Today I would like to share with you another investment tool used in real estate. This tool is called a Self-Directed IRA. We will only cover a few basics about what is a SDIRA, and how you can accelerate your investment career using it. A self-directed IRA is an individual retirement account that gives the IRA owner greater control over their investment decisions. Simply put, a self-directed IRA allows you to use your retirement fund to invest in nontraditional investments, like real estate, trust or mortgage deeds, private placements, tax liens and so on. This allows you to compound your assets quickly with investments you select. The profits made from your real estate investments are tax-free, as long as those investments are held by your self-directed IRA.
The first thing you need to do is find a custodian, preferably a bank or trust company, which accepts real estate in a self directed IRA or real estate IRA. Once you have selected one, set up a self-directed IRA with your IRA custodian. You then finance the self-directed IRA account with funds, or transfer money from either a previously held retirement account or one that an employer is currently funding.
One great vehicle that can accelerate the value of your IRA would be Income Producing Property. If the property generates any income through sell, rental or lease of the property, the income must flow back into the IRA. This is because the purpose of your IRA is to provide for your retirement in the future, not to benefit you now. Using a Real Estate IRA to purchase real estate is one of the best ways to add to your portfolio and save for your future. With cash-flow and appreciation, real estate has a potential higher rate of return than stocks and mutual funds. Also the profits you make from these investments have huge tax benefits. Another great benefit is that the property or properties can be sold at any time to an unrelated party and the proceeds from selling an IRA-owned property roll back into the IRA without facing capital-gains taxes. You can then invest the proceeds in another property or any other asset within your IRA.
Given the uncertainty in today’s mainstream investments, real estate is gaining a great deal of interest as an investment option. Whether your investment strategy is to buy & hold, or buy & sell for gain, real estate investing through your IRA can yield unbelievable profits towards your retirement.
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