It’s a little-known fact that foreign Real Estate can be purchased with retirement account funds. When using a Self-Directed IRA LLC or Solo 401(k) for real estate investments in India, your profits are tax-deferred back into your retirement account. More important, if you have full checkbook control over your Self-Directed IRA LLC or Solo 401(k), the purchases can be made on the spot as fast as you can write a check or send a bank wire. In the case of a Self-Directed Roth IRA LLC, your gains are tax-free and you can take personal ownership of the property tax-free at the age of 59 1/2.
How Does it Work?
The Self-Directed IRA LLC for Foreign Real Estate
To establish the Self-Directed IRA LLC with “Checkbook Control” to buy real estate in India, a limited liability company (“LLC”) is established that is owned by the IRA and managed by the IRA account owner (you). The IRA owner’s funds are then transferred by the new passive custodian to the new IRA LLC bank account. As the manager of the IRA LLC, the IRA owner will have the authority to make investment decisions on behalf of the IRA providing the IRA owner with “checkbook control” over his or her IRA funds. Hence, once the IRA funds have been transferred from the old IRA custodian to the new IRA passive custodian in a tax-free rollover and then contributed to the new IRA LLC bank account, which can be opened at any local bank, the funds can be sent by check or wire to India to complete the real estate transaction.
The Solo 401(k) Plan for Foreign Real Estate
If you are self-employed or have a business with no full-time employees other than the business owner(s) and their spouse(s), an IRS approved Solo 401(k) Plan can be established by the sole proprietor or small business. The Solo 401(k) Plan can be established at any local bank or with most financial institutions. Using IRA Financial Group’s Solo 401(k) Plan to purchase real estate in India is as simple as writing a check or sending a bank wire. IRA Financial Group’s Solo 401(k) Plan is a trustee directed open architecture retirement structure that will allow the plan participant (you) to serve as trustee giving you “checkbook control” over the retirement funds. As trustee of the new Solo 401(k) Plan, you will have “checkbook control” to make real estate investments in India on your own without requiring the consent of any bank or custodian.
Once the new Solo 401(k) Plan account has been established at a local bank or financial institution, the tax professionals at the IRA Financial Group will help you fund the new Solo 401(k) plan via a tax-free rollover of existing IRA or 401(k) plan funds or through a new plan contribution. After the new plan has been funded, you can simply write a check or execute a bank wire to make the tax-deferred Solo 401(k) Plan real estate investment in India.
Why Choose the IRA Financial Group?
The IRA Financial Group has experience working with clients who have purchased real estate in India. Our retirement tax professionals have significant experience in structuring foreign real estate investments that are tax efficient from a U.S. and foreign tax perspective. Because of the potential foreign and U.S. tax implications of purchasing real estate in India with retirement funds it is critical to work with tax experts who have direct knowledge and experience helping clients use IRA or 401(k) plan funds to make real estate investments in India. In addition, because India imposes some limitations and restrictions as it relates to property ownership in India by foreign investors, some of these restrictions have to do with a minimum size (i.e. not less than X square feet), others have to do with the use of land (i.e. agricultural land is prohibited), it is important to work with tax professionals who can guide you on how to invest into Indian real estate with retirement funds in the most tax-efficient manner. Whether it is making a direct investment into India or using a local entity or partner, the international tax professionals at the IRA Financial group have the necessary international tax experience to help you structure your real estate investment in India.
Our unique, IRS approved self-directed foreign real estate structures, created by IRA Financial Group’s in-house retirement tax professionals and foreign tax experts are personally customized to suit your individual retirement, tax, and investment needs. Only a handful of institutions are skilled in these specialized foreign real estate retirement account structures and IRA Financial Group is the “gold standard” for compliance, leadership, customer service, and technological innovation.
Why use Retirement Funds to Buy Real Estate in India?
A Self-Directed IRA LLC or Solo 401(k) Plan allows you to make either domestic or foreign real estate investments. Whether it is residential or commercial real estate property, using a Self-Directed IRA LLC or Solo 401(k) plan to invest in domestic or foreign real estate offers tax advantages, such as tax deferral and/or tax free repatriation of income. Using a Self-Directed IRA LLC or Solo 401(k) Plan to buy foreign real estate is also a great way to take advantage of foreign real estate and currency markets while at the same time diversifying your retirement portfolio from overexposure to U.S. financial markets.
To learn more about how you can use retirement funds to make real estate investments in India, please contact an international tax professional at 800-472-0646