Powerful investment tool: the self-directed IRA
Author: Stephen Marcum
Author: Stephen MarcumPower investment tool: the self-directed IRA If real estate investors do not have a self-directed, IRA, they need to think about doing so because they are missing out on the benefits of them. You may ask youself,"What is a self-directed IRA?" Simply, it is a retirement account that allows investments to grow tax-free. "Does this include property investment?" Yes, it does. "I have seen people flip properties in Baltimore and DC and they have earned $20,000 or more tax-free. I think even in this economy everyone like to have an extra $20,000 or so to put toward their retirement," said Ian Johnson,Pillar Property Group. www.pillarprodeals.com">
Share: How does this work? 1.First, you create a self-directed ROTH IRA by depositing a small amount of money with a self-directed IRA administration company. 2.Next, you look for a property with some equity, and write a contract to buy. 3.With the self-directed IRA administration, you will want to be the custodian of it. At the time of the purchase, you will want to write "Self Directed IRA Administration Company, custodian for your name in the buyer's signature. "I did this myself and sold a property for $20,000 more than my contract. My $20,000 profit went to my IRA account, which was tax-free money," said Johnson. Many investors ask if they can have access to this money immediately. Well, the IRS has some stipulations on many IRAs including the self-directed IRA. First, you cannot touch the money until the age of 59.5-years-old. There are exceptions if you become disabled, educational expenses, medical insurance premiums, expenses involved with building or buyring your first home, and levy payments to the IRS. Many investors can pay themselves a management fee for directing their own investments. No more than 20 perecent is advised," according to Johnson. www.pillarprodeals.com">
Share: Regarding what form to file when buying and selling real estate options through your IRA, use Form 5498. When you bring debt into the picture, it creates UBIT (Unrelated Business Income Tax) and UDFI (Unrelated Debt Financed Income) and form 990T may have to be filed. The tax is not huge, so it can still be worthwhile to leverage (finance) your ROTH IRA/LLC to purchase property. And if you plan your exit strategy right and pay off the loan 12 months prior to selling, and there would be no UDFI to pay. "These forms can become cumbersome for many new investors or even some seasoned investors. It is advised for you to speak with a professional who deals with these forms on a daily basis,: said Johnson. If there are any questions, please contactJohnson.About the Author: Treatment of Ovarian Cysts – Natural Remedy in the Comfort of Your Own Home UK University Funding Cuts - Can Efficient Space Management Offer A Ray Of Light? Shareholders Agreement: Do you need one? Pay-per-click (ppc) Management & Consulting Men's Luxury Choice—Santos de Cartier A Importância Das Finanças No Casamento Cristão What Is A Serviced Apartment? County Court Judgment - How Will This Affect Me Travel Africa : Five Safari Adventure recommendations for 2010 Make Your Ex Girlfriend Want You Again With These Easy Steps El Aeleteo De La Mariposa. Ana María Manceda .san Martín De Los Andes Thrush Symptoms and Treatment Information Obsessed With You Ex Girlfriend? Get Her Back Now