include “no self-dealing,” which is selling/buying to or from a person that is related to you. Another important rule is no improvements via “sweat equity.” Furthermore, no benefits can be derived, such as living on the property or renting it directly to a family member.
Buying real estate with a Self Directed IRA is growing in popularity but still underutilized by most investors. Investors looking to leverage their retirement accounts to invest in real estate should contact a qualified and knowledgeable team like the IRA Club. If you’re interested in diversifying your investment portfolio and taking advantage of the tax benefits, contact The IRA Club today.
For information about the Self Directed IRA or Solo 401(k) call IRA Club at (888)795-7950.
IRA Club offers no investments, products or planning services. Therefore, please consult your attorney, tax professional, financial planner, and any other qualified person before making any investments.