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The Secret To Creating Wealth: The Real Estate IRA

Aug 17, 2007
Would you like to buy and sell real estate without paying taxes? Do you want to know the secret to creating true wealth? The fact is that the wealthy often pay less in taxes because they have tax shelters and one of the best tax shelters around is the IRA account, specifically the Roth IRA.

What is a Roth IRA?

The Roth IRA came into existence in 1998 and is named after the late Senator William V. Roth, Jr. The chief advantage of a Roth IRA is obvious. Although there is no deferral of taxes on the money originally invested in a Roth IRA, as in other IRAs, all income earned by the investments in a Roth account is tax free when it is withdrawn. Another benefit is that you are not required to take distributions beginning at age 70 1/2 as with other accounts, so if you don't need the money to live on, it can continue growing and earning for you tax free. Also, a Roth IRA makes it easier in some cases to take early withdrawals without penalties compared to other retirement accounts.

But what does this have to do with real estate? You accountant or stock broker probably did not tell you this, but you can actually buy real estate, tax certificates and even mortgages and notes in your IRA! This is a great way to supercharge your retirement investments.

If you call your local stockbroker and tell them you want to buy real estate in your IRA, he will probably tell you that it's not possible and will try to steer you away from such an idea, because he will not make a commission. The key to investing in real estate with your IRA account is going through a special custodian that offers it.

The property will be titled in the custodian's name. For example my tax lien investments are titled as "Equity Trust Company Custodian FBO Donald Carlos Scarpero IRA." The county where my tax certificates are located gets the tax id number for Equity Trust and I pay no tax at all on this investment. My custodian, Equity Trust, handles all expenses associated with my property per the instructions that I send them.

My custodian also offers college savings accounts, so I even have my son's college savings invested in real estate growing tax free at a much higher return than the local bank. Is that great or what!

So, if you want to grow your investments quickly like the big players, then look into opening a real estate IRA today.
About the Author
Carlos Scarpero is an experienced real estate investor who specializes in land. On his tax lien and tax deed blog at http://www.scarpero.com/real_estate , he discusses innovative and creative real estate strategies to make your real estate investing more profitable.
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