Invest In Real Estate With Your IRA

The dream of owning and managing real estate and keeping the profits to yourself instead of the tax man is not a dream any more. The fact is, it’s completely possible to enjoy tax-free or tax-deferred profit just by using your IRA or 401k to invest in real estate. Unfortunately, most people think their government-sponsored retirement plans are just for investing in stocks, bonds and mutual funds. That couldn’t be further from the truth!

Adding Real Estate To Your Portfolio Can Really Add Up

Besides the benefit of building tax-deferred wealth and compounding interest, taking advantage of the tax-deferred nature of an IRA is one of the most generous benefits of such a retirement account. That means that should you use your IRA investment to purchase conduct a real estate transaction that turns you a profit, you won’t have to pay an immediate tax on any earnings like rent from a tenant or a property sale. What’s more, since these profits are earning compound interest, any profits your IRA real estate transactions make are generating a potentially huge influx of cash into your retirement account nest egg. Simply put, compound interest is interest earned on both the original investment sum and on the interest that accumulated on top of that original sum.

Why Haven’t I Heard About This Before?

The fact is, most financial advisors and IRA custodians don’t offer real estate retirement investing as an option. Even if you ask your trustee or custodian if you can invest in real estate as part of your investment portfolio, they’ll likely tell you “no” or even respond that they’ve never heard of the concept.

You can invest in real estate as a part of your overall retirement portfolio. Of course, the process is completely legal, though there are strict rules as laid out by the Internal Revenue Service which you can read about on the IRS website under Publication 590. What’s more, you can only invest in real estate with your IRA money under the guidance of a self-directed IRA firm.