If you are interested in diversifying your retirement portfolio, you might want to consider a self-directed IRA. This allows you to put your hard-earned money directly into whatever you choose to invest over time (subject to IRS guidelines). One of your many options is real estate.
Tax regulations on real estate purchases
One of the main factors to consider before you buy real estate with IRA funds is tax regulations. There are a number of rules set by the Internal Revenue Service that could easily (but unintentionally) be broken if you are not mindful of them during the investment process.
For instance, you may be able to rent a property purchased with a self-directed IRA to your siblings, but the IRS prohibits you from renting it to ascendants, descendants and your spouse. For this reason, you should seek a legal advisor or self-directed IRA facilitator to help you sort through the red tape.
Going beyond real estate
Once you choose to invest your IRA funds into real estate, you may find that you want to expand your horizons by investing in other assets – property is not your only option. For instance, it is possible to use your self-directed IRA to invest in private stock, partnerships, limited liability companies, and publicly-traded stock.
Ideally, you should have enough money in your retirement funds to be able to invest without thinking twice before pursuing this option. W. Andrew Larson, director of retirement education at Retirement Learning Center, told MarketWatch that $1 million is a solid number to begin with when starting this venture. However, this is not to say that anyone without this amount is prohibited from this form of investment.
Keep What You Earn
A qualified trustee or custodian is often needed to help individuals file the proper paperwork and handle IRS regulations for a traditional IRA. These professionals, however, typically require a percentage of your earnings for their services.
In this, Provident stands apart in the self-directed IRA market. Through a simple flat fee, you can work with this trusted administrator and custodian to allow you to invest your retirement funds properly, whether it is in real estate or stock.
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