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Understanding Agency    
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Tough Questions For Sellers    
   
Owning A Home Pays Off    
What a REALTORŪ Can Do for You    
Why Use Our Firm?    

 

 
       Don Khoury
   Associate Broker
       REALTORŪ
 
Glossary Of Terms    
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What to Know About Using IRA Money for Real Estate

Self-directed IRAs give investors many more options than do traditional company-sponsored retirement plans, including the option of investing in real estate.

For many people, real estate is the alternative investment of choice, according to Tom Anderson, president of PENSCO Trust, a custodial firm specializing in self-directed IRAs. "The slowdown in the real estate market really hasn't affected our business because we're talking about investment properties versus personal residences, and people are taking advantage of down market opportunities," he says. The rules and regulations for investing an IRA in real estate are complex, and failure to pay attention will result in substantial taxes and penalties, experts say. Accountant Ed Slott, founder of the IRAhelp.com Web site, offers these suggestions:
 
  • Set up a separate IRA for real estate investments. Even if only a small portion of the IRA is used for real estate, the IRS could penalize the entire balance in a prohibited transaction.
  • Check the investment scenario with custodians and other professionals who have experience in these transactions and can spot red flags.
  • If possible, choose to invest in a Roth IRA. The money in the Roth has already been taxed and any distributions, including capital gains on the property, are generally tax-free.


Source: MarketWatch, Marla Brill