With real estate prices down, many homeowners wish they could take advantage of the low prices to diversify their retirement portfolios but don't have the liquid assets to do so. Great news if you have money in your 401K or other retirement plans. Equity Trust Company, A leader in Self-Directed IRA's put on a seminar in our office last week about acquiring investment properties through a self-directed IRA. There are significant IRS restrictions but this could be an excellent opportunity to invest in Real Estate.
Here's the deal. Once you have opened a Self-Directed IRA, you will identify the property you wish to purchase and go to contract naming your IRA as the buyer. Once ratified, you go on-line and request the funds from your IRA to be transferred to the title company for settlement. It is just like paying cash but the funds don't come from your checking account. Depending upon your retirement plan, the increase in property value over time could be tax-free. Monies needed for repairs must also come from the retirement plan and all rents received must go back into the retirement plan. Sorry, but no comingling is permitted under IRS regulations.
Properties acquired through your retirement plan must be solely for investment purchases, not personal use or you may be subject to IRS penalties.
If you are interested in learning more, please let me know. This could be a great opportunity to diversify your retirement policy rather than leaving it all in the stock market.
Craig Rosenfeld
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