Tag Archives: 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.


Some Important Reminders About USC Section 1031

Businesses rely on investments and assets in order to survive, although there are times when some of these go so bad that it’s time to have them removed. However, rather than go through the trouble of liquidating them and buying a new one, savvy businessmen can simply swap their old assets with new ones, and pay little for the transaction. This is known as real estate exchange.

Section 1031 of the Internal Revenue Code deals with the “exchange of property held for productive use or investment”. While this description sounds pretty straightforward, this does give some limits to 1031; it can’t be invoked to swap one residential property for another, unless it’ll be used for investment (rather than living) purposes. The term “property”, however, is very broad and can include even small things like cars and paintings.

According to the Internal Revenue Service (IRS), up to three of these properties can be designated as replacement properties, provided that the buyer makes a transaction on at least one of them. In addition to that, taxes can still apply on exchanges that involve properties with existing debts and mortgages, like office spaces. This is especially true if, say, the old property has a greater mortgage than the new one because this will mean that the buyer only has to pay off a smaller mortgage after the exchange, which is considered by the IRS as “income”.