Can I Buy My House With My IRA?
It is possible to invest your IRA in real estate, but there are some things you should consider. The IRS does not allow investing your IRA in life insurance or collectibles such as art work, memorabilia or gems. Using your IRA to invest in real estate is possible, but not necessarily easily done.
First off, you need to create a self directed IRA. You also need to get an independent custodian for that IRA. There are trust companies, brokerages and other financial institutions that will do this, so check around.
You can do a search on the Internet for "self-directed IRA custodians". Compare prices and check into the reliability of the company as well as their insurance coverage. You want to make sure your assets are well protected.
Many of these kinds of custodians can also invest in other items such as stocks and bonds and mutual funds. Make sure you know the rules. Make sure you know exactly what they will be providing for their services.
Some of these custodians will offer other services such as rent collection. Others will not. It is best to avoid high maintenance real estate for these kinds of investments.
There are some other rules to consider as well. You cannot invest in any property that will be used as your residence or vacation home. You also cannot buy, rent or lease from a spouse, parent or child.
If there is a mortgage on the property, most of your gains will still be taxable. You won't get the tax breaks normally associated with home buying. Make sure to consult a tax professional to see how this would affect you.
When considering a real estate investment for your self directed IRA, remember to figure in the costs of property management and custodian fees. Also remember to figure in the tax changes. If you will soon need liquid assets, this plan may not be right for you. Look at all sides of this investment before jumping in.
Article Source: FxTradingStock.com
About the Author
NAFEP (The National Association of Financial and Estate Planning) is a leading provider of self directed IRA and self directed 401k products, administrative and custodial services.
by: John Coktostin
Total views: 27
Word Count: 345
Date: Thu, 15 Jul 2010
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