Most people don’t know that you can buy real estate through your IRA. I had always heard that and didn’t totally understand it. However, recently I have had a lot of personal experience with it and I have to say what an incredible way to buy and sell real estate.
A Self-Directed Individual Retirement Arrangement is an IRA that requires the account owner to make investment decisions and investments on behalf of the retirement plan. You can convert your retirement plan now that might be held in stocks into a self-directed plan and instead buy real estate with it. How cool would it be to have your IRA own a rental home or two that will pay your IRA rent every month and when you sell the home your IRA gets all the profits for tax free growth! Here’s a little information to help guide you:
- You first will need a 3rd party to set up your Self-Directed IRA plan, because all the money and home purchases must go through the IRA, not through you personally. I’m not a financial advisor or tax advisor, so definitely consult your own. If they can’t help you with this, let me know and I’ll suggest the company in SW Florida that I use.
- You could buy and sell, buy and sell, and do all of this while the funds grow tax free in your IRA. Pretty amazing right?
- Want long-term holds? Buy a rental property and have them pay your IRA rent every month – it will also grow tax free while the property itself will hopefully appreciate as well.
- You personally can’t benefit – this is where some people get confused. Basically, your IRA buys the property. Your IRA writes all the checks. You personally cannot do work to the house, you personally cannot live in the house. The moment you take personal advantage of the property, you are violating the rules of the IRA investment. This can get you into trouble and trigger a taxable event.
If you’ve been beat up by the stock market, explore this opportunity to buy real estate through your IRA. It’s a very low cost with very low fees to start up and it can be extremely profitable for you. Even if you have a small amount in your IRA, you can buy a percentage of a property based on the dollar amount it contributes to the deal.
To your successful retirement!
Gabe Mellein was voted a Top Real Estate Agent – Exceptional in Service and Overall Satisfaction by Gulfshore Life Magazine in 2012. He is the broker of Gulf Pointe Properties, Inc and has over 8 years experience in the SW Florida Real Estate Market. He is a member of The Naples Area Board of Realtors, Bonita Springs – Estero Association of Realtors, Realtor Association of Greater Fort Myers and the Beach, The Florida Association of Realtors, The National Association of Realtors, and is nationally certified in Feng Shui for Real Estate. Need real estate help? Please contact Gabe at: 239.825.2234, Gabe@GulfPointeProperties.com or www.GulfPointeProperties.com