Investor Frequently Asked Questions

1
Did you know that you can tap into your retirement funds to buy investment real estate?
07-08-2017
07-08-2017

With a self-directed IRA, you can invest in what you know and understand – real estate. 

By simply transferring your IRA from the bank or brokerage firm you are currently using to a self-directed IRA administrator, you gain the ability to make your own investment decisions, without being limited to the stock market. With all the uncertainty in the stock market, now more than ever is the time to learn how to take control of your portfolio.

The process is simple: 

  1. Open and fund your self-directed IRA.
  2. Do your due diligence to find the property you wish to invest in.
  3. Direct your IRA administrator to purchase the property.

Once the property has been purchased in the name of your self-directed IRA, you reap all the tax advantages within that IRA, be it Traditional and tax-deferred or Roth and tax-free. The greatest advantage is that IRA investors pay no capital gains tax when the property is sold by the IRA.

In addition, because the profit from the sale is deposited back into the IRA with no tax on gain or growth, the investor enjoys the power of compound interest to invest in the next real estate deal. Although IRS 1031 exchanges can be used to fund partial IRA investments in real estate, self-directed IRAs do not have the same limitations and holding periods, thus are much more flexible.

Finally, if you’re like many investors who are tired of poor-performing investments in stocks, bonds and mutual funds, self-directed IRAs offer true portfolio diversification, for example through real estate, to help build wealth via tax-deferred or tax-free income-generating assets! 

Your first step in purchasing real estate is to have a trusted Realtor who is knowledgeable in finding your ideal property. Purchasing real estate with your IRA is very similar to conventional means, but IRS regulations must be observed. As with any investment, you should always seek competent advice from tax and legal advisors. Beyond that, the best way to avoid problems with the IRS is to become an educated investor by reading or attending a workshop or seminar on buying real estate in an IRA offered by a local self-directed IRA administrator.