Tag Archives: ira real estate

Buying an IRA Real Estate

Buying real estate with your IRA (or any other retirement account) is possible but it’s not going to be easy without guidance from experts in law and investments. Ideally, a person who wishes to use his or her IRA in purchasing real estate must scout for a plan administrator who will let him do so. This administrator will follow many strict rules, so you would have to do a lot of convincing to get him or her to believe that the property you want is a good investment for your IRA.

Experts advise against administrators who could be working on a commission under financial planners, who could have premeditated designs in selling their very own investments. As much as possible, look for one who would be committed to administering accounts and nothing much else. After doing so, you may then roll retirement funds onto the new retirement account.

If there’s enough cash on the new retirement account, you will be able to buy a self-supporting property. In this program, you will be getting a property that would appreciate in value over the next couple of years. Moreover, this property can generate enough gains to cover its own cost over the years. This means that you would no longer need to shell out money from other resources to pay for it.

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3 Must-Knows about 1031 Exchanges

Making sense of figures in a tax form can be confusing if one’s mind is not adept at number-crunching. For tax whizzes who handle such things that involve much more analysis like investments and properties, it will add up sometime. A tax expert can explain how a 1031 exchange works, for example, in a simple language: it is a method of disposal of property and acquisition of another one without the burden of a capital gains tax. 

Here are three other things a financial genius will tell you about 1031 exchanges. First, it deals with like-kind exchanges. This means, a personal property cannot be sold to buy business assets. Examples of qualified trades include, among others, land for an industrial building, or an office in exchange for a shopping center. 

Second, the barter of properties can be delayed. It is not frequent that a prospective investor will be able to find a land or structure he likes at first scouting. When this happens, a person should be hired to virtually hold the proceeds from the first purchase, and later on use the money to pay for a replacement asset preferred by the first party. 

Third, prospective replacement properties under 1031 exchanges can be multiple. The Internal Revenue Service says it can be as much as three, so long as one is closed within the prescribed period.