Real Estate Articles

Real Estate IRA’s: How to Buy Real Estate Inside Your IRA | By: Rich Desich

How to Buy Greenville Real Estate in Your IRA

Can You Really Buy Real Estate in Your IRA? Yes You Can! Here’s How-

3 Reasons Why Real Estate Investing with an IRA is Popular with Successful Investors from all over the country, including the Upstate of South Carolina

After completing a successful real estate transaction, do you wish almost half of your hard-earned profits didn’t have to go to the IRS for taxes? Do you ever dream about how many more real estate deals you could do if you could keep all the profit?

Well dream no more. Realizing tax-free or tax-deferred profits on real estate investing is a reality, and has been a popular investment strategy for years.

Government sponsored retirement plans such as IRAs and 401(k)s allow you to invest in almost anything (including Greenville, SC real estate), not just stocks, bonds and mutual funds. And all the benefits those plans provide—tax-deductions and tax-free profits—apply to whatever investment you choose, including real estate.

As an experienced real estate investor it is important to know the 3 reasons why IRA investing in real estate has been a successful strategy…

1) Tax-Deferred and Tax-Free Profits on all Deals

“The most powerful force on Earth is compounding interest.” – Albert Einstein

One of an IRA’s greatest features is that it allows Americans to enjoy the true power of tax-deferred compounding interest. Compound interest occurs when interest you are earning interest not only on your original investment sum, but also on the interest earned from the original sum.

Compound interest can occur with any investment you make, but the “true” power of compounding interest is obtained when you make an investment in a tax-deferred environment, like an IRA. No longer do you have to buy stocks, send your money out of state or hope someone’s looking out for your investment as closely as you would. Right here in the Upstate, whether Greenville, Clemson, Anderson, Spartanburg….you name it…It’s as good as place as any to realize some nice profits within your IRA or other retirement account.

By taking advantage of an IRA’s tax-deferred status, you do not have to pay tax immediately on your real estate earnings (like the sale of a property or rent collected). Thus, you are able to enjoy the power of compounding on ALL of your profit, not just what is left after taxes.

2) A Mostly Undiscovered Strategy, It’s Been Successful Since 1974

Enviably when learning about real estate in IRAs people become skeptical and think it might be too good to be true. Not paying taxes on real estate deals for the rest of your life does sound pretty good.

Well, it’s not too good to be true. In fact, since the IRA was created in 1974, investing in real estate and other alternative assets has been legal. IRS Publication 590 (dealing with IRAs) states what investments are prohibited; these investments include artwork, stamps, rugs, antiques and gems. All other investments including stocks, bonds, mutual funds, real estate, mortgages, private placements or even livestock are perfectly acceptable as long as IRS rules governing retirement plans are followed.

Most investors haven’t heard of this opportunity because most IRA custodians do not offer truly self-directed IRAs that allow you to invest in real estate and other non-traditional investments. Don’t think that just because your local Greenville, SC banker or IRA custodian doesn’t know the ins and outs of this that it’s not a reality. Millions of people invest in their IRA and so can you!

Often, when you ask a custodian/trustee, “Can I invest in real estate with an IRA?” they will say, “I’ve never heard of that” or, “No, you can’t do that.” What they really mean is that you can’t do this at their company because they only offer stocks, mutual funds or bonds. Only a truly self-directed IRA custodian will have a variety of plans for traditional and non-traditional assets.

Understanding real estate in an IRA allows you to become part of a select group of knowledgeable investors, because for many, this is an undiscovered strategy. Knowing the benefits of real estate IRA investing gives you a leg up on other real estate investors.

3) Real Estate IRA Investing is Simple and Similar to Normal Real Estate Investing

“Is it hard to do?” is a common question about investing in real estate with a truly self-directed IRA. It is similar to the way you currently invest in real estate. In no time at all you can be investing in real estate and other alternative assets receiving tax-free or tax-deferred profits.

The main difference between self-directed IRA real estate investing and general real estate investing is that you and your IRA are two separate entities, and as such, everything related to your investment (the property deed, property insurance, etc.) needs to be titled in the name of your IRA and not you personally. Also, all profits or expenses generated from the investment must come from and to the IRA, not your personal funds.

Armed with this knowledge, many successful investors right here in the Upstate have already benefited from real estate in their IRA for years—realizing the dream of tax-free real estate profits.

By Rich Desich, Vice President of Equity Trust Company

This article is brought to you by the Upstate Carolina Real Estate Investors Association. (UCREIA)
Information about UCREIA’s Educational programs can be obtained off this website or by contacting the club’s Dir. of Education, Karla Kuhn

Author Rich Desich is the Vice President of Equity Trust Company and son of the famed Dick Desich, Founder of the largest Real Estate IRA Custodian in the country.
You can find additional information about Investing in Real Estate with your IRAs at their website Equity Trust Company

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