The IRA - individual retirement account, is still an enigma to many people. Frequently set up at the suggestion of a CPA or financial advisor as a way to offset income tax in a given year, the retirement account is often hurriedly created in a stock market based fund and then forgotten. Left to grow-or diminish- with little or no management on the part of the IRA owner. It is not unusual for the beneficiary to have no conception of the variety of investment options available to them. Once placed with a market oriented money manager, it is up to the IRA owner to discover investment options other than those Wall Street has to offer.
Here are five facts you probably don't know about your IRA:
Despite what your CPA, financial advisor, tax attorney, or trusted friend might say- you CAN use your IRA or 401k rollover to purchase real estate.
There are two different methods of applying your retirement funds to the purchase of real estate. Each method is structured and regulated under entirely different tax rules.
The INSIDE method (such as Self-Directed or Checkbook Directed) does not allow the owner of the IRA to personally gain any benefit from the real estate investment. A list of prohibited transactions makes this method only suitable for a hands-off investment purchase, requiring the service of a trustee.
The OUTSIDE method (aka IRA Real Estate to Occupy and our SAFE HARBOR®-Directed IRA™ (SHIRA™)) allows for personal occupancy of the real estate. Making the purchase of a primary residence, vacation home, business office or self managed residential rental property an attractive opportunity for redirecting your IRA monies into real estate.
You don't have to be 59.5 before you can utilize monies in your IRA. Provided that your use is structured to comply with IRS rules, access to your IRA funds can be without penalty.
DID YOU KNOW?
The combination of low inventory and high buyer demand is creating an environment where homes are flying off the market. This is also a good indicator that while certain parts of the economy remain frozen, real estate is not one of them, and the pandemic has not slowed eager buyers from acting. [KCM].
ONE LAST THING.
With the extreme volatility the market has been experiencing the last few months, not a single client of ours has incurred a loss of value to their SHIRA™.
In fact, according to a report from Zillow, real estate increased in value an average 5.46% in 2019 nationwide, along with the asset protection of their SHIRA™, possible rental income, tax benefits, and the intrinsic value of occupancy of the property, our clients enjoy confidence, peace of mind and growth with their SAFE HARBOR®-Directed IRA™ (SHIRA™) real estate investment and its bottom line.