There are many reasons that real estate is such a prestigious industry to get into. It could be that some people get a thrill from auctions or negotiating, some enjoy the satisfaction of seeing a rundown home turn into the best-looking house on the block, or some love seeing their retirement funds grow. Whatever your motivations, understanding the rules and regulations in place is of the utmost importance to successfully owning real estate within your IRA. Understanding the benefits is equally important as well, so here are a couple of reasons real estate investing might be for you.
Variety of Investment
When most people think about owning an investment property, they think of a single-family home. But since a self-directed IRA gives the investor such a wide variety of investment options, why not take full advantage of that freedom? Commercial properties, business complexes, farmland, and overseas properties are just a couple of options that your self-directed IRA can be invested in. So ask yourself, what is it that you want out of your retirement fund?
When you buy a rental property with an IRA all the expenses are paid from the IRA and all the income goes back into the IRA. The awesome part about using a Roth IRA is appreciation and income on the property is tax-free in most cases. If you have a traditional IRA, the money you invest into the IRA is tax-free and when you start taking money out later the profits become taxable. In either case, you pay fewer taxes than you would if you bought rental properties.
As we’ve all seen in recent months, the stock market has been in serious flux. Threats of a federal rate hike, unstable conditions in China, and the global economy as a whole getting shakier are all contributing factors. One thing that serious investors do in times like these is diversify, which essentially means that their eggs aren’t all in one basket.