Purchasing property with an IRA

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Land investment is a financial tool that is used by many who are looking for a low risk secure investment for retirement. For those who are not able to invest in properties through mutual bonds, stocks and bonds, choose to invest in property using an IRA. Tangible assets like undeveloped land are increasing in value as they are outside from the hustle bustle of the city. This type of long-term investment plans can easily fit into your retirement plan. If you want to avoid the uncertainties and volatility of traditional mutual funds, stocks and equity and have longer investment duration, then an IRA can be an appropriate option when you are ready to purchase land.

An IRA, (Individual Retirement Account) is a financial savings account approved by the government and allows for investments in land and property. These investments are tax free or tax-deferred to maximize monetary growth over time. If the assets require some type of protection and need to be passed down to a future generation, IRA’s qualify for tax breaks. For those struggling with mutual funds or bonds to invest in land and are looking for other investment options, a real estate IRA will help you invest in any real estate property such as vacant lands zoned for commercial, residential or mobile friendly.

Not many people are aware of this particular option. A Self-Directed IRA is the method to use if you wish to purchase a land property. Self-Directing IRA’s simply means one can select what type of investment you want to make. Self-Directed IRA’s involve an investor gaining control of their assets through a custodian and investing in an alternative property that falls under the IRS tax code. A Custodian will assist you in the handling of paperwork, transactions as well as financial reporting. They should also guide you through the rules and regulations of utilizing your IRA for property purchases, leaving little or no room for any tax law violations.

Many individuals are extremely passionate about investing in real estate being that it is one of the most secure investments that can eventually provide you with the most monetary payout. One of the obstacles of investing in real estate properties is that need for a down payment. As the majority of people are currently paying off mortgage loans, paying for their children’s education, paying for medical care and trying to save for retirement, not much funds are left to invest in any real estate. Therefore, a Self-Directed IRA is the road to take when securing retirement.

Since purchasing property through an IRA is seen as an investment tool, you cannot use the property as your main residence, holiday home, or use it for commercial use. You and your IRA are deemed separate bodies- you do not own the property, your IRA does. The following people the IRS deem disqualified are:

• Spouse
• Children and their spouses
• Grandchildren
• Parents and grandparents
• Any entity that owns more than 50% share of the property
• IRA service providers

If you have decided to invest in land property through your retirement account, you just need to follow this simple procedure:

1} First, open a self-directed IRA account with your custodian
2} Add funds into your IRA account on a regular basis using an IRA transfer
3} Identify the land property that you wish to invest in
4} Utilize and take advantage the guidance of your custodian’s services, to complete your investment
5} Continue to monitor the account through the custodian’s IRA investor portal.

Investors who purchase land through an IRA can fund the entire transaction with cash from their IRA. The IRA can also be chosen as a partial investor and coupled with other financial tools such as personal savings or mutual bonds.

Once the purchase is made and the transaction is complete, your IRA will be deemed as the owner of the property. The ownership status will be in the name of your IRA. Since the new property is for investment purposes only, all of the expenses and any monetary gain must be directly deposited to the IRA. If you owe taxes, management fees, insurance, maintenance and association dues, all need to be paid by the IRA.

If you decide to sell your property, and request for it to be put on the market and sold on your behalf, the profit will then go back into your IRA, depending on the type of IRA uses, you can be subject to tax breaks and/or deductions.

With the increasing prices for land and property, investing in real estate is the best option as of now. If you do not hold any stocks, bonds or other financial tools, taking advantage of an IRA is a viable option when securing for retirement. Identify a worthy asset, such as vacant land, that can be easily purchased using an IRA.

At The Land Store, we offer many great properties that can be used for invest purposes.
The Land Store

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