Using your Self Directed IRA to Purchase Investment Property

Section 408 of the Internal Revenue Code permits individuals to use a self-directed IRA to purchase real estate investments such as commercial property, condominiums, residential property, international real estate, mortgages, trust deeds, real estate contracts, private placements, limited partnerships, limited liability company's (LLC's), and many other types of investments with retirement funds held in many common forms of IRAs, including 401k's, Traditional IRA, Roth IRA, and Simplified Employee Pension Plan or SEP-IRA. (see IRS Publication 590 Individual Retirement Arrangements).



I am not and I repeat not a tax advisor or CPA so always consult with yours to understand all the benefits to this program. The low down is that you can write a check directly from your self directed IRA to purchase a piece of property. All rents and returns from that property are made payable back to the IRA. Generating money that is tax deffered.


If you purchase, using your self directed IRA, a distressed home maybe a foreclosure on the courthouse steps or a real estated owned bank property you have saved $$ from the top. Depending on the condition of the home you may also have to add money in renovations. But since you have purchased the home for cents on the dollar you should see an increase in value within 5 years. (This could be affected by certain elements such as location. Its always important to consult your realtor when purchasing investment property. He/she can help locate investments and understand the ever so changing closing documents.)


Its your money make it work for you.



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