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Basic Facts About Self Directed IRA Real Estate Investments

Aug 28, 2008
One of the popular features of self directed IRA real estate investments is the limited custodial participation and reduced custodial fees. This means that self directed IRA holder does not have to pay additional special, asset based, holding, or other related types of fees, including transactional fees for each check from your investment that you draw.

IRAs were created in 1975, as part of the Employee Income Security Act of 1974, or ERISA, and self directed IRAs were also created during this time. Most investment choices during this time included real estate and notes. Technically, self directed IRAs are no different from traditional IRAs.

They differ in their investment options, since most traditional IRAs only permit investment options in approved stocks, mutual funds, bonds, and CDs. This type of IRA allows, in addition to the investment types mentioned above, for tax lien certificates and private placements.

Some of the benefits of this investment type include special tax deductions, estate planning and asset protection options. A self directed IRA allows you to have complete control over your Individual Retirement Account funds, with most people opting to be custodians of their accounts, which, depending on individual financial portfolios, may or not be a feasible option for everyone.

The differences between purchasing personal real estate and a real estate investment for a self directed IRA have to do with expenses, signatures, funding, and title. In terms of signatures, all documents pertaining to the investments must be signed by the custodian appointed to the IRA, any expenses associated with your investment must be paid from and any income resulted from this investment must be paid from and into your IRA.

When you purchase an asset for your IRA, it must be titled properly to reflect its investment status and must make mention of the custodian of your IRA.

Investments purchased must be done so with funds directly from the IRA. You should also be aware that you cannot use your IRA to purchase real estate that you currently own, since this, as well as the purchase of real estate owned by your corporation or LLC is considered a prohibited transaction.

Self directed IRA real estate investments can be very profitable if handled and managed correctly, which is why so many people decide to pursue these alternatives to traditional IRA investing. Be sure to do your research and consult with your financial advisor before making any final decisions.
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To learn more about a self directed IRA rollover and other investment opportunities visit our site.
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