More Investors Turning to Self-directed IRA Real Estate Investments
There has been a major surge recently in the interest of investors in REITs, Real Estate Investment Trusts. The passive nature of these investments and tax advantages offered are primary motivators in this increased interest. Smaller investors are beginning to recognize the similarity of tax benefits available to them through a self-directed IRA.
A self-directed IRA allows tax-deferred real estate investment, and if it’s a self-directed Roth IRA, there are other possible benefits. This is because contributions to a Roth IRA are made with after-tax dollars, so this type of account enjoys tax deferral and in some cases even tax exempt status. The amount of the contribution is considered the basis.
The large well-known retirement custodians normally do not offer real estate as an investment option in retirement accounts. It’s a specialty niche requiring a significantly higher level of service, as every transaction involved in the purchase, sale, rental and management of the property must go through the account. Not one dollar can be collected or expended for anything, including maintenance unless it goes through the account. It’s totally hands-off for the investor.
However, the growing popularity of this type of investing is spawning more specialty custodial companies. They seek out investors and offer the suite of services necessary to stay on the right side of the IRS and invest in real estate with significant tax advantages.
There has been a major surge recently in the interest of investors in REITs, Real Estate Investment Trusts. The passive nature of these investments and tax advantages offered are primary motivators in this increased interest. Smaller investors are beginning to recognize the similarity of tax benefits available to them through a self-directed IRA.
A self-directed IRA allows tax-deferred real estate investment, and if it’s a self-directed Roth IRA, there are other possible benefits. This is because contributions to a Roth IRA are made with after-tax dollars, so this type of account enjoys tax deferral and in some cases even tax exempt status. The amount of the contribution is considered the basis.
The large well-known retirement custodians normally do not offer real estate as an investment option in retirement accounts. It’s a specialty niche requiring a significantly higher level of service, as every transaction involved in the purchase, sale, rental and management of the property must go through the account. Not one dollar can be collected or expended for anything, including maintenance unless it goes through the account. It’s totally hands-off for the investor.
However, the growing popularity of this type of investing is spawning more specialty custodial companies. They seek out investors and offer the suite of services necessary to stay on the right side of the IRS and invest in real estate with significant tax advantages.