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Five Things To Consider Before Buying Real Estate With A Self-Directed IRA

In a recent article for Forbes.com, IRA Financial Group president discusses five things to know before using a Self-Directed IRA to purchase real estate –

The Internal Revenue Service (“IRS”) permits retirement accounts, such as an IRA, to invest in real estate and other alternative types of investments. As a matter of fact, IRS rules permit one to invest retirement funds in almost any type of investment, aside generally from any investment involving a disqualified person, collectibles, and life insurance, in the case of an IRA.

There are several advantages of using a self-directed IRA to buy real estate. The first is tax deferral or tax-free growth. For example, if one purchased a piece of property with retirement funds for $80,000 and later sold the property for $300,000, the $220,000 of gain appreciation would generally be tax-deferred. Whereas, if you purchased the property using personal funds (non-retirement funds), the gain would be subject to federal income tax, and in most cases, state income tax. Second, a self-directed IRA can allow you to invest in hard assets you know and understand, such as a rental property or piece of land. Lastly, having the ability to invest in alternative assets is believed to be a good source of investment diversification.

Click here to read the full article.

To learn more about investing in real estate with your Self-Directed IRA, please contact us @ 800.472.0646.

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