IRA Real Estate Investing Options to Suit Your Situation
Investing your retirement funds in real estate may sound appealing as the stock market woes are preventing you from building wealth in your retirement account. To do this you will need to locate an independent Individual Retirement Account (IRA) custodian that allows IRA Real Estate Investing option and work with the company to set up an IRA real estate investing account.
Most companies that offer IRA real estate investing deal may limit your choices to certificates of deposit, stocks, mutual funds, annuities and other similar financial tools. But the Internal Revenue Code under Section 408 permits individual to purchase land, commercial property, residential property, real estate contracts, trust deeds, or condominiums with IRA real estate investing accounts.
Some of the IRA options that allow IRA real estate investing are stated as follows. But you should keep in mind that there are pros and cons associated with the type of IRA real estate investing account that might seem best for you:
- A traditional IRA real estate investing account allows you to annually deduct your contributions from your income. However, when you begin withdrawing the money, those funds will be taxed as regular income.
- A Roth IRA real estate investing deal gives you no deduction on your current contributions but it allows you to withdraw funds tax-free. This IRA real estate investing option may be a good one for you if you expect to hold it for a long period, particularly if the property increases in value over that period.
- A SEP-IRA is especially designed for self-employed individuals and small companies. With a SEP-IRA real estate investing account you can contribute up to 25% of your compensation or $40,000 whichever is less. This is an ideal option for real estate practitioners who can make high contributions, as they are able to build funds more rapidly to purchase properties. Withdrawals from a SEP-IRA real estate investing account are treated like those of a traditional IRA for tax purposes.
About the Author
Brad Wozny is a real estate investing expert. Let Brad show you how to connect with eager real estate investor buyers & sellers of investment properties. Access private money & creative lending resources. Claim your FREE Strategic Investment Manifesto and Download your 2 FREE real estate investing mp3 case studies.
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