IRA – Go Beyond Stock Market Investments

Owning a home is a good investment in the view of many people. If one is good, two must be better! Before you rush out to buy a second home, you might consider doing it through your IRA.

If you have an IRA, you need to invest the contributions in stocks, bonds or mutual funds, correct? Actually, this common perception is wrong. You can make far more money by actually investing in property such as homes, condos and so on.

Investing in mutual funds, stocks and bonds is a way to make gains, but not huge ones unless you get lucky. The wealthy do not do so. Instead, they think outside of the box on the issue and investing in property through an IRA is a tremendous strategy.

Every time I read about a new wealth building strategy, I do so with a healthy bit of skepticism. If it sounds to good to be true, it often is. This strategy, however, does not push any limits or validate itself because of a loophole. It is basic IRA planning.

Truth be told, you have the right to invest your retirement dollars in many more investment areas then you are led to believe. So, why haven’t you been told this? Well, most stock investment brokers don’t make money in real estate, so why would they promote it?

To buy homes, commercial properties, rental properties and so on, you need to open a particular type of IRA. It can be a traditional or Roth version, but it must be self-directed and have a custodian. Most banks and trust companies offer them at a small cost.

As the name suggest, you are in control of the individual retirement account. This means you get to set the parameters of what can be invested in and what cannot so long as it is legal. Homes, condos and so on are legal investments under the tax code.

After setting up your account, you can invest in property. That being said, there are some minor limitations put forth in the tax regulations by the IRS. You cannot buy, for instance, your own home, which would be self dealing.

With money on hand, it is time to invest in property. There are surprisingly few rules. The only limitation is on self-dealing. You cannot buy your current home or a property you already own. Most people buy second homes or rentals.

When the actual property is obtained, it will be signed off on by the IRA custodian. Self-directed IRAs have an independent custodian who oversees the account do to IRA rules. After that, you just collect earnings from the property tax free in your account.

While buying property with an IRA is a good strategy, doing so with a Roth IRA is a much better one. It works the same way, but the tax benefits are tremendous. All distributions made from the Roth with be tax free. It is a nice way to build your retirement nest egg.

The above represents a very simplified look at maximizing your IRA investment with property. That being said, it is one of the outside of the box wealth building strategies that can produce tremendous returns.

Article Source: http://www.realtyreferenceonline.com/articles

Find out how using a self-directed Roth IRA can be used for wealth building at UFCAmerica.com.
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