Curious how to use your Self Directed IRA Account to Purchase Investment Property? One popular application of self-directed IRA funds has been direct or indirect investments in the ultimate “hard” asset: real estate. With the recent gains of the stock market individuals may wish to consider moving a portion of their qualified retirement plans from Wall Street to Las Vegas by investing in real estate. Many people are simply unaware how easy it is to transfer funds tax free from an existing retirement account into a Self Directed IRA. Once the funds are transferred, using a self directed IRA is a great way to purchase Investment Property in Vegas.
When it comes to real estate investing with your IRA, you can invest in property for long-term appreciation, rental income, or a short-term flip. You can even benefit from real estate without owning the property itself by using self-directed IRA funds to purchase mortgage notes and trust deeds secured by real estate.
Section 408 of the Internal Revenue Code allows you to use your self-directed IRA to purchase investment real estate such as a residential property like a single family home (SFR). You should talk to your tax advisor first before you do so to find out the benefits and other rules for compliance.
So...How Does it Work?
Investing in real estate with an IRA is not a new concept. These types of investments have been allowed by the IRS for over 30 years. Basically, you can write a check from your self-directed IRA to purchase the investment property. All the rents and income generated from the income property must be paid to the self-directed IRA. You are accumulating tax deferred dollars this way. You don’t have to pay any taxes on the money until you take it out. If you withdraw any funds from your IRA other than for those purposes that are allowed under the IRS rules before age 59 ½, you must pay a 10% penalty on the money you withdraw.
Rice Real Estate & Property Management
Though the bull market has been leaving investors grinning, the constant threat of recession and inflation is consistently looming in their minds. Financial advisors continue to preach that the best protection from a volatile market is a well-diversified portfolio. Real estate is one alternative asset class that many investors are familiar with, and it can provide investors with steady income and higher yields than traditional fixed income. If you’re interested in using a self-directed IRA to purchase investment property in Vegas give Rice Real Estate a call. We can help you source an investment property for purchase and help you manage it long-term.
The material in this article is presented for informational purposes only. Rice Real Estate is a licensed real estate brokerage in the state of Nevada. Rice Real Estate performs the duties of a licensed real estate brokerage and permitted property management company. We do not offer directed custodian, legal or tax advice. For reference, here are a couple examples of companies that offer directed custodian IRA services: Millennium Trust Company and Pacific Premier Trust
Over the past decade Rice Real Estate has consistently leased properties to qualified tenants within 7-14 days. Our marketing, responsiveness, screening and pricing strategies increase the profitability of your investment.
Tips for Choosing a Self-Directed IRA Provider
When choose a self directed IRA custodian, FINRA offers the following guidance:
“Make sure you do your own due diligence. You have to make sure you’re setting up your self-directed IRA with an IRS-approved institution. All IRAs enjoy certain tax advantages, but only if they’re held by an IRS-approved institution. The IRS provides a list of approved IRA custodians that you can reference to make sure your potential provider is approved. An IRA custodian is a facilitator for an account. They aren’t like a broker/dealer or investment advisor – they don’t do any kind of inspections of potential investments or make recommendations, nor are they doing any due diligence, evaluations, or valuations. Unlike other investment providers, account statements from a self-directed IRA custodian may only indicate what investments you own and what you paid. You are responsible for being aware of the changing value of investments and making decisions on what to hold and when to sell.” – Gerri Walsh, Senior Vice President for Investor Education, FINRA note: FINRA plays a critical role in ensuring the integrity of America’s financial system—all at no cost to taxpayers. FINRA works under the supervision of the Securities and Exchange Commission
The material in this article is presented for informational purposes only. Rice Real Estate is a licensed real estate brokerage in the state of Nevada. Rice Real Estate performs the duties of a licensed real estate brokerage and permitted property management company. We do not offer directed custodian, legal or tax advice. For reference, here are a couple examples of companies that offer self-directed IRA custodian services: Millennium Trust Company and Pacific Premier Trust.