USE YOUR IRA FOR REAL ESTATE INVESTMENTS
HAVE YOU HEARD THE RUMOR THAT YOU CAN REALLY USE YOUR IRA FUNDS TO BUY AND SELL REAL ESTATE? AND ALL THE PROFITS ARE TAX DEFERRED UNTIL RETIREMENT!!
Well, it's true and perfectly legal…
In order for this to work you must do two things:
First, you have to have a Self-Directed IRA, 401 (K), SEP-IRA or a Keogh.
HAVE YOU HEARD OF A SELF-DIRECTED IRA?
A Self-Directed IRA is one where You Decide, not some administrator, where your money is invested.
Most IRA's are geared toward investments in some type of Mutual Fund which mainly buys stocks. With this type of investment you are subject to the volatility of the stock market which we have seen steadily decline over the last couple of years. Many employers do allow some self-direction but you are frequently limited to only those alternatives approved by your employers plan. If you are in this situation, you will not have access to your funds for Real Estate Investments until you retire or until you otherwise leave the company and roll over your funds into a Self-Directed Account.
OUR REPRESENTATIVES can assist you in the process of Rollover, Transfer or Origination of a SELF-DIRECTED PLAN.
The Second Step is having your Self-Directed Account with a Custodian, Trustee or Administrator who Allows You to Select different Investment Options, including Real Estate transactions, within the framework of IRS rules. Again, even though Direct Real Estate transactions are authorized by IRS rules, many administrators do not allow their clients to invest in Direct Real Estate transactions (although they typically permit investments in Real Estate Mutual Funds or REIT's). An example would be Charles Schwab….this company administers Self-Directed IRA's but does not allow Direct Real Estate investments.
OUR REPRESENTATIVES can assist you in processing your application for IRA Rollover, Transfer or Origination of a Self-Directed IRA managed by a Self-Directed IRA Custodian (Administrator) that allows You to Select Different Investment Options including Direct Real Estate transactions.
Be aware! Even if you have a Self-Directed IRA or Basic IRA at let's say Merril Lynch, you can transfer a portion of your funds to another Self-Directed Custodian who allows Real Estate investments. You are not required to transfer all of your funds to the new account. This flexibility provides you with the ability to fully diversify your retirement investments.
REAL ESTATE OPTIONS
WHAT REAL ESTATE INVESTMENT OPTIONS DO YOU HAVE WITH YOUR IRA MONEY?
There are really only a few restrictions with regards to the type of investment you can make.
Some Options:
Note: You do not have to purchase properties using all of your own cash, in other words, you can use your funds in combination with other financing or investors. ie.: using a Limited Liability Company with other shareholders to pool their funds to minimize investment risk.
RESTRICTIONS
Investments you make with your IRA must be for investment purposes.
The underlying premise for any real estate investment purchased with IRA funds is that it cannot have any personal use or benefit of the property. ie: The IRS will not let you use the real estate owned by your IRA as your residence or vacation home. Nor can your business lease it as office space. Additionally, you cannot lend money to or purchase property for, or a rent property to a family member.
These would be considered "Prohibited Transaction" by the IRS.
"Prohibited Transactions" CLICK HERE
Investing your tax deferred IRA money in Truly Self-Directed programs is an excellent way to consistently Higher Returns. Our IRA custodians have been providing quality administrative services for Self-Directed Plans for years. Contact us today to upgrade your IRA.
IN CONSIDERING WHETHER TO INVEST YOUR SELF-DIRECTED IRA, 401K, SEP-IRA or KEOGH IN REAL ESTATE SOME IMPORTANT POINTS TO KEEP IN MIND
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You can use your Qualified Plan Funds (Self-directed IRA, 401K, etc.) to direct the purchase of raw land, commercial buildings, condos, residential properties, rental properties and acreage.
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You cannot have any personal use or benefit of the property while it is held in your account.
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The property may be rented to an unrelated party if you wish as long as the rental income flows back to your Qualified Plan or IRA.
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Our custodian requires that the outright purchase of real estate be wholly-owned-no debt financing is permitted.
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Property may be held in conjunction with other owners, as long as the deed to the property reflects the appropriate portions owned by your account as an undivided interest. (Note: This does not apply to real property purchased by a Limited Liability Company).
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You cannot place a real estate property that you already own into your IRA or Qualified Plan.
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The purchase must be made by your custodian - not by you personally.
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Your IRA or Qualified Plan should have some liquid funds available to pay for any expenses. (taxes, insurance)
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Real Estate is generally not considered a liquid investment. If you are approaching retirement or anticipate that you will need to draw upon your IRA or Qualified Plan Funds soon, real estate may not be the right investment for you.
