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A little-known IRS provision lets you extend your real estate purchasing with tax-deferred dollars. Section 408 of the Internal Revenue Code permits individuals to purchase land, commercial property, condominiums, residential property, trust deeds, or real estate contracts with funds held in many common forms of IRAs. The IRA account holder can´t serve as the custodian of his or her own account. It´s important to select a custodian knowledgeable about the types of investment you´re interested in, because the custodian holds title to the real estate. If the option of using tax-deferred funds to purchase property sounds appealing, you´ll need to locate an independent IRA custodian that allows real estate investments and work with that company to set up an IRA account. Taking personal responsibility in planning your financial future is more important than ever. The amount of retirement savings you accumulate will have a direct impact on whether you´ll be able to maintain your standard of living when you retire. A self-directed IRA lets you purchase property with your retirement funds and realize the more predictable, steady growth that real estate has to offer. It provides the flexibility and diversification necessary to respond to changes in the financial markets, while also enabling you to select those investments most appropriate for your financial needs and objectives. This method of investing retirement funds is especially attractive to investors who are still 10 or more years away from retirement age. Internal Revenue Service regulations will not let you use the real estate owned by your IRA as your residence or vacation home. The underlying premise for any real estate investment purchased with IRA funds is that you can´t have any personal use or benefit of the property. Because real estate is not as liquid as many investments, its long term buy and hold strategy fits perfectly in a retirement portfolio. There are several companies that specialize in these types of investments. There are specific guidelines that must be adhered to. For instance, absolutely no personal funds may be used in the transaction, so any earnest money deposits from the initial contract must be refunded to the buyer at closing and only funds from the IRA administrator and cooperating lenders may be used. If the investment is a rental condo, then all rental income must be deposited back into the IRA account and any operating expenses must be deducted from the same account. Your qualified plan may purchase single-family and multi-unit homes, apartment buildings, co-ops, condominiums, improved or unimproved land, or commercial property. For more information Email Me or call me direct (828) 507-6239 "Success is going from failure to failure without a loss of enthusiasm." - Sir Winston Churchill |