IRA Financial Group: Real Estate Investment Options Using Self-Directed IRA
What does it mean by self-directed IRA? Self-directed IRA are alternative types of investments which are offered and accepted by the IRA custodian, a financial institution responsible for IRS reporting requirements and record keeping. When it comes to the advantages of owning real estate in a self-directed IRA, one of which is the potential tax benefits. Your real estate investment gains become tax-free because of tax-deferral income until you’re able to withdraw, or if your investment holdings are in a Roth IRA. For those active investors, they may still engage in buying, selling, and flipping properties, moving funds from one project to another, and still maintaining their IRA’s tax-deferral status.
Many people are not aware that they can purchase a property or invest in real estate with their retirement without the tax benefits of a 401k or IRA. With the use of self-directed IRA, you can engage in investing your retirement plan in a real estate and gain the benefits of delayed taxes on investment gains, tax-free growth through a Roth IRA, leverage growth, protection against market volatility and inflation, rental income, and a chance to pay your retirement house. As long as you keep the money from selling a property to your retirement account, an IRA delays the taxes, thus allowing to earn higher an after-tax-return for your real estate portfolio. The tax-free growth offered through Roth IRA has a better incentive as compared to the initial savings on the traditional IRA because your investment earnings are tax-free when making withdrawals after the age of 59 1/2. When it comes to purchasing a real estate property under your IRA, the title will not be directly under your name but your IRA, thus offering a good financial protection in case of a defaulted loan, wherein the lender can seize your property but not your other assets and not affecting your own personal credit score.
When compared to the stock market, there is lesser stress and risks associated with real estate investments, so it is best to invest your retirement plan to real estate properties as they value tend to rise over time. You can pay off your mortgage and your other investment property expenses with rental income, and any additional income stays in your IRA where it will grow tax-deferred and used for your future investments. With the help of your IRA, it is now possible to purchase your dream home. By buying a retirement property through a self-directed IRA, you can earn rental income, and when you are ready to retire, you can just withdraw the title from your IRA, and then move into your retirement home. To learn more about self-directed IRA options and 401K, feel free to check our website or homepage now.