Saving regularly to your IRA will let you retire safely, but if you are wiser and invest the money in real estate, you could retire richer than planned. Investing your IRA funds into real estate is a smart way to turn your money into tax-deferred or tax-free assets.
When you talk to your real estate lawyer on the subject, he or she will advise on the following few things:
- When you invest your IRA funds, all the taxable income is deferred until withdrawal. When it comes to Roth IRA, all the investment gains accumulate and can be withdrawn free of tax.
- Your IRA has to be self-directed. It has to be independent of any brokerage that could make decisions on your behalf.
- You IRA owns the property, not you. All the income goes to the IRA funds, and all the cost associated with the property have to be paid by the IRA funds.
- You can buy only business property with your IRA. The property can’t be used for residency by you or members of your family. It can be used only for business purposes.
- You can not mortgage the property.
How to Invest Your IRA in Real Estate?
You need to open a custodial account and transfer your IRA money there. Then you can buy a property under the IRA account name. The whole paperwork and process will go through a custodian, to keep you from violating the strict rules of this procedure. The custodian, however, is hired just to handle the transaction properly. He won’t advise you about the investment itself, and this is where we can help. You can call for help at 813-421-3411.
