CASE STUDY OF ACTUAL CLIENTS OF LASAII BENEFITS. NAMES HAVE BEEN CHANGED TO PROTECT OUR CLIENT'S PRIVACY.
Case Outline: Mr. Brown is 64 years old, married, owns a primary residence and has a net worth of over 3 million, not including his IRA accounts. Prior to contacting us, Mr. Brown and his wife-both retired-had been researching the possibility of purchasing a vacation home in a western ski resort. Mr. Brown first heard of the OUTSIDE™ method of investing in real estate from searching the web. After completing the compatibility form on our website, Mr. and Mrs. Brown had a telephone meeting with one of our consultants to more throughly understand how our IRA Real Estate to Occupy Investing Strategy aka the OUTSIDE™ structure, could apply to their scenario and determine if it would be of benefit to them.
The Browns decided to allocate $750,000 of their IRA to the purchase of their $900,000 ski condo, preferring to utilize their IRA money for the real estate purchase than to use income generated from pensions and investments. Using $260,000 of non IRA monies for the down payments, the Browns obtained a second home mortgage arranged by us to finance the balance of the purchase price. To establish the structural foundation of the IRA real estate plan, we assisted Mr. Brown in transferring his allocated IRA monies to the SAFE HARBOR®-Directed IRA™ (SHIRA™) account. The SHIRA™ account, with a potential to earn 5% (at that time) as a ten-year average, insures against loss of principal value due to investment exposure during the life time of the contract. We then structured Mr. Brown's SHIRA™ account to provide a reliable monthly income stream to be used to cover the mortgage payments. Any tax liability generated by distributions from the IRA was calculated to be offset by allowable real estate tax deductions, resulting in a zero tax outcome.
Summary: The implementation of the OUTSIDE™ structure of IRA real estate has enabled the Browns to purchase a ski vacation condo for their personal use within a secure financial framework. Ultimately, Mr. Brown and his wife plan to sell their vacation home in approximately ten years when they anticipate their interest in skiing to diminish. At that time, they should expect to still retain approximately 75% of the original value of the IRA in the SHIRA™ account which may then be transferred to any investment of their choice. Believing their real estate purchase to be a sound investment, the Brown's expect to benefit from a healthy capital gain. The gain, along with the principal value of the original down payment as well as the accumulation of IRA monies transferred into the real estate over the 10-year period, will be applied to their later retirement years. Additionally, there are estate planning benefits to this IRA real estate plan that are not covered in this brief synopsis.
Find out more about how our IRA real estate investing strategy can systematically diffuse the tax consequences for a large IRA here.
Learn more about the 3 pillars that make our IRA Real Estate Investing Program a well-oiled machine here.
SMART INVESTING STARTS AT HOME
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.