3 IRA’s Used to Invest in Real Estate

I Wish I Would’ve Known…

“I wish I would have known about you guys before I purchased my real estate with the Self-Directed IRA.” and, “This would have been perfect for me, but I can’t do it now as I’m stuck in a SDIRA and didn’t know it could be done this way!” We get a phone call or email at least three times a month from someone saying exactly this. Just last week, we had two phone calls whereby someone was very upset that they had not heard about our program and expressed the money and opprortunies wasted by not having heard of us beforehand.

As a family owned business that has been structuring IRA Real Estate plans since 1992 with the SAFE HARBOR® -Directed IRA™, it’s really unfortunate when potential clients come to us unaware of the differences between the three IRA’s used to invest in real estate. More often than not, the conversations end with feelings of regret because they simply did not know that there was another way.

So, we’re on a mission to better serve, inform, and get the word out there for those that are looking for an investment like ours that there is another way. We’ve made a quick post highlighting the differences between the three IRA’s used to invest in Real Estate:

SELF-DIRECTED (SDIRA): THE TITLE OF THE REAL ESTATE IS HELD IN THE NAME OF THE IRA, NOT IN YOUR NAME, THEREFORE:

  • It is a prohibited transaction for the SDIRA owner or any of the owner’s ascending/descending family members to occupy the real estate. Therefore, husband/wife, your mom/dad, daughter/son, granddaughter/grandson and so on and so forth could NEVER occupy the real estate. These restrictions eliminate your ability to use your IRA to invest in a residential, vacation home or a second home.

  • You or your direct family members cannot do any work or labor to the real estate. That means, anytime you want to freshen up with a coat of paint, or fix a leaky kitchen sink, you would have to hire someone to do it for you.

  • Violation of the IRS’s rules for SDIRAs would cause the entire value of the SDIRA real estate investment to be taxable as additional income during the same year as a prohibited transaction. You would also incur early withdrawal penalties during the same year the violation occurred if you are under 59.5 years of age.

*SAFE HARBOR®-DIRECTED IRA™ (SHIRA™): THE TITLE OF THE REAL ESTATE IS HELD IN YOUR NAME, NOT BY THE IRA. THEREFORE,

  • There are NO prohibited transactions! You and your entire immediate family down the line and sideways could OCCUPY the real estate, which makes it a great option for a residential, vacation, and second home.

  • Leaky kitchen sink? Paint touch up? Save the money of hiring out and do it yourself!

  • Not only can your immediate family occupy the real estate immediately, your heirs will have Step Up In Basis on the real estate down the road.

  • Withdrawals from the SHIRA™ are taxable as additional income in the year withdrawn. If you qualify, all tax offsets can be applied against your normal income and your SHIRA™ tax liability. Any tax liability will be eliminated or minimized by normal real estate tax write offs.

*The SHIRA™ invests the owner’s funds in a principal protected account with an upside potential, while buffering from downside risk in compliance with IRS Tax Shelter Inspectors. Those assets in coordination with non-IRA funds, can be structured to support the purchase of real estate. Again, with the completion of a SHIRA™ plan, you now own two investments. One is your SAFE HARBOR®-Directed IRA™, and the other is your real estate. One supports the other while the two exist legally as completely separate entities.

CHECKBOOK IRA LLC (CBIRA): THE TITLE OF THE REAL ESTATE IS HELD IN THE NAME OF THE IRA, NOT IN YOUR NAME, THEREFORE:

  • The Checkbook IRA does offer a little more flexibility than the Self Directed IRA. For instance, it grants its owner checkbook writing privileges, and the freedom to decide how, when and where to invest, as long as the CBIRA rules are followed. This type of IRA is owned by a LLC, which offers significant benefits, such as limited liability and asset protection (exceptions and limitations may vary from state to state, so be sure to check with a real estate lawyer).

  • It is a prohibited transaction for the CBIRA owner or any of the owner’s ascending/descending family members to occupy the real estate. Therefore, husband/wife, your mom/dad, daughter/son, granddaughter/grandson and so on and so forth could NEVER occupy the real estate. These restrictions eliminate your ability to use your IRA to invest in a residential, vacation home or a second home.

  • You or your direct family members cannot do any work or labor to the real estate. That means, anytime you want to freshen up with a coat of paint, or fix a leaky kitchen sink, you would have to hire someone to do it for you.

  • Violation of the IRS’s rules for CBIRAs would cause the entire value of the CBIRA real estate investment to be taxable as additional income during the same year as a prohibited transaction. You would also incur early withdrawal penalties during the same year the violation occurred if you are under 59.5 years of age.

CHECK ME OUT!

Did you know?
Case Study: SDIRA Vs. SHIRA
the Numbers: SDIRA Vs. SHIRA

The perfect alternative investment: IRA Real Estate to Occupy:

With the potential interest earnings from the SAFE-HARBOR®-Directed IRA™(SHIRA™), possible appreciation of the real estate over time, rental income, if you wish, and the intrinsic value of occupancy, together with the tax write-offs (if you qualify), the actual total value and benefits of both the SHIRA™ and the real estate could be a double digit return for you! In other words, the perfect alternative investment.

With Lasaii Benefit’s creative, innovative and life-changing estate planning, don’t miss out on the opportunity of maximizing your IRA funds and investing in real estate that you and your family can occupy.

We are the leading experts in the IRA Real Estate to Occupy Industry.

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Please share this with friends and family that could benefit from our proprietary IRA real estate structure!

We are here to answer any questions you may have a to help you reach your real estate goals. Don’t wait, click below and set up a free consultation with us.

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Sources: Sources: Investment Company Institute, Federal Reserve Board, National Association of Government Defined Contribution Administrators, American Council of Life Insurers, and Internal Revenue Service Statistics of Income Division. See” The U.S. Retirement Market, Fourth Quarter 2010.” Other Plans include private sector DB plans; federal, state, and local pension plans; and all fixed and variable annuity reserves at life insurance companies less annuities held by IRAs, 403(b) plans, 457 plans, and private pension funds. Federal pension plans include U.S. Treasury security holdings of the civil service requirement and disability fund, the military retirement fund, the judicial retirement funds, the Railroad Retirement Board, and the foreign service retirement and disability fund. These plans also include securities held in the National Railroad Investment Trust and Federal Employees Retirement System (FERS) Thrift Savings Plan (TSP).