IRA Financial Group: Investing in a Real Estate Self-Directed IRA
What does self-directed IRA mean? It means alternative forms of investments that are offered or accepted by the IRA custodian, which is a financial institution responsible for IRS reporting and record keeping. Potential tax benefits is perhaps the greatest benefit of using a self-directed IRA when purchasing a real estate. You can benefit from tax-deferral of your income until the day you take withdrawals, or if your investment holdings are in a Roth IRA. For active real estate investors, they may still perform buy and sell, and flipping properties, and moving funds from one project to another, and still maintain the IRA’s tax-deferral status.
A lot of people don’t realize or are not aware that they can invest their retirement in real estate, and they can purchase a property without the tax benefits of a 401k or IRA. You can invest on a real estate using your self-directed IRA, gaining several advantages such as delayed taxes on investment gains, leverage growth, protection against market volatility and inflation, tax-free growth through a Roth IRA, rental income, and a chance to pay your retirement house. Whenever you invest in real estate within your retirement plan, or sell a property and keep the money on your retirement account, your self-directed IRA delays your taxes, helping you earn higher an after-tax-return for your real estate portfolio. In Roth IRA, you don’t have tax deductions for your contributions, and you have more tax savings as your investment earnings are tax-free when making withdrawals after the age of 59 1/2 as compared to traditional IRA. You can even protect your finances by purchasing a real estate with the mortgage in the name of your IRA because in any event that the loan becomes default, the lender can seize the property but not your other assets and your own personal credit score is not affected.
As compared to the stock market, the real estate market is more stable so it has the lowest risk for investing your retirement savings. Purchasing a real estate property is not a loss at all because you can have it rented and you can use the rental income to pay off your expenses. If you have a dream retirement home, your self-directed IRA can help you in financing it. By purchasing a retirement property through a self-directed IRA, you can earn rental income, and when you’re ready to retire, just withdraw the title from your IRA, and then move into your retirement home. Allowus to help you increase awareness and understanding about self-directed IRA options by visiting our website or homepage now.