One of the most beneficial aspects of buying real estate with your IRA are the tax benefits. Investors have been purchasing real estate with their SD IRA’s for decades and using the real estate as a tax-deferred investment growth vehicle. Preferred Trust Company provides three important tips for understanding the benefits of owning real estate through a self-directed IRA:
- When you purchase real estate through your self-directed IRA, all expenses associated with the property purchase must come directly from your IRA. This protects your investment from any unnecessary taxation. An Investment Authorization and Direction form must be completed (along with other applicable documents related to the purchase) and submitted to Preferred Trust Company prior to the release of funds for the purchase. Subsequently any expenses related to the property will require and Investment Expense Authorization form and the supporting invoice.
- Preferred Trust Company allows you to purchase real estate using your self-directed IRA anywhere in the United States. For example, an account owner residing in California can purchase real estate in Texas or Delaware with their Preferred Trust Company IRA; this allows you the freedom to diversify your investments in the markets that best suit your financial goals.
- Real Estate can be purchased to “fix and flip” or as an income producing rental property. All proceeds from the sale of the property or monthly rental income generated must go directly back to your IRA at Preferred Trust Company in order for it to remain a qualified investment and retain its tax-deferred status.
