*Names have been changed to protect the privacy of our clients.
Case Outline: Mr. & Mrs. Kelly, both in their early 40’s, operate a Bed and Breakfast Inn, in which they also live, in a beautiful, historic downtown neighborhood of a cosmopolitan city in the south western United States. The home next door to their Inn became available for sale and the Kelly’s dreamed of buying it as an annex to to their current facility, providing additional rooms for their business as well as the opportunity to expand their own living space. Their current finances did not allow for additional mortgage expense and so they believed their dream to be unattainable until they came across our advertisement in a Frontier’s Wild Blue Yonder in-flight magazine.
Summary: The purchase price of the property the Kelly’s wanted to buy was $385,000. They had an IRA value of $200,000-which they transferred to establish a SAFE HARBOR®-Directed IRA™ (SHIRA™) account as the foundation for their IRA Real Estate plan. The IRA value was not enough to structure the cash flow to satisfy one hundred percent of the mortgage payment, however, the addition of the IRA cash flow to the Kelly’s current income along with additional income from the new annex to their Bed and Breakfast was more than enough to qualify them for their loan. We then structured the IRA in coordination with a commercial property mortgage in the amount of $308,000 using non IRA monies necessary for the down payment to purchase the building.
Business tax offsets, coupled with allowable real estate offsets will more than satisfy the tax liability generated by the IRA cash flow, allowing the Kelly’s to gradually transfer the value of their IRA into the real estate with little or no tax consequences. Our IRA Real Estate to Occupy Investing strategy (AKA the OUTSIDE™ Method) allowed the Kelly’s IRA to expand their business and improve their own standard of living, while at the same time, make a long term investment in real estate which will contribute to their eventual retirement.
Click here to read about the other estate planning benefits derived from our structure
We help people multiply their IRA funds by directing them to purchase real estate that they can personally use or create an additional income from, so that they can have more flexibility in their retirement, as well as create certainty and security for their families and leave a larger and more impactful legacy.
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.