Purchase Real Estate with your Self-Directed IRA, or ROTH
Retirement Account.

Real Estate ownership may be contributing to your primary or supplemental income, but what if you could also build additional security for tomorrow by utilizing an approach you’ve already mastered ? If you make money by buying, selling, leasing of other real estate including commercial, you can put these same strategies to work for your future with a self-directed retirement plan. Specialized uses including a vacation or second home are certainly no exceptions; if you can legally profit from your home and  other investments with your personal funds, there’s nothing to stop you from doing the same with an IRA, 401(k) or a health savings account (HSA).

 

The uncertainty of Wall Street can definitely throw a retirement portfolio for a loop, but alternative assets can help stabilize an investors control in any market. You may have been turned off by negative interpretations of self-directed investing and believe the process will be more trouble than it’s worth, but the bulk of your responsibilities will involve the implementation of your existing business talents. Furthermore, the support of an education and technology-based IRA provider will make it easier than ever to consolidate funds into a self-directed IRA and get started with a real estate investment.

 

The advantage of benefits you receive by investing in real estate with a retirement plan:

 

• Tax-Advantaged Income – Unlike personal income where you’re responsible to pay taxes every year, retirement income may be tax-deferred or even tax-free depending on the type of account you have. With pre-tax plans like a Traditional IRA, you benefit immediately by deducting contributions (deposits into your IRA) from your income for tax purposes. But, remember, the taxes will be due on those funds when you distribute or withdraw the funds. During the period that you are focused on building up your retirement program and if you’re willing to pay the extra taxes (or) if you’ve reached retirement age and you’re in a lower tax bracket, a great option for you to use is a ROTH IRA. This IRA requires that you pay taxes on funds you invest when you make the contribution, but when you take the funds out of your retirement, assuming you follow the rules and the distributions are qualified, the investment and profit you take out will be 100 percent tax-free.  

 

• You’re In Control – Even though your retirement plan will technically own the land asset, you still pull the strings. You can review potential investments, negotiate terms, invest or collect payments on behalf of your IRA 401(k), your ROTH IRA or your Health Savings Account. ( remember, income that you generate from your investment must always be returned directly to your IRA account or you will personally be responsible for taxes that will be due on the income).

 

• Debt Leverage – If your account balance is not sufficient to fund a transaction in full, you can pursue other funding to finance all or a portion of the real estate acquisition.  NOTE: Your personal funds may not be offered as collateral. The real estate itself would be used to secure the note, which allows you to enhance your IRA’s purchasing power without risking your individual holdings.

 

Real estate documentation related to the IRA investment is titled in the name of the IRA, and, just as all income generated must return to the plan, any inherent expenses must be paid for and covered by the plan. Apart from these distinctions, owning real estate with a self-directed IRA or ROTH can mirror your personal investments in almost every way.

For those who choose to invest in real estate, speak with a qualified agent that will help you understand your ability to use a self directed IRA, ROTH or HSA plan.