WHAT IS A SELF-DIRECTED IRA?
A self-directed IRA (SDIRA) empowers you to diversify your portfolio with alternative investments. For example, you can invest in Real Estate, Precious Metals, or Digital Currency amongst other things. Note that you can use a Roth IRA, Traditional IRA, or SEP-IRA.
HOW REAL ESTATE IRA’S WORK:
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Purchase (Investment Property) either with cash or financing within your IRA.
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Investment income (rental income) is then contributed back to your IRA and you still retain the ability to fund your IRA outside of the investment income.
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You are unable to purchase or sell property from your IRA to prohibited individuals, typically family members.
To invest in alternative assets, you need a self-directed IRA, and the IRS states that you must invest via a passive third party. Many investors choose a self-directed IRA custodian because of the protections that come with additional oversight. I can help you find the investment property within your IRA. Some examples of investment property – Airbnb, VRBO, long-term rental property, buy and rehab.
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KEY TAKEAWAYS
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Self-directed IRA real estate investing can be carried out through direct purchases, partnered funds, an LLC, or non-recourse loan.
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With a self-directed IRA you can use retirement funds to invest in real estate in a tax-advantage manner. This is also known as a “Real Estate IRA”.
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Your SDIRA owns the investment property, and all related income and expenses must flow through the SDIRA.