Due to the development in ownership of private properties, real estate has become a major business. Investing in real estate is a great way to gain a much wanted income. In fact, many venture into real estate business in the hope of getting rich. However, this requires large funding because you will be needing appraisers, brokers, development of land, management of property, and relocation services.
One way to get the funding that you need can be through your IRA account.
Real Estate IRA Rules
Although the rules are strictly to be followed to avoid disqualification of your entire IRA with IRS, using your IRA to invest in real estate is allowed. There are set of rules that you need to follow otherwise you will be risking your IRA.
The prohibited transactions are as follows:
- Buying property from your IRA.
- Selling property to your IRA.
- Money loans to your IRA.
- Borrowing money form your IRA.
- Using your IRA account to secure a loan.
- Receiving goods and services from your account.
- Providing goods and services to your IRA.
One should abide by these rules because failure to do so will result to dire situations regarding your IRA account.
It is best to seek the help of a custodian that specializes in non-traditional investments for IRA. The fees maybe higher than the usual but you keep your IRA secured. You can’t risk losing it all just because of one violation that you made.
In getting IRA accounts there are several things to consider namely the type of IRA account to open and the IRA company to open it with. The most popular type of IRA is usually the Roth IRA. And when we talk about IRA investments with real estate then it should be Self-Directed IRA.
It’s really up to you to decide what type of IRA account suits your profile and financial objective. When it comes to choosing the best IRA Company then try checking the IRA rates that they offer and their reputation of course.
This is a type of IRA that allows you to choose your investments. With this account you can venture on non-traditional investments like real estate, businesses, notes, and etc. For as long as you follow the rules of the IRS. To get the best self directed IRA then you need to have a great custodian. Someone that is trustworthy, reliable, responsible and competent. Looking at the prohibited transactions numerated above it is quit easy to commit mistakes that will lead to IRA disasters. So I would say that a Roth IRA account will be a better option when it comes to Individual Retirement Accounts.
This type of IRA has been the choice of many individuals because of its tax-free growth and tax-free withdrawals. With Roth IRA you can also leave your money for as long as you want. Eligibility rules are also simple. Any individual that receives taxed compensations such as salaries, wages, tips, bonuses, or professional fees can open a Roth account provided that they don’t exceed the income limits.