Real Estate and Your IRA
Lots of self-directed investors come to us because they aren’t happy with the yields they are seeing in their traditional IRAs. Even if they put a large amount of their money in stocks with higher risk, with the low interest rates, the yield is often unsatisfactory. Enter real estate investing with a self-directed IRA.
According to the New York Times, 45 million households have IRAs but only 2% of IRA funds are invested in real estate. However, this 2% is twice as much as in 2007.
As interest rates hit rock bottom and the fear of inflation increases, tangible assets, such as real estate, appeal to many investors who want to continue to see increased growth in their retirement portfolios.
Investors have been able to hold real estate in their IRAs for quite some time, but very few brokers and banks are willing to oversee such investments, sticking with traditional stocks and bonds. However, as investors have been rethinking their investment strategies as home values surpass stock returns, a few firms have stepped up to the challenge of administering real estate IRAs, including iPlanGroup.
Although real estate investing has the real ability for higher returns, there are also a few things to consider. For example, there are several IRS regulations and offenders face stiff penalties. Additionally, you cannot use your investments as a primary, vacation or business location; a custodian must buy the property and all maintenance expenses must be paid from the IRA, meaning you must have liquid funds available for upkeep. iPlanGroup can answer some of your questions about these regulations.
The potential for high returns far outweighs these and other considerations. There are also important positive elements to SDIRAs, such as the fact that rental income goes directly into the IRA, where it grows at often a larger rate than traditional retirement portfolios. Also, capital gains tax on IRA-held property can be deferred or even tax-free when using a Roth IRA.
Taking control of your retirement portfolio and seeing increased returns on your investment is a reality with real estate investing.
iPlanGroup is not a fiduciary and does not render investment, tax, legal, accounting, or other professional advice. You should seek the services of a competent professional if investment, tax, legal, accounting, or other similar expert assistance is required. iPlanGroup does not endorse or recommend any particular investments.