Idaho Falls Real Estate Blog

One of the greatest tools available to Idaho Falls real estate investors is government-sponsored retirement plans, such as IRAs.

 

You have the option to self-direct your IRAs and other retirement plans into real estate, and benefit from the tax advantages those plans provide.  Investments in IRAs benefit from tax-deferred profits or in some cases tax-free profits.  The IRS does not allow you to personally “touch” your self-directed IRA account, so you need a passive custodian.

 

The tremendous advantages a real estate IRA and other self directed retirement plans offer taxpayers include the following:

 

•    The power of compound interest
•    Reduction of taxable income
•    Asset protection
•    Estate planning

There are certain types of transactions that you can not perform through an IRA.  Basically, the IRS prohibits “self-dealing,” which are investments in which you or your family members of lineal descent have prior ownership.

 

The most important thing to remember is that with a self directed real estate IRA, the type of investments you make will be exactly the same kind you presently are making for your personal account.  The only difference is that the profits in your real estate IRA investments are tax free/deferred.

 

There is also a self directed 401(K), (The “Plan”).  This is a 401K plan setup for your company and you are the manager of the company.  Direct ownership of real estate is not permitted; but indirect investment via the self directed 401K is the only choice.  Some of the benefits include:

 

  1.  Deferral of real estate capital gains  

  2.  Direct, hands-on control of

       decisions                                      

  3.  “The Plan” can finance or borrow for real 

       estate purchases

 

Contact your accountant for assistance in tax advantaged strategies such as these.

 

For more finance advice, click here to see our Idaho Falls real estate library.