A self-directed IRA lets you invest in real estate and helps you enjoy high tax-free returns over a fairly short period of investment. Investing your SDIRA in real estate brings you high income and gives you the unbeatable combination of control, appreciation and leverage.

You can invest in local, national or international real estate properties. Owning real estate with a self-directed IRA is aimed at wealth building and this is subject to certain rules. The account must be set up properly and the property owned by you must be solely for investment. However, to do this, it is important to set up the SDIRA with a trust company. You still get to control your real estate investments completely and grow your portfolio. With the self-directed IRA LLC account structure, you can do the following:

 

a) Use the SDIRA to buy traditional as well as non-traditional investments including real estate
b) Spot buy foreclosed properties and tax liens
c) Buy and sell local and international, commercial, residential and rental properties under the SDIRA and enjoy tax deferred profits
d) Buy your retirement property at the current rates, rent it and take occupation at the time of your IRA distribution
e) The types of property you can invest in with your self-directed IRA include residential and commercial properties such as single-family and multi-unit homes, apartment buildings, co-ops, condominiums, improved or unimproved land, etc.

Even if your SDIRA cannot finance the entire purchase, it is possible to finance or leverage an income-producing property, by using it as security for the loan. This is known as IRA lending or non recourse lending since the IRA holder cannot offer credit to the IRA. The property actually belongs to your IRA and the debt will be repaid from your IRA’s assets and this could be income via the property, allowed contributions or other IRA assets. So basically the property is bought or sold for your own benefit through your SDIRA funds.

In addition to being aware that the investment property is an asset of your retirement plan, you need to know the following:

 

a) The property you intend to buy using the plan funds cannot be personally owned by you, your spouse or your family and it should not be a prohibited transaction
b) You or your family members cannot occupy or lease this property
c) As long as the property is in your SDIRA plan, you cannot lease it to your business.
d) Your main benefit is receiving the property as a distribution from your plan at retirement.

You can build substantial wealth by investing in real estate through your self directed IRA. Even with a small account balance, investments can be made utilizing non recourse lending. Many people buy a second property, rent it, and build its equity to invest in more rental property. If the home was owned for at least a year and purchased as passive investment, you are not liable for Unrelated Business Income Taxes (UBIT) under SDIRA. To protect these assets, most investors create an LLC or Limited Liability Company to make sure that their business is separate from personal dealings.

For more information regarding Real Estate IRA Lending, please visit IslandViewMortgage.com