Most people are concerned about self-directed IRA rules. Nobody wants to make a mistake. Mistakes can be costly; particularly when it comes to self-directed IRAs. If you have questions, you will find the following information interesting and useful.
There are fewer self-directed IRA rules than you might think, at least, when it comes to government regulations. A brokerage firm may have additional rules or policies.
The basic theme of Congressional regulations regarding self-directed IRAs is quite simple. They want you to make sensible, low-risk investments, so the money is there when you need it most.
Other self-directed IRA laws and rules prevent you from investing in items that cannot be liquidated quickly and easily. Therefore, you cannot invest in antiques or collectibles. It takes too long to find a buyer and it’s too difficult to put an exact value on them.
Stocks, mutual funds, bonds, and certificates of deposit are considered reasonable, low-risk investments, but there are other options. The brokerage you currently use may not offer them, but some of the options (real estate investing, for example) could help you grow your retirement wealth faster than more conventional options.
Most real estate can be liquidated fairly quickly, should the need arise. Property value is easy to assess. There are just a few additional self-directed IRA rules that apply to real estate.
Purchases should be made for investment purposes only. You or your family members cannot live in a house that is deeded to your IRA. Any cost of maintenance or repair must come out of the account. And all income, whether from rental or resale, must return to the account.
The best real estate deals are cash deals. You may be able to get a mortgage in the name of the IRA trustee, but the costs could outweigh the gains, especially if you intend to hold the property for a long period of time.
Seasoned real estate investors are using the funds in their self-directed IRAs for purchases for two main reasons. They increase their profits by reducing their taxes. And they build your retirement wealth faster, because real estate deals can be very profitable, if you can find the right ones.
An Equity Trust client earned $93,500 for his IRA in less than two years. If you have the time and the knowledge, you can do the same. However, you can get help from experienced investors who have the time and knowledge. There are several who are willing to do most of the work for you.
Unfortunately, most brokers that offer self-directed IRAs do not offer their clients the option to invest in real estate. They stick with the more traditional investments. One company, Equity Trust, offers its clients the ability to invest in real estate or anything else that falls within the Self-Directed IRA rules and guidelines. If you are using a different brokerage, you may want to consider switching.