Self Directed IRA Delivers Options To Invest In Real Estate With Your IRA
Copyright (c) 2014 Mark Adams
What all hard-working taxpayers should know. Using self-directed IRA or 401k funds to purchase income-generating real estate is a profitable strategy an ever-growing number of savvy investors are experiencing, especially given the current market conditions. With an IRAcheckbook, checkbook IRA or 401K checkbook Plan, you can buy rental property as an investment just as you would buy stock market securities. This means our customers can use their retirement funds to buy real estate without incurring early distribution taxes or penalties, and they can realize the rental payments as tax-deferred income within their IRA or 401k; and in the case of Roth IRA funds, tax-free growth. That's right! Rent does not show up on the tax return. There's also no Schedule E because the rent is seen as a return on investment to the IRA or 401k, not income. The same is true with capital gains. Profits upon sale are seen as a return on investment to the IRA or 401k and there is no Schedule E involved. All that is required is a one-time report of value for the self-directed IRA at year-end. In the case of a self-directed 401k, there's no requirement for a year-end report if the value is less than $250,000. The power of this is evident!
Who's promoting self-directed investment into real estate? Buying investment property with real estate IRA Buying real estate in an IRA or 401(K) is not new. Commonly called a Self Directed IRA or 401(K), it has been an option since the passing of the Employee Retirement Income Security Act (ERISA) in 1974.
However you're not alone if you are one of many investors who are not familiar with the self-directed concept. It isn't promoted or supported by brokerage firms who would rather sell you stocks, mutual funds and bonds over and over again for multiple or ongoing investment fees instead of the one-time fee for buying real property.
Using your retirement funds in conjunction with a loan. Using a non-recourse loan in conjunction with your IRAcheckbook or 401K checkbook Plan can create a powerful wealth-building tool. It's very important when you set up a self-directed IRA or 401(K) with a non-recourse loan that you work with an experienced and reputable facilitator, real estate lender and tax professional. We believe our team and affiliates are the best in the business. In fact, our company, IRAcheckbook, is one of the top five facilitators recommended by NASB, North American Savings Bank.
There are a limited number of banks that will provide non-recourse loans, and it's worth your while to seek them out. Be prepared for the possibility of some confusion unless you're dealing with a bank that specializes in non-recourse lending or a commercial lender. Many banks that have provided non-recourse loans in the past have usually done so for multi-unit or commercial purchases, not single-family homes bought by self-directed IRA or 401K funds. The right tax and real estate professionals can help you get through this confusion.
With the right counsel and professional direction, you can open the door to many more investment opportunities for your IRA or 401(K). Real estate investments you once thought were out of reach can now be part of your portfolio!
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