One of the major advantages of the self-directed IRA LLC is that one can make traditional as well as non-traditional investments, such as real estate on a tax-deferred basis. Self Directed IRA LLC offers one the ability to use his or her retirement funds to make almost any type of investment on their own without requiring the consent of any custodian or person. The IRS only describes the type of investments that are prohibited, which are very few. Accordingly, the trends involved in the self-directed IRA LLC has a lot to do with the investment opportunities based on the current market conditions.
For 2012, the popular self-directed IRA investments continue to be real estate. A significant number of investors are looking at the current U.S. real estate market and are seeing very attractive growth opportunities. Retirement investors are viewing the domestic real estate market as a more attractive and higher growth industry than Wall Street.
The IRS has always permitted an IRA to purchase or hold real estate or raw land. Making a real estate investment is as simple as writing a check. Since you are the manager of your Self-Directed IRA LLC, you have the authority to make investment decisions on behalf of your IRA. One major advantage of purchasing real estate with a Self-Directed IRA is that all gains are tax-deferred until a distribution is taken (Traditional IRA distributions are not required until the IRA owner turns 70 1/2). In the case of a Self-Directed Roth IRA LLC, all gains are tax-free.
For example, if you purchased a piece of property with your Self-Directed IRA for $100,000 and later sold the property for $200,000, the $100,000 of gain would generally be tax-free. Whereas, if you purchased the property using personal funds (non-retirement funds), the gain would be subject to federal income taxes and in most cases state income tax.
Hence, for 2012, the hot trend in the self-directed IRA LLC investment is the U.S. real estate market. With the real estate market starting to bottom out and stabilize, many real estate investors have been able to take advantage of depressed real estate prices by either flipping or selling real estate properties or generating tax-deferred rental income.