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última version al 19:48 3 may 2012
Iras And Real Estate Investing
If you are thinking about investing in real estatemortgage notes, raw land, condos, houses, or commercial propertybecause housing prices are down, you can add to your portfolio by using a self-directed IRA. For the widest range of options, you will need an independent administrator to act as your custodian or trustee, rather than a brokerage, insurance company, or bank. As you proceed, be sure to keep the tax consequences of any action you take in mind.
What you can do before you invest
If you have a basic IRA, you can begin by converting to a Roth and using those funds for tax-free growth by investing in real estate, if you feel that the market will bounce back in the long run. Roth IRAs do not include Required Minimum Distributions (RMDs), and the illiquidity of your investment should be kept in mind as well. You may also find that you prefer the greater diversification and liquidity that a Real Estate Investment Trust (REIT) provides is more appealing and comprehensive. It is best to use a separate IRA for every non-traditional investment you make in order to avoid any complications related to the detailed Internal Revenue Service (IRS) regulations that may apply.
What you should be aware of when you invest
Care must be taken with your use and handling of the real estate you buy through an IRA because self-dealing could make the whole IRA taxable and subject to certain penalties as well. Here are some examples of things that are prohibited under the law when using an IRA to purchase real estate: Do not buy a so-called fixer upper and complete the rehabilitation of the home yourself, or hire anyone related to you to do the work. Do not purchase a property for your personal use, rent it out, and then stay there for even one week out of the year. Remember that an investment property purchased with an IRA is ineligible for any capital loss deductions or depreciation benefits. Since the use of leverage is not allowed in this case, you must provide 100% of the capital when you purchase real estate, and you cannot have any kind of mortgage.
Because mortgages are difficult to obtain in the current economic climate, you may feel that you want to help your adult children by using your IRA to pay for their new home and having them make their monthly payments to you. This may seem like a win-win situation for both generations, but since members of your family would actually live in the home, it would probably also be prohibited by the IRS.
