IRA Real Estate Investing

One of the best kept “secrets” in real estate investing is that you can buy real estate with money that’s in your IRA, specifically through using a Self-Directed IRA.

Traditionally, most people have used their IRAs to purchase stocks, mutual funds, or CDs, and few realize that the IRS has allowed real estate purchases since 1974.

All types of real estate, from commercial buildings to rental properties, vacant land to multi-family units, apartment buildings to condos can be purchased with a self-directed IRA.

There’s just one “catch” – you can’t live in the properties or in any way benefit from the use of them. Instead, you’ll need to hire a trustee or custodian to hold your property, and this person or company will need to administer the account and file documents with the IRS.

The main benefit of purchasing real estate with a self-directed IRA is that all of the appreciation (capital gains) and income generated from the properties flow back into the IRA tax-free!

Here are some points to evaluate when deciding whether using a self-directed IRA for your real estate investing is right for you:

• all expenses, taxes, insurance, HOA fees, and maintenance need to be paid out of the IRA
• you can’t benefit from the property while it’s owned by the self-directed IRA, and neither can immediate family members or business associates
• all income from the property is deferred, including capital gains and rental income
• the property is actually “owned” by the IRA (as an LLC), not by you
• you can buy and sell properties within the IRA, as long as all of the transactions are handled by a qualified intermediary

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