Strategic Alliance Real Estate Investing

Invest in Real Estate Through IRAs and 401k Plans

Are you tired of investing in the dark sleep of Wall Street with all of your retirement savings? Yields are low. You are forced to go after capital appreciation in an overvalued market balloon. Did you know you can invest your retirement funds in some alternative ways that don’t include the stock market? You can invest in real estate through IRAs and 401k plans.

We want to help you with information to implement a retirement account outside of the stock market. This knowledge allows you to invest in real estate through IRAs and 401k plans. It allows you to avoid paper assets that can be gamed by the financial system.

invest in Real Estate Through IRAs and 401k Plans

Individual Retirement Accounts (IRAs) and 401k plans are long-term savings accounts. They offer tax advantages if you comply with various Internal Revenue Service (IRS) regulations. A growing number of financial firms are offering self-directed IRA plans that make it easier to invest in real estate through your IRA.

Here are a few things you should specifically consider if you think using an IRA to buy investment properties could work for you.

According to Forbes, there are rules you must follow to invest in real estate through IRAs and 401k plans.

  • “The real estate you buy must be a business property, not a personal residence, second home, or occasional rental. You can’t use your IRA to buy a property you already own. It has to be a new purchase directly into the IRA.
  • “If you want to buy a rental property, you open an IRA custodial account, transfer cash from an existing IRA account, or 401(k), into the custodial account. Then purchase real estate under the IRA account name. Very specific rules outline what you can and cannot do in funding and managing the investment. You must make sure to get good advice on those rules.
  • “You can also buy and sell real estate in a self-directed IRA if you are in the flipping business, but there are limits on how many you can do per year. The profits on any transaction would be tax-deferred or tax-free, which allows your IRA to continue to grow with those tax advantages.”
  • A traditional mortgage loan is not available in an IRA. You need to have enough money in your IRA to purchase properties for cash if you plan on having the property as a long-term rental.

There are costs for administering the IRA or 401K

Custodians charge an annual or quarterly fee to provide the necessary reporting. You need to factor those costs into your calculations before investing in a real estate property. Many of these custodians provide literature and links to the IRS rules that apply. Most of them will not give you legal or tax advice so it will be up to you to make sure you are following the rules. If you don’t follow the rules, you take the risk that your entire IRA account will be considered taxable income.

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