Most investors are not aware that the IRS permits the use of retirement funds to purchase both domestic as well as foreign real estate. In fact, the IRS states so right on their website. Using retirement funds, such as a Traditional IRA, Roth IRA, SEP, SIMPLE IRA, 401(k), 403(b), etc to buy real estate through a Self-Directed IRA LLC vehicles has proven to be an extremely tax advantageous.
Many U.S. investors have began to recognize the tax advantages of using a Self Directed IRA LLC with “Checkbook Control” to buy real estate in Greece. Greece located in Western Europe. Greece primarily has a Mediterranean climate, featuring mild, wet winters and hot, dry summers. This climate occurs at all coastal locations, including Athens, the Cyclades, the Dodecanese, Crete, the Peloponnese, and parts of the Sterea Ellada (Central Continental Greece) region. The landscapes are beautiful, this country has a lot of authentic beauty to offer. In addition, many U.S. investors have began to view Greece real estate as an excellent investment opportunity for both personal assets and retirement assets. With the recent financial crisis unfolding in Greece, there are many that believe that Greece presents an exciting real estate opportunity for foreign investors. The tax attorneys at the IRA Financial Group have significant experience assisting clients use their retirement funds to make real estate investments in Greece through a Self-Directed IRA LLC or Solo 401K Plan.
In the case of a Self-Directed IRA LLC an LLC is established that will be owned by an IRA and managed by the IRA Holder (you). The IRA funds would be transferred tax-free to a new IRA Passive Custodian who would then transfer the funds to the new IRA LLC bank account. The LLC manager (you) would then simply write a check to the seller of the Greece property to complete the transaction. Title to the property would be held in the name of the LLC.
In the case of a Solo 401K Plan, an IRS approved Solo 401K Plan would be adopted by a business and the business owner (you) would become trustee of the Solo 401K Plan. The business owner’s retirement funds would then be transferred tax-free to the new Solo 401(k) Plan ban account. The trustee of the Solo 401K Plan would then write a check to the seller of the Greece property to complete the transaction. Title to the property would be held in the name of the Solo 401K Plan.
From a local tax standpoint, the Self Directed IRA LLC or Solo 401K Plan would be liable for any local property or other tax with respect to the property. In addition, a with-holding tax may be imposed on the transfer of income or sale proceeds from the property. Whereas, from a U.S. tax standpoint, in general, the Self-Directed IRA LLC or Solo 401K Plan would not be subject to any federal income tax on the income or gains generated by the Greece real estate investment.
In sum, using a Self Directed IRA or Solo 401K Plan to purchase real estate in Greece offers a number of tax advantages, including tax deferral. Moreover, the use of after-tax retirement funds (i.e. Roth IRA or Roth Solo 401k funds) present a number of interesting tax planning opportunities, including the ability to take possession of the property for personal use with no tax or penalty.