If
you want to use your IRA to buy real estate, you need to understand what you
can and can’t do.
Did you know that IRAs can be
used to own other types of assets, such as investment property? Most taxpayers
don’t know about some great tax advantages gained with IRAs involving real
estate.
For those looking to leverage
their IRAs just a bit more and maybe transfer the ownership of some investment
assets with greater ease, it is worth your while to consider your options to
own investment properties inside of your IRA.
A recent Bloomberg article is worth reading as it asks the question “Can You Use Your IRA to Buy Investment
Property?” In short, yes. However, there are certain conditions that
render it an unavailable option.
For starters, you need a
self-directed IRA. Second, the property must be acquired directly by the IRA
itself. In other words, there would need to have been enough funds in the IRA
to begin with to purchase the investment property.
Even if your IRA would be
eligible to own investment property, you must evaluate how investment property
fits into your overall estate plan as far as the IRA is concerned. Obviously,
it is rather attractive to grow your IRA on a tax-deferred or tax-free basis.
On the other hand, what kind of additional complexities lie in wait upon the
eventual sale and perhaps even the transfer to the eventual beneficiary at
death? IRAs have a tendency to live on after their owners.
Just like any other financial
planning decision, it is essential to consider the tax and estate planning
consequences downstream.
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estate planning and elder law topics, please visit our website
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Reference: Bloomberg
(June 10, 2013) “Can You Use Your IRA to Buy Investment
Property?”