The Self-Directed Real Estate IRA: Five Benefits You Didn’t Know

Posted on August 1, 2016 by

You might have heard of a Real Estate IRA. You might have even looked into it as an option in the past as you considered the retirement options that make the most sense for you and your family. But if you’re not familiar with this kind of retirement account, you might be surprised at just what kinds of investment results you can have when using it properly.

Don’t believe us? Let’s take a closer look at the Self-Directed Real Estate IRA—and how it can uniquely benefit your retirement plans:

Benefit #1: Getting More Leverage with a Real Estate IRA

One of the most fascinating concepts in real estate investing is that of leverage. By using leverage, you can make purchases you otherwise wouldn’t be able to make with the cash in your bank account. In Real Estate IRAs, you’ll be expected to use non-recourse loans, but you’ll still be able to use this concept of leverage to your advantage. In other words, you can buy real estate that you otherwise would not be able to with plain, ordinary cash. 

This is well-known to anyone who’s invested in real estate, but the good news is that you can use these non-recourse loans within a Real Estate IRA as well, giving you the opportunity to employ big investments of real estate into your tax-protected retirement plans.

Benefit #2: You Can Collect Rental Income Tax-Free or Tax-Deferred

Because the real estate is within a tax-protected account like a Roth IRA, you’ll be able to collect on real estate income without paying the usual taxes. This is the chief advantage of retirement accounts like the Roth IRA—you’re simply applying it to a different asset class.

Keep in mind that you’ll hire a property manager in order to handle rental collections when you work with a real estate IRA. The differences between real estate in an IRA and real estate as a regular investment are subtle, but important.

Benefit #3: You Can Still Partner with Others for Investments

Sometimes, you can’t quite get enough money together yourself in order to secure a real estate purchase. Fortunately, you can still use the ability to partner up with other investors even when you’re working within a real estate IRA, which gives you even more leverage than a simple non-recourse loan. It allows you to invest in large properties and include these properties as part of your retirement plan.

Benefit #4: You Can Sell Property Within a Real Estate IRA Without Capital Gains Taxes

Tax protection under an IRA helps you to make moves within that account that don’t apply to your taxes the way normal investments and sales might. In other words, using a Real Estate IRA, you can still sell property without having to worry about capital gains taxes—giving you plenty of opportunities to grow money as you make deals you otherwise would have to pay substantial taxes on.

Benefit #5: Quick Access to Passive Income

Because it’s difficult to turn a lot of money into passive income overnight, the Real Estate IRA is unique in that it offers a quick path for soon-to-be-retirees to turn their money into a regular income. This helps you secure the kind of cash flow you need to make a peaceful retirement possible.

If these benefits sound interesting to you, it might be a good idea to keep reading about Real Estate IRAs and find out if they’re right for your investment strategy. For more information, continue browsing our website or contact American IRA directly at 1-866-7500-IRA.

Jim HittJim Hitt is the Chief Executive Officer of American IRA and he has been committed to all aspects of investing for more than 30 years, using self-directed IRAs for his own investments since 1982. Jim’s forte is the financing and acquisition of real estate, private offerings, mortgage lending, business’s, joint ventures, partnerships and limited liability companies using creative techniques.

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