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REAL ESTATE

Diversify Your IRA Portfolio By Investing In Real Estate

Real estate is the most popular investment asset for Self-Directed IRA investors. An IRA can purchase real estate the same way you can outside of an IRA – Cash, through entities, or with a mortgage.

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Using An IRA To Invest In Real Estate Offers Several Benefits

  • Greater profit potential
  • No rental income taxes
  • Tax-deferred or tax-free growth
  • Added diversification
  • Decreased volatility
  • Hedge against inflation
  • Tangible asset

3 WAYS TO PURCHASE REAL ESTATE WITH
YOUR IRA

1

CASH

Paying for real estate with cash is simple and straightforward. It is the fastest way for your Self-Directed IRA to purchase real estate.

  • IRA pays 100% of the purchase price of the property
  • IRA owes 100% of all expenses
  • IRA collects 100% of all the income – tax-free!

Benefit: Competitive advantage over other investors who need financing to purchase the investment property!

2

ENTITIES

You can use entities, such as Limited Liability Companies (LLCs) and Limited Partnerships (LPs), to purchase real estate.

  • Self-Directed IRA purchases a fractional interest of the entity alongside other investors by pooling monies to buy more properties or bigger deals your IRA can’t afford on its own
  • Other investors can use their personal money or their IRA funds to partner (co-invest) with your Self-Directed IRA
  • Self-Directed IRA owes pro-rata interest for all expenses within the entity

Benefit: Your IRA collects a pro-rata share for all investment income – tax-free!

3

MORTGAGE

Your IRA can obtain a mortgage to purchase real estate. This method of payment has different requirements than that of a personal mortgage.

  • The Self-Directed IRA, not the IRA Account Holder, is the Borrower (personal credit score not used to approve the IRA loan)
  • The IRA loan must be non-recourse (no personal guarantees) mortgage
  • Typical down payment for an IRA non-recourse loan is 30%-50%
  • Property must have rental income to pay mortgage
  • Self-Directed IRA will own 100% of the property subject to the mortgage
  • Self-Directed IRA collects 100% of all income
  • Self-Directed IRA pays 100% of expenses including mortgage

Benefit: Your IRA savings can be leveraged to buy higher-priced and/or multiple properties!

Note: 100% of the investments in real estate that your Self-Directed IRA is making must be for investment purposes only. You can’t personally use your real estate investment to live in or as a vacation home because that is considered self-dealing.

SEE THE IRA RULES

Ready to invest in real estate with your IRA? Get started here.

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