For every client that buys or lists a house, there is likely a related retirement plan belonging to that client that can be used for real estate. Many REALTORS® have started taking advantage of their self-directed IRAs to invest in real estate. After all, in this economy, deals are everywhere but most of us don’t have the cash to take advantage – until we realize we can use money from our IRAs. The IRS has never prohibited IRAs from owning real estate. Most IRA custodians will not allow it due to administrative burdens. Also, most IRA custodians only allow investing in what they sell (stocks/CDs).
To invest in real estate, you don’t need a special IRA. You just need an administrator willing to hold these types of assets. Any IRA can be self-directed, including Traditional, Roth, SEPs and Simples. The upside is the tax-deferred gains (tax-free in the case of a Roth). For example, you can buy a duplex to rent out. The tenants would make their payments to the IRA, which would be tax-free income, just like stock dividends. When the property is re-sold, there are no capital gains taxes.
There is lots of money out there for real estate. REALTORS® should spread the word to their clients about using IRAs and reap the benefits through additional sales.
Daniel Hanlon, Entrust Chicago
312-753-6383 or email@example.com