An individual retirement account, more commonly known as an IRA, is an investment account that allows people to save for their retirements. There are three different types of IRAs and each of them offers a different tax treatment. Some IRAs offer tax-free growth, while other IRAs offer tax-deferred growth. Many real estate professionals are interested in using self-directed IRAs to not only fund their retirements but to also grow their businesses. There are a variety of ways that IRAs can be used in conjunction with real estate investments.
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A professional will not only want to ensure that they understand the rules of a self-directed IRA but that their clients do as well. The Internal Revenue Service (IRS) has several guidelines for how real estate IRAs can be handled. A few of these guidelines govern the type of investments that clients can purchase and the people that investments can be purchased from.
A professional who is seeking to use IRAs with their real estate investments will need to hire the proper custodian for their IRA. Custodians should offer a variety of services, provide quick response times, and fit into the investor’s budget. These three things will ensure that an investor doesn’t overpay for their IRA and is able to speak with a representative if something is wrong.
The proper candidates are also essential to developing a self-directed IRA. There are additional guidelines on the type of investor who can invest into a self-directed IRA without encountering penalties from the IRS. Most ideal candidates should already be investing in real estate and should want to utilize alternative assets to grow their IRA.
The best thing that a real estate professional can do when aiming to use IRAs in their real estate investments is to learn more about self-directed IRAs. There are a variety of strategies to use and guidelines to follow when it comes to these accounts. Professionals have access to a large amount of information at their fingertips. Many blogs, articles, and videos offer information about the subject. Make sure to stay up to date with the IRS and any changes that may take place with their requirements.